December 21 2005

(image placeholder)December 21, 2005
Anticipating the 2006 housing market
The end is near for 2005, which means that everyone is trying to predict what will happen to the housing market in 2006. In its 2006 Investor's Guide, Fortune warns that the coming months won't be as kind to housing as 2005 was: "At some point in the next two years...a third of the nation's 100 largest metro areas (accounting for 60% of the U.S. population) are expected to see modestly falling house prices." The magazine's list of the top 100 real estate markets shows cities in the South fairing best in 2006, while California and Las Vegas are expected to not do as well. Business Week, meanwhile, recommends that homeowners not put too much money into renovations if they intend to trade up soon, but to invest in other segments of the real estate market instead. Hotel and apartment REITs and rental housing "in the heartland" are the best bets for good returns, according to BW. But for most people with a vested interest in the real estate market, the Seattle Times may have the best advice: become an armchair economist. Watch your own neighborhood for signs of what to expect in 2006: "Are houses staying on the market longer? Are sellers getting their asking price? That's an indicator of whether housing continues to boom, simmers or goes flat."