Capitalizing on key opportunities in urban development.

With the residential real estate market apparently in a cool-down phase, Lyons Mortgage Services recently hosted an event aimed at providing

hope and insight to what lies ahead.

Held at the Central Park Boathouse, featured speakers gave insight to their perspective on the market and how their services play a part of it.

Dr. David Berson, vice president and chief economist at Fannie Mac, told guests, "We are in a period of transition." Even though we should not expect 2006 to be another record breaking year, it is not and is not expected to be a recession, based on his research.

"Whether one is purchasing his first home or building a ten-story residence, the goals are the same: to obtain the appropriate financing to achieve ownership of that property" stated Lyons Mortgage CEO, Edith O'Donnell, in her opening remarks.

O'Donnell reflected her firm's amicable approach to the entire acquisition community which aims to provide financing to first-time homebuyers, builders and renovators. Despite the local market's incredibly inflated prices, this attitude is facilitated by the FANNIE MAE guidelines for purchasing these mortgages in the second tier market which tries to create opportunity and make the market "affordable".

"Knowing the trends in the market is pointless, unless you know how to capitalize on key opportunities", said Noah Coughlin, of Guardhill Mortgage. "It requires a little more groundwork " said Coughlin, who came to New York from Boston with a strategy to capitalize on the conversion boom.

Dr. Berson pointed out four key economic indicators that he believes will keep the housing market from faltering: consumer confidence, demographics, affordability and investment purchases.

Consumer confidence remains strong in 2006, but it is not at record levels due to factors such as rising interest rates, rising fuel prices, and the slowdown in housing sales (which Berson stated, cools home price appreciation and the resulting consumer spending).

However, consumer confidence remains on the fence due to, and depending on, the balance of certain geopolitical concerns affecting utility supplies, as well as national trends based on the Fed's interest rate adjustments.

When it comes to demographics, Fannie Mac's research has concluded that the age of 70 years old is the median age in which people purchase homes. The fact that Baby Boomers are now in their 40's to 60's in itself poses a strong economic indicator for future home sales will benefit from this increased demand.

Demographic indicators also include the immigrant population. It is reported that approximately 5% of all immigrants purchase homes within their first year. Each incoming population eventually reaches the national average within ten years. If immigration laws do not hinder current trends, then the next two decades will have positive indicators for successful housing markets based on demographics of immigration and age, which will be reaching their peaks.

Dr Berson's third demographic factor of concern is affordability. Home prices have risen at the fastest rates ever, with double digit gains over the last two years on yo-yo gains. Berson said "unsustainable trends must come to an end" and rising mortgage rates are making that a reality.

Fannie Mac reports that home sales are projected to fall by nearly 10% in 2006 due to the decrease in affordability and fall-off in investor demand. This is more of a reality check for the over-inflated markets, but also be offset by the increased favor of ARMs, second generation immigrants, and the wealthier population of retirees.

The fourth factor to consider is investment purchases. Berson said he felt that it is often difficult to undo this trend and that it causes markets to be volatile. What may be a key opportunity is that the decrease in investor demand will raise the overall supply and therefore lower prices, or at the very least allow incomes to catch up with prices. How will this affect the New York market? The spotlight has recently changed to the commercial market with business activity booming, companies expanding, and commercial rents skyrocketing.

If the commercial end has money then, hopefully, the income will get the opportunity to catch up with the home prices. In the city where dreams are made, the conversion boom will continue with the young looking to get ahead, the older looking to enjoy their golden years, the immigrants looking to achieve their dreams and investors making their profits. As inflation rises, rentals become less available (due to conversion), and creative financing is available, the factors facing the regional economy appear to be favorable for the immediate future and hopefully the next generation.

Based on U.S. Census data, the entire U.S. population will be 50% larger in 2050 than it was in 1990 and the first stage of the Baby Boomer population will turn 65 in 2011. With insight on demand like that alone, anyone buying long term (more than 5 or 10 years) will be in a better position when they decide to sell. The NY market offers enough diversity to allow its population an opportunity of the American Dream--home ownership. However, one must sometimes endure the segregation of neighborhoods, pray for gentrification and eventually achieve their goals. The outer-boros can still offer the hidden gems and Manhattan will continue its upward trend on conversion throughout thus decade, according to the seminar speakers.

It's the availability of cash and financing that will open the best opportunities.