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Housing Market Suffocating Under Dense Forecasts

(The United States' housing market has been under much stress the past year and feels the weight mounting more every month as new reports are released.)

The obvious concern involved with these numerous reports is the future of the housing market, or rather what direction it appears to be heading.

Since one of the biggest housing booms in U.S. history (2000 to 2005), the current market has been slumping with mixed projections of how long or deep the slowdown will become. As 2006 nears its end, earlier predictions of the 2007 market appear to have been on the conservative side.

Broderick Perkins' article, "Housing Consumers Suffering Information Glut," written November 6, 2006 explains how the housing industry receives worse news in just about every report.

"Housing consumers appear to be coming down with a case of cognitive dissonance caused by uncertainty over a glut of gloomy housing market reports that follow one of the greatest booms in history."

Homeowners and investors have to make a crucial decision within a couple of months concerning their property; to sell or hold on. Many homeowners got caught up in the latest boom and may have purchased two properties, when even one was unaffordable.

As interest rates have risen and the adjustable-rate mortgages, which were very popular among people who did not have the necessary finances to purchase a home, are about to set to the higher rates, homeowners have to decide how long this downturn in the current housing market is going to last. Should they refinance or sell?

"Three weeks ago, an AOL-Associated Press Real Estate poll reported nearly half, 49 percent, of Americans were still under the impression that housing prices in their regions will rise in the next two years."

The same survey also revealed that 50 percent of Americans did not believe their home is overpriced and therefore should not decline in price.

This AOL poll was produced in September, a month before the latest forecast released by Moody's Economy.com,," which stated that median home prices in 20 metropolitan areas would "crash" by 10 percent or more by the end of 2007.

"It also forecast 'measurable' price declines in 70 markets not already experiencing declines, in addition to the 30 markets it said were already experiencing price declines. "With the 100 markets representing half the housing stock in the nation, the stage is set for 2007 to become the year of the first national price decline since the Great Depression, the report said, with price declines expected to continue into 2009."

However, not everyone believes the housing market is in for a crash and in fact, believes that its correction phase is already coming full circle.

Certain reports have disclosed that new homes sales rose in September due to the already steep price declines.

"When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market, and sales will be at more normal levels in the wake of the unsustainable boom that we saw last year," David Lereah, NAR's chief economist said.

The two sides of the fence concerning the immediate and long term future of the U.S. housing market are vast. The abundance of information concerning the market may prove to be just a crazy uncle who tells a different story of the same events every time.

Whatever you decide to do, the earlier the decision, the more you can financially plan around it.

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