Two of the largest home builders in the nation addressed their shareholders this week. Obviously the state of the housing market is very, very important to them and they keep a close eye on things. So there is generally something to be learned from what they say.

Usually you have to start by filtering out the spin, but that wasn't the case with D R Horton's CEO, Donald Tomnitz. He said the market will "suck" in 2007. No spin there! Mr. Tomnitz' biggest concern is the tremendous amount of inventory still sitting out there.

His counterpart at Toll Brothers was much more optimistic, however. Robert Toll noted that in the last five weeks contract cancellations have dropped from 36% to 16%. He hopes Toll Brothers can burn off most of its excess inventory within five months if this trend continues.

Now, neither of these predictions is ridiculously rosy. So no one should assume that the spring market is going to make everything sell like crazy again. But it is interesting that Robert Toll now talks about the market "approaching" bottom since six months ago he said it had hit bottom. It's also interesting that Robert Toll's brother, Bruce, has sold $47 million dollars in the company stock since September. He certainly doesn't seem to believe a turn around is right around the corner!

I'll put a little asterisk on all of this with another warning that all real estate is local. But both Toll Brothers and D R Horton do business in this area.  And the greater DC market definitely figured into the predictions they provided.

My own prediction is that 2007 will be, once again, a bumpy ride!

Having taken a break for Christmas and for nursing of a very sick pet, it's time to get back in the swing of things in the real estate world!

I know many of you are wondering what the new year will bring for the real estate market. I don't claim to have a crystal ball and make no guarantees. Remember the old saying, "I don't make the news, I just report it!" That's how it works with the market as well.

There was an radio interview with Nicholas Retsinas from Harvard University's Joint Center for Housing Studies. The interview was to ask him about the outlook for 2007. Bear in mind that Mr. Retsinas has been pretty bearish on the markets overall and that no doubt remains true as he looks forward. He does agree that the market appears to have bottomed out. However, he sees it staying at the bottom for most, if not all, of 2007. He sees a year of continued slower sales and no increase in prices. According to his projections there may be a few overheated markets where we'll still see additional small price reductions. But for most of us, it will be status quo in the new year.

I don't know how accurate Mr. Retsinas' forecast is, but I don't see any economic factors or real estate market developments that would tell me he's dead wrong.

So, it's your turn to play prognosticator! What do you project for the year ahead?  Are you bullish or bearish? More sales? Higher prices, lower prices, or more of the same? What will 2007 bring for the No. VA housing market? I look forward to your input!

Tomorrow's Washington Post will contain an interesting article. The author has tracked a local broker's prognostications on the real estate market over the past couple of years.

While the broker in question has been consistently wrong and consistently overly optimistic and may deserve some scorn it's probably fair to point out that there were economists on both sides of the fence on this.  This broker has lots of company across a wide range of professions.

But it does raise an issue of when does dogged optimism become a disservice to your clients? While I can't tell you what the answer is, I can tell you it's something I wrestle with on a regular basis. If you're not optimistic by nature you probably won't last long in this business. But that may mean that we need to work harder at taking off the rose-colored glasses in order to serve our clients by giving them a true picture of current conditions.

Read the article for yourself.

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/08/AR2006120801682.html?referrer=emailarticlepg

What do you think? Should the broker be run out of town on a rail? If you're an agent, how do you balance optimism and realism when trying to give your clients the best advice?