Facts, Fiction, and the Fantasy of Real Estate

Moving into the New Year many people are optimistic that 2007 will prove to be a lucrative year; the question remains, is this just wishful thinking, or are there economic indicators that support such thinking? Of course today will be a day of reckoning as government employees return to work after mourning Gerald Ford yesterday, and many anticipated reports are released, specifically the minutes from the Federal Reserve’s last meeting, its next meeting scheduled the 30th and 31st of this month.

Of course the Fed is not the only indicator that we should be paying attention to. Recently rates have risen, the 30 year fixed hovering at 6.18, and construction spending fell by .2% in November, an number thought to be closer to .5%; despite this, we have not seen an increase in this figure since April. More importantly residential spending has dropped for the eighth consecutive time to the rate seen in two years.

Doom and gloom appears to be the forecast, however, like the glass, you may see these figures as half full rather than half empty. Yes rates are up, but loan applications are up as well, signalling perhaps a turning point that has been long anticipated by insiders waiting for market recovery. Despite numbers being down, we must keep in my these figures represent the conclusion of the year last, a typical down time in the market cycle, and not necessarily indicative to what we should expect in ‘07. With applications up, it is not a hasty conclusion to believe that people are beginning to look at home purchases for the New Year.

Moreover with the bullish stock market, money is being made in different sectors, and may be diversified into longer term investments like real estate after a slight fall and market correction in housing prices. Historically rates are still lower than there counter parts through out the last few decades, and despite recent rate hikes, which were minimal, there are no real indicators that suggest we will see significant hikes causing concern in the market.

With that said, shopping for a new home, is, in my professional opinion, a wise investment; but like any other market those investing should consider and research all the factors, such as population increases in their specific areas as well as median income hikes (links on this blog down the left hand side can assist you in this research). We are not at a point in time where you can simply expect appreciation, however, finding a home that will appreciate is very possible. Finding the right agent, (a point discussed in a previous entry) is one of the most important steps in this process. In addition finding a established lender with references readily available from past clients is as important.

Should anyone have additional questions, or concerns about a particular transaction or regional market, please comment, my many readers along with myself are ready and willing to produce the necessary information you need.

Here’s to a prosperous 2007.

peter@approved-online.com