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(EMAILWIRE.COM, January 28, 2007 ) SACRAMENTO, CA -- Many people in the United States are hoping that the downturn in the residential housing market is coming to a close and that its effects will not drag the economy into a prolonged recession. However, analysts expect the housing sector to be a continuing drag on the American economy for at least the first half of 2007. The unfortunate truth is that the housing industry is in its toughest downturn since the recession of the early 1990s. Speculators are partly to blame for the recent run-up in prices in the residential real estate market. As investors flooded into the real estate market after the crash in technology stocks, a “prices can't go anywhere but up” mania seemed to prevail. People who actually planned to live in the homes they purchased were seduced by high home values that seemed to continually rise. The bad news is that many people who bought homes in 2005 and 2006 now owe more to their lender than their home is worth, especially considering the costs involved in selling a home. David Seiders, chief economist of the National Association of Home Builders, believes that 2007 will see depressed home prices as home builders work hard to sell their glut of unsold homes. His organization reports that up to 60 percent of home building companies are offering large incentives to buyers to get their properties sold. Additionally, more than 50% of builders now offer to pay closing costs. Seiders added that he believes that new home construction will fall by 14 percent in 2007, following a 12.9 percent decline in 2006. While home prices for most of the country did indeed rise in December of 2006, the West actually saw prices continue to fall. “The residential housing market in California was, to quote the great Alan Greenspan, irrationally exuberant during the past several years,” said Patrick McGilvray, J.D., President of http://www.thehomebuyingcenter.com. “Many people bought homes because they felt as though they would be priced out of the market where they lived, especially in the central valley of California. Outside investors helped create a frenzy and buyers rushed to unconventional forms of financing such as adjustable rate mortgages with low teaser rates just to get in a home.” He adds, “I don't believe we'll see the bottom of the housing market for some time.”Contact:Patrick McGilvray, J.DTel: 916-920-3278 http://www.thehomebuyingcenter.com
Patrick McGilvray, J.D.
manny@thehomebuyingcenter.com 
Source: EmailWire.com
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