Housing Market Expected to Rebound, But Some Areas Will Still Lag Behind

Many area Realtors and Florida home loan providers alike have voiced optimism for the new year. But are their joyous forecasts anything more than a lot of hot air?

Economists expect the housing market to rebound in 2007 for most of the nation, but some areas will take longer to recover, the South Florida Business Journal reports.

That includes parts of Florida, particularly Palm Beach County, Broward County and Miami-Dade County as well as parts of the state’s Southwest.

“We may be bottoming out on the sales side,” says David Lereah, chief economist for the National Association of Realtors, who is usually among the market optimists.

Sellers are “being a lot more flexible,” he says, and lower prices and consistently low Florida mortgage rates are bringing buyers back to the market in many cases. Home builders have cut back on production of new houses, which will make for a healthier market going forward.

David Seiders, chief economist for the National Association of Home Builders (NAHB), expects house values will decline about 1 percent in 2007. That’s not, he says, “a major threat to the housing wealth effect.”

As for the overall economic forecast, stock market gains have largely offset declining home values, says Martin Regalia, chief economist for the U.S. Chamber of Commerce. People are continuing to spend - the good news since 70 percent of the U.S. economy is dependent on consumption.

“It just doesn’t look like the American consumer is going away,” Regalia says.

A few more months of price declines actually will be good for the housing market because they will provide more affordable housing, Lereah says.

“Affordability is the problem in housing right now,” he says.

The housing market will grow in three-fourths of the country in 2007, Lereah predicts. Markets in the rest of the country - including California and coastal resort areas from Delaware to Florida - are going to experience some pain.

“It’s going to take a while to work off some of the excess,” Lereah said.

The Naples housing market, for example, has a 15-month supply of homes for sale. While the worst may be over, that’s too much inventory for sales and prices to pick back up in the immediate future.

“You need to look at local markets independently of one another to get a good feel for them,” Lereah said.

Take this into consideration as you evaluate your Florida mortgage quest. Are prices in the area you’re looking to invest in going down? Are they likely to level off or even rise a little in the early part of 2007? It’s up to you to do your research and make the right call.