SANTA ANA, CA -- - Analysis Projects Strongest Markets for Investors in 2006 - First American Real Estate Solutions (RES(R)); the nation's largest provider of advanced property and ownership information, analytics and services; today released a new study entitled "The Real Estate Cycle in 2006: Evaluating Market Position, Identifying Turning Points and Constructing Scenarios," which investigates where the residential real estate market stands today and where it is likely heading based on historical economic information.
The study by Christopher Cagan, Ph.D. and director of research and analytics at First American RES, examines more than 100 metropolitan areas between 1988 through 2005 by analyzing the median sales-price index for existing single-family homes as published by the National Association of Realtors(R). Cagan applied proprietary mathematical techniques in classifying those markets and investigating their present status and likely future behavior. He suggests that markets where prices have not risen rapidly may be the best part of the country in which to purchase or invest during 2006.
During the last several years, home values have risen rapidly in almost every market in the nation. In many coastal areas, prices have more than doubled since 2000. Now prices in most areas are rising at single-digit levels, flattening or slightly declining -- an indication that conditions have returned to normal following a strong bull market. Utilizing current information and assumptions about future prices, interest rates and metropolitan income levels, the study discusses and analyzes the effects and likelihood of five scenarios ranging from strongly optimistic to strongly pessimistic.
"The residential real estate market stands at a pivotal position in the spring of 2006," said Cagan. "Through this analysis, we provide a framework for assessing where the market may be heading to assist real estate professionals with identifying potential opportunities and risks."
The study identifies four market types: cyclical, linear, hybrid and catch-on. Most real estate markets have a long-term price-growth rate of 5 percent or more. Cyclical markets, such as Southern California, Miami, Honolulu and New York City, follow a business cycle pattern of wave-like motion over 10 to 15 year periods, which causes prices to fluctuate by large percentages above and below long-term growth rates. Linear markets, which tend to deviate only slightly from a slow and steady growth pattern, include Wichita, Kan.; Atlanta; Nashville, Tenn.; St. Louis and Indianapolis. Hybrid markets, which show characteristics of both linear and cyclic markets, can be found in Chicago and Seattle. Catch-on markets, or markets that have traditionally behaved in a linear fashion but recently experienced a strong move up or down in prices, are found in Phoenix, Detroit and Las Vegas.
Access to an electronic copy of the study is available at www.firstamres.com. For more information, or to arrange an interview with Dr. Cagan, please call (714) 250-6759.
First American RES, a member of The First American Family of Companies, is the nation's largest provider of advanced property and ownership information, analytics and services. First American RES' database covers more than 2,700 counties representing 97 percent of the nation's real estate transactions. With more than 600,000 users nationwide, First American RES products are used by companies to improve customer acquisition and retention, detect and prevent fraud, improve mortgage transaction cycle time and cost efficiency, measure the value of residential and commercial properties, identify real estate trends and neighborhood characteristics, track market performance and increase market share. More information about First American RES can be found on the Internet at www.firstamres.com.
The First American Corporation (NYSE:FAF), a FORTUNE 500(R) company that traces its history to 1889, is America's largest provider of business information. First American combines advanced analytics with its vast data resources to supply businesses and consumers with valuable information products to support the major economic events of people's lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and opening or buying a business. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within five primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, and Risk Mitigation and Business Solutions -- a new segment that the company formed in 2005 by combining its Credit Information and Screening Information segments. With revenues of $8.1 billion in 2005, First American has approximately 2,100 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found at www.firstam.com.
Contact:
David Schulz
Corporate Communications
The First American Corporation
(714) 800-3298
dschulz@firstam.com
Source: The First American Corporation
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CONTACT: David Schulz, Corporate Communications of The First American
Corporation, +1-714-800-3298, dschulz@firstam.com
Web site: http://www.firstam.com/
http://www.firstamres.com/
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