It's not surprising reports of doom and gloom in the housing sector aren't welcomed by those who stake their living on the industry, but that isn't going to make it go quickly, quietly into history.

As 2006 winds down, experts, forecasters and pundits are trying to put a positive spin on change in the residential real estate market, but the boom-gone-bust may have just begun, according to a new, well-respected forecast.

By 2007, anyone who tried to make sense of 2006 by labeling it a fleeting real estate market correction could be too busy scratching their head and wringing their hands to spin fast enough to avoid egg in their face.

According to the 28th edition of a survey of 600 real estate industry experts, 2007 will remain loaded with uncertainty for the housing market as prices continue to shake out, financing costs grow and more potential buyers find a spot on the fence.

"Let's just say, 2007 won't be a standout for the housing sector. Odds favor pricing declines or, at best, stagnant markets," according to the Urban Land Institute's "Emerging Trends In Real Estate 2007".

Not easily dismissed, the report reflects the studied views of more than 600 experts, 404 of them surveyed and 213 of them personally interviewed for ULI by PricewaterhouseCoopers. Among the 600, 34.8 percent were from private commercial/multifamily property companies or developers; 17.5 percent, real estate service firms; 14.2 percent, institutional/equity investors or advisers; 9.1 percent, homebuilders or residential land developers; 6.3 percent, lenders or mortgage bankers/brokers; 5.6 percent, publicly traded commercial/multifamily REITs or operating companies and 12.4 percent listed as "other."

The first chapter's pragmatic title, "Nothing Last's Forever: No More Easy Money" sets the tone. While the tone isn't completely grim, it does smack of shot of cold water in the face.

"Welcome back to reality. Some recent vintage 'priced to perfection' deals could struggle in the future under negative leverage and increasing expenses from high energy costs, rising taxes, and pricey insurance premiums, not adequately factored into 'optimistic' pro formas," the report says.

It also concedes, while those interviewed voiced much moaning and groaning, there was a consensus that the economy has built up enough momentum, to pull housing through to the next real upturn -- a economic switch, given housing was once the super fuel driving the economic engine.

Here's a look at forecast points.

• The change will feel more like an elevator moving sideways or slowly slipping down, instead of going up, up, up. Prices are beyond affordability for many buyers, crippled by higher interest rates, energy costs and insurance premium hikes.

• Hardest hit will be late-comer speculators, recent buyers forced to sell soon and others who are still playing the real estate game like it's 2005.

• Existing home owners, who have a decade of equity gains to cushion them, should fair well, provided higher property taxes, insurance premium hikes, bad mortgage decisions and energy costs don't pull them under.

• Too much supply in markets dominated by investors will continue to give new home buyers the edge, but bailing investors and mortgage defaults could worsen the so-called "correction."

• "The second home market has … slowed to a crawl … enormous price increases got ahead of themselves." A growing number of fence-sitters are waiting for that discretionary vacation property to cost less. "The entire psychology has changed." Over time, however, the baby boomer market will spark more life into second homes, driving up prices. Expect continued corrections in coastal markets and watch for speculators to give up and for over extended owners to get strangled by ARMs.

• The condo market will remain a leading indicator, suffering the most anguish. "Especially avoid developing condominiums in saturated markets such as Miami and Las Vegas."

• That may not be the case for certain locations and types of housing developments. Coastal global pathways, including New York, Washington, D.C., Los Angeles, San Francisco and Seattle remain favored investment markets.

Infill locations -- often urban, but also suburban -- near mass transit, remain attractive. That's due to fuel costs savings that come with the greater convenience afforded by a proximity to frequented destinations.

Published: November 15, 2006

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.