Forecasting is difficult to get right. Whether you are talking about forecasting the weather report or the real estate market, it is never 100% accurate. It does, however, give one a good idea based on the reasonable probabilities.
I just got back from the October meetings for the California Association of Realtors which was located at the Long Beach Convention Center this year. We have meetings three times a year but it is always at this time of year that we get the economic update and forecast from C.A.R.’s Chief Economist, Leslie Appleton-Young. The last 5 years have been pretty much the same report, double digit appreciation rates in property values and a significant increase in the number of sales. This year, however, the report is different. She did not say the sky was falling but prices and the number of sales will be down.
Click here to see the report summary from the California Association of Realtors.
The main point I took away from it is that the market may actually be starting to level out. 2006 will probably end up down close to 25% in the number of total sales but the median price will still be up 7% from the previous year, not a bad investment overall for one year. C.A.R. is forecasting that 2007 will be down 7% in sales volume, with the median price only going down 2%.
With energy costs leveling out, gas prices dropping pretty significantly, and interest rates remaining steady & actually dropping a bit, the climate for the real estate market is starting to look better than it did a few months ago.
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