Positive Outlook for 2007 and a Recovery into 2008

According to the National Association of Realtors® consumers are beginning to respond to more favorable housing market conditions but new-home constructions will still be dampened until inventories decline further.

David Lereah, NAR’s chief economist feels we’ve reached the bottom of the cooling housing market in 2006 and the recovery will come well into 2008.

The forecast of the 30-year fixed-rate mortgage indicates it may rise to 6.7% by the second half of the year. Beginning January we started with rates (30-yr fixed) at about the same level as this time last year but stronger employment and higher wages put an upward pressure on inflation, in turn higher interest rates. Although mortgage interest rates have inched up a bit, solid economic growth and a moderate inflation contributed to the Fed’s decision to leave the target short-term interest rate unchanged.

On our recent meeting with Scott Anderson, VP & Senior Economist of Wells Fargo, he presented a view of the market as being three fourths (3/4) into the economic slow down therefore we show to be in the road to recovery since most of the correction happened in 2006. Scott was more concerned about the economy in July of 2006 than today but it all depends of where interest rates go from here. As a final note even in the slow market it seems that the Bay Area could outperform the rest of California.

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February 7th, 2007 · Filed Under Keeping an Eye on the Market, Real Estate Information

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