A review of the 2006 economy and a forecast for 2007 reveal some interesting trends in real estate. While most markets anticipate a cooling down period, it’s important to understand that the hottest markets accelerated real estate to the point where an adjustment is desperately needed.
It’s hard to believe that in 2005, the national average for home appreciation was over twelve percent! The market simply cannot continue to bear that figure, but appreciation will continue in the five to six percent range, and early reports indicate that this year will be among the four best ever in real estate.
It makes sense that the very hottest markets with the very highest prices will see a fall in sales. On the other hand, strong but reasonable markets should actually begin selling faster. Basically, there’s no need for concern if listing periods remain at six months or less. We firmly believe that Vermont and the Bennington area does not see the highs and lows that major metropolitan areas experience. For this reason we don’t have as far to fall when prices do start to decline.
Of course, unknown factors can affect these trends, such as oil prices, inflation and interest rates. However, business spending remains robust in 2006, and a strong economy is anticipated to be a positive influence on real estate.
While interest rates may rise a couple times in the coming year, they should still remain at or below seven percent. Considering rates were about double that twenty years ago, you can see that we’re still very optimistic about home ownership!
Categories: Buying, Selling, Bennington VT