Sellers will be adjusting home prices to accommodate for a slowing housing market in the coming year.
And buyers will have more options than they've had in nearly a decade, according to analysts.
Realtors in Lodi are maintaining a positive outlook, with the expectation that a large menu of loan choices, decreased home prices and a low mortgage rate will encourage buyers to invest in a home.
But the real key to doing well in the slowing market is for sellers to adjust home prices accordingly, said Larry Underhill, the incoming president of the Lodi Association of Realtors.
Underhill compared the housing market to a balloon that has slowly been losing air, rather than the proverbial bubble bursting.
There has been some scare that there will be a housing collapse similar to that of the early 1990s, but Underhill said that isn't the case. Currently there is about a 7-month supply of homes in California, compared to a record-high inventory of 20 months in the early '90s.
He said buyers are still showing a lot of interest in the Lodi area, so he expects 2007 to be a good year for Realtors if sellers maintain reasonable pricing.
However, affordability could still be an issue for those looking to move to California from out of state, said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.
He said the Central Valley, which extends from Sacramento to Bakersfield, will fare better than other parts of the state because of a comparatively low median price of $340,000. Statewide, the median home price lies at $550,000.
While this makes Lodi more appealing to Californians, it can be daunting to those looking to move from out of state, where the median home price remains $220,000.
Kleinhenz said the cost can be prohibitively expensive for first-time homebuyers. But the recent increase in condominium and town home development provides an affordable solution for those seeking a long-term investment in real estate, he added.
Forecasts predict a 7 percent decrease in home sales in 2007, which can be considered a relief when compared to the 23 percent decline seen in 2006, said Kleinhenz.
"But remember, this is following record high sales in 2004 and 2005," he said. "This is a normal real estate cycle."
For renters and landlords, a similar slowdown is expected, according to Eileen St. Yves, who sits on the board of the San Joaquin County Rental Property Association.
She said it can be difficult to find qualified tenants because lower income families are buying homes. In addition, there are more rental properties available because those who can't sell their homes often turn their home into a rental property as a way out.
St. Yves said that just as with selling a home, landlords should price their rentals for a slowing market.
She said to do some research before pricing a rental property. Check other rental prices in the area, crime rates and income levels to make the property more affordable, she said.
If a rental property is priced the same in a less desirable neighborhood as in a good location, it probably won't rent, St. Yves said.
"In 2007, the most important thing anyone can do is price right," she said.
First published: Wednesday, January 3, 2007