Economic forecasts for 2006 are hitting the wire. With respect to 2006 housing prices, Wells Fargo is forecasting a 5.7% increase for Northern California, while FORTUNE is forecasting an anemic .1% growth for San Francisco in 2006 (-2.9% in 2007). From FORTUNE:

Nationally, the overall outlook seems reasonable: 7 percent appreciation for 2006 and flat for 2007. But markets that have seen the greatest appreciation over the past five years appear to be vulnerable.
Indeed, at some point in the next two years, according to the forecast, a third of the nation’s 100 largest metro areas (accounting for 60 percent of the U.S. population) are expected to see modestly falling house prices.
Real estate bear markets often come in the form of steady declines over many years, rather than sudden sharp drops…As inflation gradually gnaws away at the value of nominal home prices, regular folks might not take much notice [ed: emphasis added]. But in the long run the loss of wealth becomes all too real.
For newcomers to the market and those with low-money-down deals who may have overleveraged themselves with adjustable-rate mortgages, even a modest downturn could mean financial jeopardy.

So keep reading SocketSite and avoid becoming one of those aforementioned “regular folks”…
Exclusive forecasts for the 100 largest markets [CNN/Money]
Wells Fargo Northern California Economic Report – pdf [Wells Fargo]

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