Titled “a little bit of heaven in 2007!”, Gary Watts has released an updated forecast for Orange County Real Estate in 2007. From the title, you can tell that his outlook is optimistic. As most of us in the industry know, the media has been taking the numbers and blowing them way out of proportion. According to Gary, they have been creating sensational headlines to try to boost their readership. I tend to agree as this is a trend repeated with news from all over the world.
Setting the stage, Alan Greenspan has stated “most of the negatives in housing are behind us.” Furthermore, the national association of Realtors is reporting existing home sales rising and new unsold home inventory falling for the 4th straight month. The median home price is still rising, up 1.4%. The California association of Realtors is calling for an appreciation rate of 6.5% to 7%.
Gary thinks we will not see appreciation in the first quarter of 2007 stating that it will take time for the new numbers to come out and start to affect buyer psychology (although we are very quickly running out of bargain basement deals). In the second quarter he thinks that interest rates may fall a little further fueling the housing come back. In the third quarter all of these factors may come together with lower interest rates and a positive media. Finally, the market may pausing once again in the 4th quarter in preparation for the new year.
Based on anecdotal activity that I have been experiencing in the Orange County real estate market, I would say that this new forecast is probably on the money. I am calling for a 5% increase in prices but not in all markets. That will depend on inventory levels and affordability factors. Overall, I would call this a normal market.