It is not too early to begin to look at the 2008 market and make business plans based on your assessment of future market conditions. It may take a “crystal ball” and some good common sense and not a group of economists. I recently came across an article on WSJ.com that I had filed away; they surveyed a group of economists on the downturn in the housing market. Those polled felt strongly and by a large margin that the housing market would be in recovery mode by December and that we had bottomed out in October. Unfortunately this article was from November 2006. How much more wrong could they have been.

NAR (the most optimistic forecasters in the world) have recently projected 2007 to be below the 6 million resale mark. Most of us in the business knew this in the spring of 2007 when NAR was projecting 5-6% declines; we were seeing in most every market in America 10-15% declines, someone was wrong. NAR is still forecasting a 5.8% increase in transactions in 2008 vs. 2007, and a 2.2% increase in prices. What would you expect out of our trade association but positive news?

The reality I believe is somewhat harsher. Inventory levels in most of the country continue to rise. Buyers are becoming much more aggressive in their offers off of list price. Most people I work with are not too optimistic about 2008 being a better year than 2007, and most expect prices to decline. I hope I am very wrong on this, and the recovery is well on its way. If you can not trust the economists or our own NAR to be accurate, it is back to your own “gut instinct” or “intuition”.

I would really like to hear from you on what your thoughts are for transactions and pricing. I am predicting a further decline of 4-5% off of 2007 numbers in transactions and a decline in sale prices of 2%. If I am wrong at least I will be in good(?) company with the Wall Street Journal and the NAR of 2006.

What do you think? Up or Down?