Home Prices Could Go Up in 2007

Is it possible that the worst is behind us in many housing markets? With builders starting less homes and clearing out their inventories with incentives, what many would call a "supply correction" due to excess speculation might be passing soon. Just like it was hard to call the top of the market until it passed(August 2005) it will be very hard to call the bottom (now??? or soon) until 3-6 months after it has already happened.

This business week article (Biz Week )discusses the Boston Fed's analysis (Boston Fed Link)that house prices might increase next year.

This Just In From Boston ... Prices "Could Keep Increasing"

".........What makes the Boston Fed at least mildly positive on the market? Looking at housing cycles state by state, senior economist Yolanda K. Kodrzyicki and research associate Nelson Gerew conclude that "house prices have rarely decreased in the absence of a state recession."

Here's the tentative bottom line: "Assuming continued increases in personal incomes, an increase in mortgage rates in 2006, and flat apartment rates, an extrapolation suggests that national house price increases are likely to be in the range of 1 to 3 percent in 2006 and 2 to 5 percent in 2007."

By Peter Coy - Businessweek