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Realtors predict another down year
WASHINGTON (Reuters) - Next year will likely bring a second annual decline in existing home sales, the National Association of Realtors predicted on Monday. [December 11]
Sales of existing homes are expected to decline 8.6 percent to 6.47 million for 2006 and contract another 1 percent to 6.40 million units next year. Still, the housing sector should see a rebound by the end of next year, said David Lereah, the association's chief economist."By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter," Lereah said.Sales of new homes should fall a sharp 17.7 percent this year and another 9.4 percent next year, the Realtors said.
About three-quarters of the country will see a sluggish expansion of existing home sales next year, Lereah said.The health of housing markets across the country will vary, he said, but "general gains in value next year will be modest by historic standards."In the last three months of 2005, homes across the nation were appreciating at a 12 percent rate, according to the Office of Federal Housing Enterprise Oversight. From July to September this year, home price appreciation had slowed to a 3.5 percent rate.Lereah also predicted that 30-year mortgage rates would increase to 6.7 percent by September. Those rates were at 6.11 percent last week, mortgage finance company Freddie Mac reported.
Among those of us who follow the real estate business closely, the predicted rebound seems optimistic. Economists with nothing at stake (unlike those who work for the Realtors) have predicted a serious increase in the number of foreclosures and short-sales, as the promotional mortgage rates that fed the recent house-buying boom expire. Many new homeowners are expected to find themselves unable to afford payments, once introductory adjustable rates expire, and some of these will find themselves owing more on the property than they initially paid.
Moreover, the NAR's experts fail to take into account the changes we can expect to see with the shifting balance of power in the federal government. Sooner or later, people will finally tumble to the fact that we are engaged in the third world war, and sooner or later, other people will insist upon radical measures to deal with that: tax increases and the renewal of military conscription, to name only two. We're also reading that the average commuting distance for US workers has continued to increase. With fuel prices remaining unstable, and the very real possibility of motor fuel supply problems, it would be foolish to insist that the US economy will continue on its current path.
Meanwhile, Realtors being professional liars, the probability is zero that Suzie Q. Real-a-tor will counsel prospective sellers to be modest in the sale prices they can expect. The industry has largely been built on the untruth that housing prices will always increase, and to compete as a real estate agent in the USA requires a person be able to lie about the probable sale price of a house to "get the listing," then tell some more lies down the road when it remains unsold, to get the price reduced to where it needs to be.
Those who over-spent, and those who are too pig-headed to work where they live, will suffer the worst. And they will deserve it.