My Fall/Winter 2007 Market Predictions

So depending on who you listen to, and there are many opinions out there; predictions for real estate for the remainder of the year are a mixed bag at best.

You have some people predicting further gloom and doom. The spectre of increasing foreclosures and further fallout from the sub prime mortgage market has buyers wary. Certainly concerns over the falling value of the American dollar as well as concerns about inflation and growing concerns about more escalation in the Middle East spurs even more concerns about what is going to happen.

But let's face reality people. If the housing market doesn't pick back up, we could very well see ourselves on the way to an economic nightmare.

Of course, landlords are happy. Based on some current statistics, occupancy rates are in the mid to high 90 percentile in rental properties, (and for any of you who didn't believe me when I told you to buy multi-unit flats over the last several years then, there you go!); landlords, as a result, have been able to hike rents to their highest levels in years. So even though the rental prices are increasing at a pace where, once again, it makes more sense to buy, and even though rates are still low and over inflated real estate prices are receding; people still aren't buying houses.

WHY?

Where are all the buyers?

I believe they are out there and I believe they are all waiting for something, some big sign that it is OK to come out. Just like in the Wizard of Oz when the Munchkins realize the witch is dead, the fearful little people are hiding out looking for their Dorothy.

Or, perhaps home buyers are more savvy than anyone thinks. For what it's worth, here are my predictions:

I believe that the demand has not shriveled up and blown away. On the contrary, I believe there is a lot of pent up demand out there and plenty of people who qualify for loans despite the tightening of lending restrictions. Additionally, I think these people will benefit from the government coming in and expanding FHA backed loans and this will go a long way to stabilize the market long term.

The fact is that there is enough inventory out there that these buyers are waiting. They are patient. They do their research. And the smartest ones are waiting for the Winter to make their move. Particularly in states like Illinois where there can be harsh weather conditions that keep buyers away; the smart buyers are looking to find the wounded and limping sellers in the toughest season and it will be, at that point, the deals will start to happen. Sellers will make concessions they would never have dreamed of a year or two ago and the buyers will benefit from all of the market instabilities. I believe there will be a short run up in the Winter market that will lead to a roaring comeback in the Spring. That's when the carpet baggers, or the fearful Munchkins if you will, recognize that there has been a divine sign from the risk takers and will take that as their cue to strike.

If they lower rates further at the next Fed meeting, then I'm confident we can expect a scenario like this.

The bottom line: If you are looking to buy a piece of property, this might be the time. Particularly if you are looking at this as more of a long term investment which is what really makes real estate a winner. The days of short term gains may be long gone but if you are looking for a home or an investment that you will be holding as part of a portfolio; I sincerely think that this is going to be one of the best opportunities we've seen in years and, quite possibly, for years to come.

Time will tell.