Loading ...Ok…here we are in the first few days of the New Year. Along with the deluge of diet and health club ads we get predictions for what this year will bring for the Pleasanton area and East Bay real estate markets. We know one thing for sure… there is no consensus. Some see a market much the same as 2006, others see stabilization and more activity, and still others see another year of soft conditions and price deterioration.
Here are three different opinions from experts as reported in the Contra Costa Times
Most residential real estate professionals are calling 2007 a transitional year, for better or worse. Although there’s some disagreement about what the new year will hold, the only consensus is that it will not be a year of booming appreciation or sales like those seen in the past five years.
The majority also said that home prices will drop slightly in 2007, but sales may stabilize to historically normal levels. Most said that sellers have to be more realistic and buyers should be warned that there is no huge decline in prices projected, even by the most objective economists.
The Economist
Ed Leamer,Director
UCLA Anderson Forecast, Los AngelesComfortable in the role of real estate agent bugaboo, Leamer, UCLA Anderson Forecast’s director, rarely holds back on bad news. However, Leamer said he didn’t foresee the residential real estate market changing dramatically in 2007.
“We expect that existing home prices will continue to slide just a little because buyers and sellers are looking in opposite directions,” he said.
Leamer said that new homes will fare better in 2007 with more competitive marketing and pricing.
Price appreciation will not be considered normal, meaning 5 percent or 6 percent a year, but probably closer to 2 percent or 3 percent, he said. This period could last from a year to five years.
The problem with home sellers is that many aren’t seriously selling but testing the market to see whether they will get their ideal price, he said. There’s no immediate need to sell, so they won’t.
He said buyers should also stop thinking that the longer they wait, the better the deal.
“Prices will come down a little, but they will come down so slowly the strategy of waiting and waiting will not work,” Leamer said, adding that in the past, prices dropped 25 percent — but over five years. “They need to lock in that mortgage rate and stop reading the real estate page.”
The Real Estate Industry Spokesman
Robert Kleinhenz, Deputy Chief Economist
California Association of Realtors, SacramentoKleinhenz said the East Bay’s real estate outlook would track closely with that of the state, only with slightly higher price appreciation because of the Bay Area’s leaner inventory.
“I would be surprised if we saw any huge deterioration in home prices, but I would expect some small declines,” he said.
Kleinhenz said he expected interest rates to stay fairly low throughout the year, a sign the housing market could hold steady or improve. “I would suspect in the second or third quarter the Federal Reserve Bank may cut rates,” he said.
Prices won’t be languishing into the next decade, Kleinhenz said. “I think if the economy continues to expand and does not head into a recession, we shall see the housing market stabilize in 2007,” he said.
The Builder
Drew Kusnick, Territory President
KB Home South Bay, Pleasanton
Kusnick said he’s much more optimistic about the coming year. The past six weeks have been profitable, and he has been able to raise prices on new homes after six months of cutting them.
“I think it will be a transitional year,” he said. “I think we’re seeing prices stabilize right now and seeing more people buying. Now, there seems to be some real demand in the marketplace.”
The decrease in inventory and more buyers starting to look serious have contributed to this, he said. “I think we’ve seen the depths of where we were going to go,” he said. “I think the key factor is buyer confidence and demand.”
Kusnick said the market has picked up fastest in communities in the South Bay, where there’s less competition, followed by the Tri-Valley and competitive East Contra Costa County.
Nearly everyone agrees on one thing. There will be no strong price appreciation this year. But aside from that, there is a diversity of opinion on the local real estate market. What is my opinion? I will give you my opinion soon
Popularity: 4% [?]
RSS
East Bay Market Outlook