It may not come as news to people tracking the real estate market this past year, but housing prices have steadily increased and will go higher. Some Realtors feel what goes up must come down as evidenced by the feverish housing market examples of the late 1980s, but statistics prove otherwise.
"You haven't seen anything yet," said noted Silicon Valley economist Richard Carlson, President of Spectrum Economics Inc.
Carlson and Leslie Appleton-Young, vice president of economics and research for the California Association of Realtors, were on hand at the Peninsula West Valley Association of Realtors 1997 Silicon Valley Real Estate Forecast luncheon March 3.
Both agreed the strong national and local economy show increasing consumer confidence.
The robust demand for housing, coupled with the phenomenal Silicon Valley job growth, has pushed the regional housing inventory to a 1-2 percent vacancy rate, which in turn has created the strongest sellers' market since 1988.
Both Carlson and Appleton-Young stated, "It's a sellers' market as far out as we can see."
One factor that will dramatically affect the price of homes is the proposed tax change currently going through Congress. If the capital gains tax cut occurs, (Carlson gives 3 to 1 odds it will happen), then people who have been sitting on the fence undecided about whether or not to sell their homes will finally have the incentive to do so.
This will bring more inventory on the market and slow the occurrence of multiple offers, but will not necessarily bring down the prices .
Carlson believes people who sell their homes now will benefit either way as the capital gains tax will probably be retroactive to January 1, 1997. If the tax law does not pass, the current demand for housing is so high homes will continue to sell quickly with many offers, he said.