5th Best

During the 70s, 80s, and 90s, there were significant changes in the economy, some of which were reflected in the housing market. The trend was always the same. The housing market rode it out and improved. 2005 and 2006 were very strong years for home sales, but did you know that 2007 was actually the fifth best in history? Existing home sales are projected at 5.92 million for 2007, rising to 6.27 million in 2008.1

A modest housing recovery is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability. Lawrence Yun, National Association of Realtors chief economist, said the housing market will improve from a steady unleashing of pent-up demand and from a wide abundance of safer mortgage products. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing home sales. The median existing home price in 2007 will have fallen by less than 2 percent from an all time high set in 2006,” Yun said.

Over the last twenty years, during tight housing markets, inflation and interest rates have been high, causing or compounding the situation. Now that mortgage interest rates are back to near record lows, about 1.5 percentage points lower than they were last summer, Susanne Cannon, director of the Real Estate Center at DePaul University, said the question becomes: At what point will the many buyers who have been waiting to buy a house because they want to see where the floor is, be compelled to act, thinking they are getting a price they can live with and a rate they do not want to miss?

Homeowners who have been sitting on the fence waiting for the market to head lower, may find that the time to act is now. “Those who try to time the market just right in hopes of buying at the very lowest point are likely to lose out,” said Matt Moroney, Executive Director of the MBA. “First, it’s nearly impossible to predict exactly when the market will start to speed back up again, and in the meantime you’re liable to lose the home of your dreams to another buyer. Second, if mortgage rates head higher while you’re waiting, or some other aspect of your financing changes, you could easily wind up spending more than if you bought now,” said Moroney. “For those interested in new construction, material and labor costs may be as low as they can go.”

Now is the time to build, remodel, or improve your home! Nationally, the projected growth in population and households being formed year after year will require about 1.8 million new housing units per year over the next 10 years just to meet demand. Once the current inventory of unsold units is cleared out, the pace of home sales and new housing construction will return to more normal levels. 

1National Association of Realtors 09/07. http://www.realtor.org/Research.nsf/himlarchives/ResearchUpdate091407
2Nation’s Building News 01/08
Additional sources: NAHB and Realty Executives Integrity.