Predictions For 2007 -- Or, Boy I Hope This Crystal Ball Is Working Better
It's New Years' Day and, like many others, I took a few days off over the holidays. During that time I was fortunate to talk with a lot of people ... from golf pros to teachers, techies to truckers, waiters to bankers. Eventually every one of them asked me pretty much the same question: "What's going to happen with real estate next year?"
To be honest, my crystal ball is just a little cloudy right now. I think it's hard to say for certain what is going to happen in real estate during 2007. But since everybody is offering predictions, why shouldn't I?
Let me begin by saying this: I do not believe we have a true residential real estate problem. The problems that are manifest as real estate problems are actually taxation and insurance problems that have a negative effect on real estate. I believe that if you resolve the taxation and insurance problems, the so-called real estate problems will be resolved by ordinary market activity.
There are a lot of frustrated sellers in the market right now, and a lot of equally frustrated buyers. Resolving the taxation and insurance problems may ease their frustration levels to the point where they go back into the market and we have a return to something resembling normalcy. It would be great if that would take place during 2007.
Given the above position, my predictions for 2007 are actually a series of "If-Then" statements. I think that "If" one thing happens, "then" something else will naturally follow.
If the State of Florida and the various taxing authorities and municipalities in this state can bring property taxes to a level where people can afford to pay the taxes after purchasing new property, then I think real estate looks promising for 2007. This is something that is outside the realm of real estate. Tax policy is a political matter. If you want to make an impact on resolving the tax problems in Florida, let your elected officials know of your concerns and that you want this matter resolved, and resolved quickly.
If insurance executives at all levels can find a way to get control of rates so that people can afford to properly insure their property, then I think real estate looks promising for 2007. This, again, is a problem that is outside the realm of real estate to solve. It is vastly more complicated than most people appreciate and involves business matters, laws and regulations that few outside the insurance field can truly appreciate. At its core, I believe, is the question of profit. We need to find a way to obtain fair coverages and still allow insurance carriers to make a fair profit. On this matter, about all you can do is cross your fingers and hope that somebody proposes something that all parties find acceptable.
If mortgage rates remain affordable, then I think real estate looks promising for 2007. Right now, from the mortgage people I've talked with recently, mortgages should remain affordable. This is a good thing.
If demand stays high, then I think real estate looks promising for 2007. Demand is the engine that drives the real estate market. Mortgage rates are the fuel that power the engine. Both these items look good to me.
If inventory remains high, then I think real estate looks promising for 2007. Right now, there is a lot of real estate on the market. This gives buyers choices in housing that were not available in the last few years when inventories were pretty low. This high inventory gets buyers excited and should bring more buyers into the market and cause properties to sell more rapidly. Of course, that assumes that the tax and insurance problems can be overcome.
If people accept the "new normal" in real estate, then I think real estate looks promising for 2007. The "new normal"? This can most easily be defined as the public's acceptance of the way things are now as being the way they most likely will be for the forseeable future. People need to accept higher prices, higher taxes, higher insurance premiums and all the rest. This means they need to accept that housing costs will command a larger percentage of their income. Once that has been accepted, then things look good for real estate. If they don't accept it, frankly I see a continued slowdown.
Actually, I'm very optimistic that the problems will be resolved and that 2007 will be a great year for buyers and sellers of real estate. To a great extent, the problems we are faced with have political solutions. I think that politicians realize that voters have had enough of "playing politics" with people's wallets and futures. I think they will make the necessary compromises to resolve the problems so real estate can start moving forward again.
I think 2007 will be a great time to be a buyer, that there will be bargains to be had since inventories are so high and mortgage rates are so affordable. I think sellers will find a lot of frustrated buyers who want to buy new homes and income properties. Consequently, I think sellers will be able to obrtain fair market value -- and that's all sellers should really expect.
So, I think 2007 will be a good year in real estate. I'm optimistic about it.
For more information about real estate in Pinellas County, visit my website at www.TheStPeteRealEstateSite.com. And HAPPY NEW YEAR!
To be honest, my crystal ball is just a little cloudy right now. I think it's hard to say for certain what is going to happen in real estate during 2007. But since everybody is offering predictions, why shouldn't I?
Let me begin by saying this: I do not believe we have a true residential real estate problem. The problems that are manifest as real estate problems are actually taxation and insurance problems that have a negative effect on real estate. I believe that if you resolve the taxation and insurance problems, the so-called real estate problems will be resolved by ordinary market activity.
There are a lot of frustrated sellers in the market right now, and a lot of equally frustrated buyers. Resolving the taxation and insurance problems may ease their frustration levels to the point where they go back into the market and we have a return to something resembling normalcy. It would be great if that would take place during 2007.
Given the above position, my predictions for 2007 are actually a series of "If-Then" statements. I think that "If" one thing happens, "then" something else will naturally follow.
If the State of Florida and the various taxing authorities and municipalities in this state can bring property taxes to a level where people can afford to pay the taxes after purchasing new property, then I think real estate looks promising for 2007. This is something that is outside the realm of real estate. Tax policy is a political matter. If you want to make an impact on resolving the tax problems in Florida, let your elected officials know of your concerns and that you want this matter resolved, and resolved quickly.
If insurance executives at all levels can find a way to get control of rates so that people can afford to properly insure their property, then I think real estate looks promising for 2007. This, again, is a problem that is outside the realm of real estate to solve. It is vastly more complicated than most people appreciate and involves business matters, laws and regulations that few outside the insurance field can truly appreciate. At its core, I believe, is the question of profit. We need to find a way to obtain fair coverages and still allow insurance carriers to make a fair profit. On this matter, about all you can do is cross your fingers and hope that somebody proposes something that all parties find acceptable.
If mortgage rates remain affordable, then I think real estate looks promising for 2007. Right now, from the mortgage people I've talked with recently, mortgages should remain affordable. This is a good thing.
If demand stays high, then I think real estate looks promising for 2007. Demand is the engine that drives the real estate market. Mortgage rates are the fuel that power the engine. Both these items look good to me.
If inventory remains high, then I think real estate looks promising for 2007. Right now, there is a lot of real estate on the market. This gives buyers choices in housing that were not available in the last few years when inventories were pretty low. This high inventory gets buyers excited and should bring more buyers into the market and cause properties to sell more rapidly. Of course, that assumes that the tax and insurance problems can be overcome.
If people accept the "new normal" in real estate, then I think real estate looks promising for 2007. The "new normal"? This can most easily be defined as the public's acceptance of the way things are now as being the way they most likely will be for the forseeable future. People need to accept higher prices, higher taxes, higher insurance premiums and all the rest. This means they need to accept that housing costs will command a larger percentage of their income. Once that has been accepted, then things look good for real estate. If they don't accept it, frankly I see a continued slowdown.
Actually, I'm very optimistic that the problems will be resolved and that 2007 will be a great year for buyers and sellers of real estate. To a great extent, the problems we are faced with have political solutions. I think that politicians realize that voters have had enough of "playing politics" with people's wallets and futures. I think they will make the necessary compromises to resolve the problems so real estate can start moving forward again.
I think 2007 will be a great time to be a buyer, that there will be bargains to be had since inventories are so high and mortgage rates are so affordable. I think sellers will find a lot of frustrated buyers who want to buy new homes and income properties. Consequently, I think sellers will be able to obrtain fair market value -- and that's all sellers should really expect.
So, I think 2007 will be a good year in real estate. I'm optimistic about it.
For more information about real estate in Pinellas County, visit my website at www.TheStPeteRealEstateSite.com. And HAPPY NEW YEAR!
posted by Terry Ward at 5:44 AM
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