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article by Real Estate Advisor

On a given day, people can easily find articles and news, describing an imminent unfortunate of the so-called housing bubble. Despite this gloomy prediction, many experts believe that the current slowdown in housing will be gradual and modest changes instead of massive breasts or recession. These experts believe that the factors leading to a sharp decline in the real estate market is just not present in the current economic outlook. Actually a current study by the Joint Center for Housing Studies at Harvard University that “despite the current chill in the long-term housing is light.”

Rise and start of the real estate market is subject to the forces of supply and demand, and these factors indicate a stable and positive growth in real estate segment.

Supply factors

limited supply of real estate is scarce and usually pushes up home prices. In contrast, tends an oversupply of property a downward pressure on home prices. Despite the current slowdown in the property market, factors affecting restricted favor continued growth in the property market. Some of these factors include:

1 developers have adjusted growth plans in the region to an oversupply of new dwellings. Over time, excess inventory is expected to be depleted and the equilibrise between supply and demand.

2 The availability of land in certain areas and land use regulations and related administrative costs will continue to offer new homes

reduce demand conditions.

homes located in areas with a high demand often more costly than homes in areas of low demand. Factors affecting demand for housing recommend a positive long-term housing prospects. Some of these factors include:

one moment no evidence of significant and over-the-board losses, estimates of the relatively low unemployment

2. In the long term, increased demand for second homes, holiday homes by baby boomers and seniors.

3 Long-term growth in demand for entry-level homes by the kids of baby boomers.

4 In the long term demand for entry-level home by immigrants.

5 Long-term demand for entry-level home with the second-generation Americans.

6 is expected that the outgoing and the influx of the American people in and from different regions is not substantially affect the total U.S. residential real estate market.

7 relative stability in interest rates.

8 Continuous stability over the long term home appreciation rates.

9 The number of wealth at all ages.

Index

In short, a strong growth of households, rising incomes and the general prosperity and a stable economy all bode well for continued long-term growth in the property market. While the overall housing market outlook is positive, affordability remains a challenge in terms of wages, particularly in lower income levels have not kept pace with housing costs.

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Modest median price gains in new and existing homes, a stable interest rate on the 30-year fixed mortgage, decreased housing starts and a stable unemployment rate are some of the features of the 2007 housing forecast provided by major trade group economists as reported by The Inman News.

NAR chief economist David Lereah anticipates new-home income to start from 1. 07 million units sold in 2006 to 975,000 units in 2007, which is an 8. 7% decline. He cites decreased new home construction as a massive contributing bourgeois to this change. The median new home price of $238,400 in 2006 is expected to increase by 1. 3 percent to $241,400 in 2007.

NAR also predicts that existing home income figures for 2006 to end around 6. 47 million units, which is an 8. 6% decline from 2005. The 2007 forecast for existing home income is 6. 43 million units. The median price of existing homes in 2006 was $223,700 and is expected to increase 1. 7% to $227,500 in 2007.

Doug Duncan, chief economist for the Mortgage Bankers Association predicts the interest rates on 30-year fixed mortgages to stay around 6. 5 percent, but mortgage originations to start 14% to $2. 1 trillion.

While Lereah predicts that the unemployment rate to stay at 4. 7 percent, Duncan takes it higher and believes it might reach 5. 2 percent by midyear 2007. However, he agrees with Lereah in predicting modest home price gains in new and existing homes for the coming year.

The housing forecast of The National Association of Home Builders (NAHB) is in line with NAR and the Mortgage Bankers Association. According to David Seiders, Chief Economist at NAHB, the year 2007 will see the housing market re-adjust itself once the housing demand stabilizes, leading to a healthy equilibrise between supply and demand.

Looking at the say level, the California Association of Realtors (CAR) projects that the median price of California homes will end 2006 around $560,700, and will decline in 2007 to $550,000 — a 1. 7% drop. The number of units sold in California will end 2006 around 481,200, and is projected to decrease 447,500 in 2007. CAR predicts that the unemployment rate will stay around 5. 1 percent, even though interest rates on the 30-year fixed mortgage might hover around 6. 7 percent in 2007.

The overall housing forecast for 2007 prefabricated by these four major real estate trade groups is not at all bad. Home buyers and investors planning to go ahead with their real estate activities can fare superior with the help of a good real estate agent.