by Jeanette Joy Fisher
Does all the media negativity
cause you to turn away from real estate investing? Take a look at what
leading economists say about the real estate market.
Statistics Challenge Pessimistic Media Coverage
We've all been bombarded recently by reports in the various
media about how the real estate boom of the past few years is over. Whether you
read it in the newspaper or a magazine or see it on television, it seems as if
the media has decided the real estate bubble has burst and the housing market
is in the initial stages of a major swoon. Not so fast, say a number of leading
economists who are challenging the negative view being portrayed in the media.
If you look at the numbers, they seem to back the opinion of
the economists. For instance, the median home price across the country has
dropped only 1.7 percent in 2006. That statistic certainly doesn't signify a
bust in the real estate market. They way property values have been increasing
over the past decade, that figure is more of a bump in the road than a major
disaster. Most homeowners are still far ahead, even with the slight decline in
home prices they experienced this year.
America's Housing Market
According to most economists, America's
housing market is simply undergoing a badly needed price correction after five
years of after five years of record-breaking sales and double-digit
appreciation. It's really more of a confirmation of the soundness of our supply
and demand economy than the catastrophe being reported by the media.
Even the Federal Reserve's vice chairman, Donald L. Kohn,
recently told a group of New York analysts that the Fed expects the recent
housing correction to be much less dramatic than the media would have us
believe, and that the correction will be relatively short-lived. Interestingly,
Kohn's speech received hardly any mainstream media coverage. Kohn told his
audience that the current downturn may actually be good for the economy as a
whole, because it represents a chance for America's supply and demand system to
rebalance in areas that have seen dramatic increases over the past few years,
allowing buyers who may have been priced out of their desired neighborhoods to
begin looking for homes again.
Economic Factors
There are other factors that may also spur a fairly quick
market recovery, including the number of new households being formed and an increasing
population. Kohn believes that the inevitable turnaround should begin
relatively soon. Statistics from the National Association of Realtors (NAR)
also would seem to back up Kohn's optimism. Kohn's same optimism is also
supported by the fact that long-term mortgage rates are only about a percentage
point above historic lows.
The recent decline in both gas prices and the country's
unemployment rate both indicate that Americans are better positioned to make
their house payments. To further debunk the doom-and-gloom predictions of a
housing swoon, the Fed has stopped raising interest rates, as well, which
indicates that they are comfortable with the situation.
So the next time you turn on your television and hear about
the catastrophic condition of America's
housing market, remember that you can't believe everything you hear. The actual
figures simply don't support what the media is reporting.
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Copyright © 2006 Jeanette J. Fisher
Lake Elsinore Real Estate