New Study Focuses on 2006 Residential Real Estate Cycles, Trends
Will you be able to afford a Florida home loan as the year progresses? Will the real estate market correct itself? Numerous questions on the topic are crossing the minds of potential buyers and sellers.
With them in mind, First American Real Estate Solutions has released a new study titled, “The Real Estate Cycle in 2006: Evaluating Market Position, Identifying Turning Points and Constructing Scenarios,” which investigates where the residential real estate market stands today and where it is likely heading based on historical economic information.
The study by Christopher Cagan, Ph.D. and director of research and analytics at First American RES, examines more than 100 metropolitan areas between 1988 through 2005 by analyzing the median sales price index for existing single-family homes as published by the National Association of Realtors.
Cagan applied proprietary mathematical techniques in classifying those markets and investigating their present status and likely future behavior. He suggests that markets where appreciation has NOT taken place may be the best part of the country in which to take out a home loan or invest during 2006.
During the last several years, Florida home values have risen rapidly, especially in coastal/waterfront regions. Now prices in most areas are rising at single-digit levels, flattening or slightly declining - an indication that conditions have returned to normal following a strong bull market. Studying current information and assumptions about future prices, Florida home loan rates and metropolitan income levels, the study discusses and analyzes the effects and likelihood of five scenarios ranging from strongly optimistic to strongly pessimistic.
“The residential real estate market stands at a pivotal position in the spring of 2006,” said Cagan. “Through this analysis, we provide a framework for assessing where the market may be heading to assist real estate professionals with identifying potential opportunities and risks.”
The study identifies four market types: cyclical, linear, hybrid and catch-on. A quick analysys of each follows:
- Cyclical: Follow a business cycle pattern of wave-like motion over 10 to 15 year periods, which causes prices to fluctuate by large percentages above and below long-term growth rates.
- Linear: Tend to deviate only slightly from a slow and steady growth pattern.
- Hybrid: Show characteristics of both linear and cyclic markets.
- Catch-on: Have traditionally behaved in a linear fashion but recently experienced strong appreciation or depreciation.
What sort of housing market are you looking in? Consider this one of the Florida home mortgage loan questions you should be thinking about before making an offer.
