Real Estate Outlook - What's Normal?

Are you in a normal market? That depends on what's par for the course in your area. The housing boom has gone on for so long, that you may not know that normal is homes that stay on the market nearly 6 months, and interest rates are about 8 percent.
The National Association of Realtors says 2006 will be the year that housing markets return to normal, but what exactly does that mean?
It means a return to normal rates of appreciation for the area.
Historically speaking, housing prices have barely beaten inflation. Over the last few decades, with few exceptions, inflation has risen 3.5 annually. So have home prices, but they've risen about 4.5 annually, giving a modest return to homeowners over time. As they paid down their mortgage loans, they built appreciation.
But the housing markets of the last few years have been anything but normal. Nationally, we've seen double digit appreciation for the last five years. Your town may not be so red hot, but areas like coastal Florida and California have seen as much as 25 percent gains annually or more.
In 2006, experts are calling for more balance in the rate of price growth, says the NAR, as well as more balance between buyers and sellers in local markets.
The NAR believes that when all the numbers are in, 2005 will be another record-setting year for price growth. But, more modest gains are healthy, says David Lereah, NAR's chief economist. "We don't need to break a record every year for the housing market to be good -- in fact, cooling sales are necessary for the long-term health of this vital sector. A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong."
The advantage to a more stable market is that buyers can take advantage of increasing inventories to make offers.
What is not normal is continuing low interest rates hovering at near record lows. This gives an incentive to buyers to take action now, which could keep the housing market on the overstimulated side of "normal." Even so, Lereah says, "A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling." He continues, "Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year." The 30-year fixed-rate mortgage is likely to trend up gradually to 6.7 percent during the second half of the year. "This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace," Lereah adds.
So what will the new normal look like? While home prices jumped nearly 13 percent in 2005, they are only predicted to rise a little over 5 percent in 2006. New construction should increase 6 percent.
The Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. That means that price gains for housing, while not red-hot, will at least still beat historical gains by more than one to two percent.
Realty Times advises that record low interest rates, coupled with more choice for home buyers, is an irresistible buying signal. Rather than buying anything that comes on the market, you can get what you want and pay near record low finance rates, too.

10 Reasons To List Now During THe Holidays

10 REASONS TO LIST NOW DURING THE HOLIDAYS

1. “Winter Prospects” Are More Serious Buyers.


2. Your Home Looks Better During The Holidays.


3. One Of The Highest Percentages Of “Listings Sold” To “Listings Taken” Occurs During This Time Of Year.


4. You May Receive More Money For Your Home Now Because You Have Less Competition.


5. Buyers Have More Time To Look At Homes During Holidays, Especially During Vacations.


6. January Is Traditionally The Biggest Transfer Month – And You Must Be On The Market To Capture That Market.


7. By Selling Now, You Can Have A Delayed Closing Or Extended Occupancy Until The Beginning Of The Following Year If You Want It.


8. When You Sell During The Winter You Have An Opportunity To Buy During The Spring, When Many Homes Are On The Market.


9. You May Have Fewer Actual Showings, But More Qualified And Motivated Prospects.


10. Corporate Transferees, Who Need To Buy A Home Now, Can’t Wait Until Spring.

If you would ever like your home SOLD instead of JUST LISTED, give me a call.  I have a marketing program that works very well in getting homes sold in your neighborhood.  

If you would like a FREE Market Analysis on your home, simply call me Toll Free @ 1-800-731-1162 Ext.0.  Thank you for reading my flyer, you are entitled for you FREE report “How To Sell Your Home At The Highest Possible Price.”    
Call for you’re your FREE Report @ 1-800-731-1162 ext. 4009
Email – rigneyrealty@comcast.net  Web Site – www.davidrigney.com  
Sincerely, David Rigney   American Realty Services, Inc.                                                    (image placeholder)             (image placeholder)
If your home is currently listed for sale with another broker, this is not intended as a solicitation of that listing.

New Orleans Agrees to Hearing Before Razing Homes

Community activists have convinced city officials in New Orleans to postpone the planned demolition of thousands of homes damaged earlier this year by Hurricane Katrina until after a hearing before a state judge that has been scheduled for next week. Activists had filed suit against the city in order to halt plans to level buildings without holding a hearing or receiving consent from the owners. The city announced last week that it would raze about 2,500 flooded buildings found to be dangerously unstable. New Orleans officials say they do not need the permission of a judge or owners to flatten buildings deemed an imminent threat to safety. The plaintiffs are arguing that the city's plans overstep its authority and were based on flawed inspections. About 5,534 buildings on the east bank in New Orleans have been tagged with red stickers, indicating they are unsafe. Source: USA Today (12/29/05)