While many economists and housing market analysts are forecasting a very bleak year for housing in 2007, a University of Alabama real estate expert predicts a good year for Alabama’s housing market.
Although the housing market began to implode in mid-2005 and continued to cool nationwide through 2006, Dr. Leonard Zumpano, director of the Alabama Real Estate Research and Education Center at UA, says Alabama’s robust economy is a good sign for the state’s real estate market.
Nationally, however, the inventory of houses for sale is so large it will take two years for the housing market to stabilize, Zumpano says. Some analysts are worried about the health of the economy if the housing sector continues to shrink because real estate expenditures are such a large part of the gross domestic product.
Despite cutbacks in new home construction, it will take time to absorb the large inventories, which makes many analysts believe the housing market will remain weak well into next year. Large inventories of both new and existing properties will put pressure on sellers to lower prices in the face of slowing demand. The sooner home prices fall, the faster the housing market will begin to stabilize.
While these statistics paint a pretty gloomy picture, not all of the nation’s housing markets are depressed. The biggest declines in sales and prices have occurred in the markets that also experienced the biggest gains in new construction and housing prices. It may take two years or more for metro markets like Miami, Las Vegas, Boston, Washington, D.C., and many West Coast cities that saw triple digit increases in price over the last five years to fully recover.
Alabama’s housing markets, like many others, remain relatively stable thanks to a strong economy and low unemployment.
The number of homes for sale in Alabama set an all time record in October 2006.
Given the large supply of homes on the market, Zumpano expects some price moderation and slowing sales into 2007.
Source
Dr. Leonard Zumpano, 205/348-7499, lzumpano@cba.ua.edu