Indicators are positive for 2007 January 17, 2007Posted by Jay Medina in News and Information.
The prognosis for the real estate market in 2007 looks promising. Previously owned home sales will slowly rise. Mortgage rates will rise slightly but remain at historically low levels. That’s the view of research folks at the National Association of Realtors. And they are usually quite accurate. They expect the volume of existing home sales to rise, while new-home sales will continue to slide downward.
“Roughly three-quarters of the country will experience an expansion in 2007, while other areas should continue to show lower sales for at least part of this year,” said David Lereah, NAR’s chief economist. “Most of the correction in home prices is behind us, but general gains in value this year will be modest by historical standards. Home buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates in recent months have provided a window of opportunity. These conditions will persist in many areas until spring when inventory supplies are likely to become more balanced,” he said.
There are several new developments that became effective as of the first of this year – new factors that could influence the market negatively and positively this year. On the positive side, premium payments for private mortgage insurance (PMI) became tax deductible for the first time.
A negative factor is increasing fees charged by credit bureaus. Two of the three major bureaus (Equifax and Experian) have started charging for each report needed for considering or processing a mortgage application. Even when a mortgage broker shops many lenders to find the right lender source for a borrower client, a fee is tacked onto each applicant submission. And, or course, those added fees are passed along to the consumer. Considering all factors, good and not so good, the market looks increasingly healthy for the year. By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than at the current time, NAR predicts.