The 2007 Real Estate Market ? What Will Happen?



It goes without saying that predicting most markets is a somewhat dubious affair. While the real estate market is not as volatile as something like the commodities market, it still fluctuates and surprises with regularity. Prior to the last hot real estate market, nobody was predicting things would go nuts.

While many made a tremendous amount of money during the early part of the decade, there is little doubt 2006 was a shocker. Many new home owners were probably wondering what was going on given the fact they had come into a market that was showing double digit appreciation gains on an annual basis. In simple terms, there was a correction. The cost of borrowing money increased, valuations pulled back and inventory increased dramatically. Put together, this meant we saw the first down year in the real estate market in 2006.

Given the bad news in 2006, many wonder what 2007 will look like. Should we be optimistic or crawl back under the sheets? The answer is neither. Most people agree the current market will enter a general flat period in 2007. Some parts of the country will see relatively small declines in home values while others will see relatively small increases. Inventory will slowly be sold off and the market will essentially take a breath to get its feet under it again. It will probably be 2008 before we see a steady increase in home values, sales rates and what have you.

If you own a home, there is really no reason to panic about the current real estate market. Unlike stocks or other paper investments, you can live in a home. As long as you can meet your mortgage obligations, you can wait out the current correction. Around the end of 2007 and heading into 2008, you can expect to start smiling again as your property appreciates. Will it appreciate at double digit rates? It just might!