Real Estate Cools in 2006

Economists think that 2006 will be the year for a settled real estate market. Slowing in the market is not necessarily a bad trend, tending to make the buying market more stable and mortgage rates more affordable. Five of the leading economists stated that 2006 will still be strong, but not near the up and down ride of 2005.

Three of the economists forecasts a drop in new and existing home value, steadying the market. Three also said that the fixed rate mortgage will come back as lenders drop rates to become competitive. Only one economist thought that fixed rates would continue to rise, hitting a forecasted 6.7% by the end of 2006. All five economists agree that appreciation will drop by 4-6% in the coming year, a marked slow from 2005, but a healthy level of activity. All also agreed that the investor market in “hot areas” such as California and South Florida may skew results, but that all in all a general decrease in activity and productivity should begin to regulate the vastly altered mortgage market of 2005.