National Association of Realtor's economist James Smith has broad look at what's coming up in the nation's economy for the next 12 months, and believes that while home sales won't be roaring, they will be chugging along just fine. Says Smith, "If the 10-year Treasury rates stay anywhere near where they've been, fixed mortgage rates are headed for 8.5 percent - and that'll mean adjustable rate mortgages will become even more popular." Smith expects fixed rates on 30-year mortgages to settle in the 8 percent range in a few months when inflation fears diminish.

After setting records four consecutive years, he expects existing-home sales to fall to about 4.89 million this year, compared to 5.18 million in 1999. Home prices, however, should hold up very nicely in 2000 because inventories are low and builders are having a hard time keeping up with demand. The Realtors expect prices to rise about 2.1 percent this year, with the national median existing home price likely to rise to about $135,800 and the median new home price likely to hit $167,300.



Remodeling business rises with home sales tide One of the peripheral benefits of a housing boom such as the nation has seen in the past four years is that other industries tend to get dragged up with it. Such is the case with the remodeling business. According to new figures from Harvard's Joint Center for Housing Studies, the remodeling industry enjoyed a 4.5 percent increase in sales last year as home sellers spent money to update their homes to make them more desirable, and many buyers spent money remodeling after they moved in. Harvard's Remodeling Activity Indicator showed that Americans spent $94.7 billion last year on home improvement projects.



Smarter homes coming! There were a number of announcements that came out during January's Home Builders convention in Dallas that suggest we'll all be in smarter homes in the near future. Builders are expressing more interest in installing high-tech appliances in new homes and, in fact, networker Cisco Systems Inc. believes the market for so-called "smart" appliances will go from around zero today to more than $8.25 billion by 2002. Shown at the Builders convention were things like refrigerators that keep track of what items are used and automatically add them to an electronic grocery list. Clothes washers are being built that will send an e-mail to the resident that it's time to load them into the dryer. Those system ultimately will be wired into home heating and air conditioning, security and lighting systems so that the homeowner can manipulate systems from a distance with no more than a touch-tone phone.

Written by Realty Times Staff