Is it time to panic? Housing sales are down, housing prices are lower in key markets, and some experts are saying the sky is falling.

Housing has propped up the nation's economy for nearly five years, following the collapse of the tech sector in stocks and the brutal events of 9/11. In fact, housing has broken sales records for five years consecutively, suggesting to many that housing's winning streak is about to come to an end.

Two recent reports have housing investors running for the exits -- the National Association's monthly report that housing sales slumped 3 percent in December -- despite setting a record for over 7 million housing units sold for 2005 total.

But then the California Association of Realtors announced that home sales nose-dived more than 17 percent in the same month.

But hold the phone. Your house is not going to implode, explode or disappear like stock options in a bad IPO.

Let's look at the big picture -- there's a lot more good news than bad for homebuyers.

The Census Bureau just reported that new home sales increased in December. Meanwhile, interest rates have softened to pre-December levels. Also, housing prices continue to shoot upward. In 2005, the median national price was $208,700, up nearly 13 percent (12.7 percent) over home prices in 2004. ($185,200.) Prices also continued to climb in California, where December prices were still up 16 percent over last year.

The NAR's chief economist David Lereah says there's no reason to panic. Not only was a market adjustment expected -- it's healthy.

In an exclusive interview with Realty Times, Lereah said this: "There is a transition taking place in most of the nation's hot housing markets: transitioning from a sellers' market to a buyers' market. In that transition, home sales drop and after some time, price appreciation follows."

But he says -- the sector still exhibits solid fundamentals: low rates, lean supply and healthy demand. What is transpiring to date is the exit of investors from hot markets. That is exacerbating the fall in home sales. But a falling market share of investors is good -- it's almost a cleansing -- for the housing sector. It takes the speculative and risky element out of the equation.

So where does that leave housing in 2006? "It will be a down year," says Lereah, "but it will leave us a great deal healthier to begin 2007."

Realty Times has been saying the same thing for weeks -- there will be some pullback in the market, but then you'll see buyers swooping down on good deals in housing again. Why? There's still no better place to put your money.

Published: January 30, 2006

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.