Excerpt from Los Angeles Times article in Business section 12/1/06:
Data have a growing number of analysts saying the worst may be over for the sector. Although data released Thursday showed U.S. homes prices making their smallest quarterly gain in eight years, some forward-looking indicators point to a stabilizing residential market. “While this real estate cycle has yet to play itself out, we are skeptical of the dire warnings of pundits.” Zachary Karabell and Daniel Chung, analysts at investment firm Fred Alger & Co., sayd Wednesday in a client note.
They joined a small but growing chorus — including Federal Reerve Chairman Ben S. Bernanke and his predecessor, Alan Greenspan — in saying the sector might have bottomed out. Recent drops in bond yields, which in turn have lowered mortgage rates, are helping to keep the housing sector from free-falling, some analysts say. The average rate on a 30 year fixed-rate mortgage in the U.S. fell to 6.14% according to mortgage giant Freddie Mac, which was the lowest rate in 10 months, and below the year ago rate of 6.26%.
“The transition from sizzling markets to normal or weak markets has been orderly so far, and recent drops in interest rates lessen the likelihood that precipitous changes will occur,” said Patrick Lawler, chief economist of the Office of Federal Housing Enterprise Oversight.
In California, prices in the third quarter rose 10.2% year over year, making it the 16th best performing state for home values, said the federal housing office, … and prices ticked up a scant .62% (over the previous quarter).