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HOMES | A strong economy and affordable mortgages will mean RISING PRICES our survey shows.

THE AMERICAN Dream of homeownership enters the new millennium more fulfilled, and fulfilling, than ever. A record 67 % of Americans own their own homes, and steady increases in value are credited with fueling not only a real sense of prosperity but also a willingness to spend that is driving our humming economy.

Yes, the surging stock market of the '90s gets a lot of credit for that, too. But no less an authority than Fed chairman Alan Greenspan sees our homes as a more powerful force behind the good feeling and loose purse strings. "The general experience of homeowners is a modest but persistent rise in home values that is perceived to be largely permanent," Greenspan explained in a November speech. "This experience contrasts markedly from volatile and often-ephemeral gains in stock-market wealth." And we can expect more of those modest but persistent gains well into the 2000s.

The number of home sales will almost certainly take a breather from 1999's breakneck pace. About 4% or 5% fewer existing homes will be sold this year compared with the 5.25 million sold in 1999. New home sales will fall a little more, by more than 6%, to about 868,000. Still, prices will climb as demand continues to outstrip supply.

Homeowners in many cities, in fact, will see their home values increase at more than double the inflation rate. Check the table on page 96, prepared for Kiplinger's by economists at DRI/ McGraw-Hill, to see the prospects for your hometown. DRI's forecasts are for the median home price--half will be more expensive; half less. But practically all homeowners can expect solid appreciation this year.

Economists for Freddie Mac and Fannie Mae, the companies that buy most mortgages and repackage them as bonds, expect home values to rise an average of 4.5 % this year. That's about the same as in 1999--and well above inflation, which is expected to stay below 3 % this year.

Not enough sellers

ASLOWDOWN IN SALES may actually be welcomed by frustrated buyers. Many have found themselves shut out of the boom--not by price, but by a dearth of listings in hot markets such as the metro areas of New York City, northern California and Washington, D.C. In hyperactive markets, full-price offers were sometimes not good enough as buyers found themselves goaded into bidding wars. What a feast for sellers--until they tried to buy their move-up house and found the tables turned.

# posted by Medical Information : 5:20 AM