2006 Real Estate Forecast

From Universal Settlements, this forecast for the local real estate market ...

Experts have differing opinions regarding the 2006 Real Estate Environment. While some see a significant slow down in the market due to rising interest rates and other market conditions, others, such as David Lereah, the National Association of Realtors chief economist, suggest that, "the slow down amounts to a tapping of the brakes on a hot market," and that conditions will remain favorable for housing, albeit not at the torrid pace of the last couple of years.

Freddie Mac is predicting that fixed-rate mortgages and i-year adjustable rate mortgages will average around 6.5% and 5.5% respectively in 2006. While housing starts and total home sales are expected to decline somewhat compared to the past year, both will be at a very healthy pace again in 2006, but at a more normal and balanced rate than in the previous few years. Hopefully, Sellers will adjust their expectations for double digit increases in value, thus encouraging Buyers to continue to purchase at a historically high pace.

With the continuing aging of the Baby Boom Generation, it is expected that the purchase of second homes and retirement homes will continue to be strong. While some experts have expressed concern about possible decrease in property values in some of the hotter markets such as Las Vegas, Miami and many California cities; others, such as those at Merrill Lynch, feel that most of those markets will, in fact, not experience price or volume declines due to factors such as migration, limits on supply and job growth. The Washington, D.C. area, with its unique set of job, economic and demographic factors, appears to be positioned for another positive year.

Overall, real estate should continue to be strong in 2006, but returning to more normal market conditions, which should benefit Buyers.