The 2007 economic outlook looks bright.  According to the National Association of REALTORS® (NAR), the country is expected to see a lower rate of inflation, a dip in GDP and about a 10th of a percent increase in the unemployment rate.  NAR economists also project an average of 6.6% rate for a 30 year, fixed mortgage.  They expect to see a very slight increase in existing home prices, a slight dip in existing home sales and a slight drop in new home sales.

Central Texas looks much better than the national outlook.  Terry Wood of Land Mortgage expects rates to rise slightly early in the year and to drop later and to remain under about 6.85%.  New home sales in the 5 county Austin area picked up dramatically in 2006.  Residential Strategies reported a 10% higher number of new home starts during the year as compared to 2005. 

The Texas Workforce Commission stated that 24,800 new jobs were created in the Austin area for the 12 months ending in November, 2006.  Economist Angelos Angelou is projecting our area to add about 20,000 new jobs and 40,000 new residents in 2007.  New residents should help to keep real estate values higher than in previous.

There has been speculation that prices may actually drop a little in 2007 in the Austin area.  One concern is that the number of listings has gone up over the last few months of 2006.  Much of that was because new homes were not selling as quickly as earlier in the year.  The number of Austin home listings had been declining month after month through the summer months.  This had prices increasing.  If the number of active listings doesn’t start going down again, prices may flatten out or even drop a little.

As always, I’m talking about a 5 county area that includes Austin, Round Rock, Cedar Park, Leander, Georgetown, Bastrop, Lakeway, Kyle, Buda, Manor, Lakeway and Spicewood.  There will be pockets within each county that are hot and pockets that will be cooler.  So what I’ve written above is a generalization for the entire area.  If you want specific information for any sub-market within the Austin MLS coverage area, contact me.