The National Association of Realtors had their annual meeting in San Francisco this past week, and the Chief Economist for the NAR, David Lereah, had some interesting assessments for the coming year for the real estate industry. His outlook is cautiously optimistic, recognizing that the red hot growth in real estate will slow, but that the market will continue to do very well.

Lereah has consistently asserted that there is no real estate bubble. He has preferred the term balloon, and has said that, at some point, the air would slowly escape the balloon.

Today, most real estate practitioners agree that the air is leaving the balloon. As Lereah predicted, it is leaving very slowly, but things are slowing. As one San Diego Realtor put it, The real is back in real estate.&br />
Lereah said the market has him & as nervous as a two-tailed cat in a room full of rocking chairs;

He said he believes interest rates will climb .slowly, reaching 7 percent by the end of 2006. To today’s borrower, a 7 percent rate seems exorbitant; however, historically, anything under 9 percent is acceptable, and 9 percent may be on the horizon. It always seems to cycle around.

Sales will slow, as will appreciation, most likely to 4 percent to 6 percent per annum. That is, unless Congress heeds the advice of the President’s Tax Reform Commission.
via Nashville City Paper

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