2006: Record Home Sales Predicted for 2006

As the national real estate market began to slow down at the end of 2005 experts raised their eyebrows and started to debate the meaning of the increase in mortgage interest rates. Forbes Magazine, The Wall Street Journal, Realty Times and many other financial publications have printed positive and negative interpretations of the most recent shifts in the real estate market. Despite a few worried predictions, most analysts see the current market shift as a correction or adjustment, not an indication of trouble to come. The National Association of Realtors ® (NAR) even predicts record home sales for 2006.

Although the NAR admits the Pending Home Sales Index shows the real estate market slowing down, on December 12, 2005 they published the article Historically Strong Home Sales Expected in 2006 by Walter Molony. "The housing market for 2005 is headed for a fifth consecutive annual record", writes Molony, "and sales activity in 2006 is expected to be the second best year in history, according to the National Association of Realtors ®." NAR’s chief economist, David Lereah, is quoted as saying "The slowdown amounts to a tapping of the brakes on a hot market. Home sales are coming down from the mountain peak, but they will level out at a high plateau – a plateau that is higher than previous peaks in the housing cycle. This transition to a more normal and balanced market is a good thing."

Realty Times writer, M. Anthony Carr states in his article Statistical Analysis Eases Bubble Talk, Shows Rents Growing from December 23, 2005 that "the real estate bubble isn't really a bubble, hasn't burst and is more likely just seeping out some air." Carr continues, "There are some very strong markets taking a breather, but by no means has any bubble popped."  "The softening", Carr states, "is more like a return to a normal market, not a bursting of a market."

E-mail Kevin@breakwatermortgage.com for more information on current mortgage lending trends for the real estate investment industry.