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Housing Market May Now Bounce Back Sooner Than Thought

(If you have any involvement with the real estate industry, you are probably pretty tired of all the contradicting reports on whether the housing market is going to continue its recent decline through 2007 or make a quick recovery, allowing buyers a small window to enjoy their moment.)

Expert economists seem to change their stance on this issue every week. But the National Association of Realtors (NAR) has always remained confident that the current housing slump is merely a correction to the "booming" years from 2000 to 2005, and will mostly end in the beginning of 2007.

Without just hearsay, Lew Sichelman explains how the NAR is reporting that about 75 percent of the United States will experience an end in the housing downturn over the next couple of months, in his article, "NAR: Housing Spiral Mostly Over," which was written and published November 13, 2006 in Realty Times.

"Noting that like politics, 'all real estate is local,' David Lereah, the chief economist of the nation's largest trade organization, said 74 percent of the nation's housing markets will once again be expanding 'in a sluggish way' in 2007."

There were five distinct groups of housing that Lereah identified. The last of the five groups accounted for the other 26 percent of the country that will have a more difficult time recouping from and ending the housing slide. This group are the areas of the country like California, Arizona and Nevada (Las Vegas), which saw prices escalate and inflated so high and rapidly, way beyond their means that a deeper correction is needed to stabilize their local housing market's economy.

"The economist would not hazard a guess as to how low prices would need to fall in the most overheated markets or how long it would take for them to hit bottom, saying it would be 'pure speculation' on his part or that of anyone else."

But at least this report sounds like the most honest ones we have encountered in months. It is natural to expect the regions impacted the most by the boom will require a more intense correction. But one should not speculate the correction negatively. It is necessary to keep the market in its natural ebb-and-flow cycle.

"What gives health to the economy is sales -- the number of transactions -- not price," Lereah said. "Every 1 percent drop in prices qualifies 50,000 more potential purchasers."

The corrections have lead to one of the most beneficial buyer's markets in recent memory. It took a while for sellers to admit that they no longer controlled the market, but once they did, prices begin to decline which is finally relating to a generation in sales again.

"Conditions for buyers have improved because sellers are flexible now and fixed mortgage are near historic lows," Lereah said. "And sellers who have been in their homes for a normal period of ownership are still seeing very healthy returns on their investments."

New home sales have declined (8.7 percent) throughout most of the country this year due to home builders cutting back on projects and buyers finding better negotiating bargains with pre-existing properties.

"Despite the slow down, however, Lereah is still predicting slight increases in housing prices. For this year, he says the national median for existing homes should rise by 1.9 percent, to $223,700."

Sales are finally starting to rebound as prices slowly appreciate. The market is overall in a decline still but with the very near future prospective of rebounding with vigor and a little more stability.

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