Price cuts will help home sales in 2007

Most housing markets experiencing slowdowns aren't facing fundamental economic problems like job losses and out migration and will see prices correct, rather than collapse, in 2007.

That was the outlook of housing experts who participated in a conference call discussion Monday, "Housing Forecast 2007: Inside the Crystal Ball," moderated by Inman News publisher Bradley Inman.

Barring an unforeseen jolt to consumer confidence or a sudden rise in interest rates, panelists predicted that nationwide, the volume of home sales in 2007 will be similar to or slightly below 2006 levels. But in order for that to happen, prices will have to come down in areas that saw rapid appreciation during the boom years.

A "good solid price correction will bring buyers back into the market," David Lereah, chief economist for the National Association of Realtors, said. The economy, although not "robust," continues to grow, he said, and a combination of wage gains and price drops will "make affordability better in many areas of the country."

Although 75 percent of the country will "probably be in expansion mode" in '07, Lereah said, "the real big boom markets will have a prolonged correction ... (and) it's anybody's guess how far prices have to drop to get that correction."

Lereah predicted home sales will hold at 6.4 million in 2007, down slightly from 6.46 million in 2006 and 7.07 million in 2005. A 50-basis-point increase in interest rates in 2006 might have put a deeper dent in sales, he said."

I'm breathing a sigh of relief," NAR's top economist said of indications that sales may have bottomed out. "

Here in our Bradenton - Sarasota market the median sale price is 22 percent lower than one year ago. Sellers who are willing to cut their price are having good success.
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Bradenton Real Estate