NAR Speculates a 1.3% Decline in Home Prices in 2007. So, Why is the Bay Area Still running Strong?

Thanks to pbo31 for the photo

The National Association of Realtors has just adjusted its forecast for the real estate market downward. This comes off of the June 5th news, that Federal Reserve Chairman Ben Bernanke told a group of bankers via satellite, “On average, over coming quarters, we expect the economy to advance at a moderate pace, close to or slightly below the economy’s trend rate of expansion.” This news was contrary to the expected interest rate cuts the markets was expecting this summer, and residential interest rates went up sharply this week.

So, how does this all relate to the Bay Area real estate climate. I would first, recommend you read my past post entitled California Real Estate Data Study Part #2. This will show you that historically interest rate hikes have caused stagnation in our Bay Area markets, but not a tremendous amount of depreciation. Nationally I expect we will continue to see subsidence in the real estate market, but locally I expect this news will have a more moderated effect.

But, the proof is in the pudding, so check out Curbed SF blog’s opinion to see how San Francisco is doing. There article illustrates nicely that our high-end desirable property market still has some legs.