2006: Among Best Ever for Real Estate Market
As last year drew to an end, we gave you an idea of what certain Florida home loan experts predicted the 2006 housing market to look like.
Now, RE/MAX chairman, Dave Liniger has also looked into the 2006 crystal ball. He states that it will be the second best year the real estate industry has ever experienced.
Liniger stated that 2005 was the culmination of a historical trend, resulting from several economic factors: “[It} was the fifth year in a row that records were set. What’s happened is the economy has been fueled by the real estate market, which has shown continued strength.”
Data from the year-end National Association of Realtors (NAR) report revealed that existing homes sales were at 7,072,000 in ‘05, an increase of 4.2 percent over 2004. Meanwhile, the national median price rose from $185,200 in 2004 to $208,700 in 2005. Rather than predicting an ominous decline in the housing market, Liniger feels that 2006 will only see a moderate correction.
State of this year’s housing market
Liniger commented on the state of real estate and the housing market after NAR released numbers that showed a decrease of 5.7 percent to a seasonally adjusted annual rate of 6.60 million units in December - down from an upwardly revised pace of 7.00 million in November. Sales were 3.1 percent lower than the 6.81 million-unit level in December 2004.
However, the RE/MAX chairman feels the real estate market is in for another banner year.
“I don’t think the last two months are anything worse than a normal cycle of the real estate business. November and December declines were a normal reaction to fluctuating interest rates …I think we are going to see an outstanding year for the real estate business.”
Prices for existing home sales may retreat more in some parts of the country, but for most regions, Liniger does not expect the dramatic collapse in prices predicted by some observers. Home sellers should not fear losing out this year.
“You do certainly have to be a little concerned with properties that have shown double digit appreciation on both coasts,” Liniger said. He then stated why he feels 2006 will be best described as the-year-of-the-correction: “We’re getting back to a much more normal real estate market. You’re going to see price appreciation, depending upon the region you’re in, somewhere between three and six percent.”
Reasons for record real estate pace
One of the reasons that the housing market has been on a record setting pace is historically low interest rates. Liniger believes that rates may climb somewhat in the upcoming year - in the neighborhood of 6.5% - but not enough to derail the real estate market.
As far as real estate trends in 2006, Liniger says to watch the baby-boomers. They’ll continue to keep the market hot. “They see real estate being a very, solid investment, unlike recent experiences in the stock market. So, I think you’re going to see second home sales continue to be very, very strong.”
Housing market will continue to lead the economy in 2006
“Most sellers did extremely well in 2005,” Liniger added, but part of the normalization process will mean the market may shift a little more in favor of the buyer. “There won’t be as many people standing in line to buy, and prices won’t go up dramatically. In 2006 we feel it will be a little easier for the buyers in the marketplace.”
Few experts possess the credibility of Liniger. His positive assessment for 2006 follows the trend of those predicting a solid Florida home loan market for the upcoming year. This appears to be especially good news for those looking to purchase.
