June Update-Changing Market Dynamics
"The ability to predict what will happen in the real estate industry is always a challenge for those who attempt to analyze the industry. For the past ten years, skeptics have predicted that the real estate bubble would burst that particular year, yet the market continued to experience tremendous gains.
Despite the current and near-term expected moderation in the number of existing home sales, we believe that the housing market will continue to benefit from expected positive long-term economic and demographic fundamentals. Although we knew the market couldn't sustain an overwhelming pace of growth throughout this decade, we are embracing a return to a more normal level of business, commonly referred to as a stable market, and the smart sellers and buyers are those who will take advantage of it.
...They (clients) need to know that demographics experts at Harvard University's Joint Center for Housing Studies expect to see 13.3 million additional households between 2005 and 2015, with significant anticipated growth in the numbers of immigrants, minority households and echo boomers. Even though home prices are far higher than they were 20 years ago, housing affordability and average household income are also both greater, so people can afford more for a home than they could back then. Combine this knowledge with Global Insight's expectation that mortgage rates will stay below 8 percent for the next nine years-and it all adds up to an excellent time to buy or sell real estate."