Housing costs were a frequently discussed topic in 2006 as markets slowed from explosive highs and everyone from consumers to brokers to agents became acutely tuned to their own expenses. Here are some predictions from the Inman News team on what will happen to housing costs in 2007:

1. Home prices: Not up, not down — flat is the operative word for home prices. 2006 was the year for adjustment, and adjust they did: they stopped rising as fast as the price of oil. Without easy money, without ridiculous hype and without speculators, 2007 will see further erosion of home prices.

2. Rents: Landlords are finally having their day, as home ownership loses some of its luster. Rental vacancies are tightening up and property owners can finally push up rents.

3. Real estate commissions: The Internet and a tight home listing inventory made for shrinking real estate commissions the last two years. Real estate agents were discounting each other to nab a scarce supply of listings. But that should end as listing inventory expands and the number of agents joining the industry shrinks. Plus, consumers will be willing to pay more to unload the houses that are sitting with very little traffic or action.

4. Mortgage rates: Interest rates have been up, down and all around. But when you smooth out the curves, they should stay about the same next year, say most experts. This alone will prevent a slowing housing market from becoming a bust.

5. Appraiser fees: The pressure is on as more and more online alternatives are created: Zillow, HomeGain and now Fidelity’s CyberHomes.com, just to name a few. At some point, these automated home valuations will replace the cookie-cutter home appraiser. High-end and complex transactions will, of course, still require appraisers.

6. Title fees: Regulators have kept title insurance fees artificially high. With renewed sunshine on the title industry, title fees could finally feel the pressure and come down.

7. Open-house staging fees: Stagers will be in high demand, as homeowners must schlep more to sell their homes. Stagers will get more elaborate and so will their fees. More listings, more staging: supply and demand will kick in.

8. Construction supplies: Thanks to a slowing market, contractors’ fees and their supply costs will finally come down as the home improvement industry slows and lenders tighten up on credit.

9. Number of Realtors: After 10 years of exploding numbers, the number of Realtors should stabilize with the slowing market and may even fall as the newbies find out that this market will have no mercy.

10. Publicly traded real estate firms: Don’t bet your 401(k) on making a killing on publicly traded real estate. REITs (real estate investment trusts) are already pumped up, and the home builders are coming down to real estate reality.


What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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