2007 Housing Trends: The Market

By: Kris Kombrink

First in a three part series, I'll share some interesting insight from various publications, experience, and trends in our local Chicagoland residential real estate market.

Market timing. Many buyers and sellers on their own timelines in 2006 missed opportunities by not recognizing the ebb and flow of the real estate market. Spring is a high market with the most demand by the largest number of buyers. Summer is a good market, fall is fair, and winter is the remnant market with left-over buyers and sellers from the high, good, and fair markets.

Savvy buyers. With interest rates historically low and pent-up demand from a soft year in 2006, the deals and lack of frenzy won't last long. "Deferred demand" from 2006 could ignite a mini-frenzy in some markets.

First-time home buyers. High home prices have driven many first-time home buyers out of the market; but falling prices in many areas are bringing these buyers back.

Homes that are priced right. It isn't the boom market of 2005, as evidenced by the sold comparables from the last six months. Forget cocktail party chit-chat when all you heard was record prices and the shortest market times in U.S. real estate history.

Borrowing costs. Julie Haviv, Reuters, reported last week in USA Today that 'Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.98%, down 0.15 percentage point from the previous week, lowest since the week ended Oct. 7, 2005, when it stood at the same level. Interest rates were also below year-ago levels of 6.32%.'

Better situation for Buyers. In the same article, she quoted Dean Maki, chief US economist at Barclays Capital in New York. 'The decline in mortgage rates and the slowing in home price appreciation, along with the build-up in inventories, have led to a much better situation for home buyers through increased affordability as well as more inventory to choose from,' he said. 'Households are saying on surveys that home buying conditions have improved notably, and that has coincided with the stabilization in home sales.'

Baby Boomers. Keep your eye on the 'baby boomer' group, too, as they begin to downsize, creating another boost in home sales soon!

In parts two and three of this series we'll discuss what's in and what's out in today's real estate market.

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