ocrealestate

By Steven & Mikey Hall 

Before we start let’s remember that all real estate is local and the NAR is a national organization. So we’ve got to take its data with a grain of salt.

Are We There Yet?

In our last post we were working on the question of whether or not the real estate market has finally reached bottom. About all we were able to conclude was that existing home sales were increasing. The problem was, rising sales doesn’t guarantee that prices will also go up.

In the meantime, Lawrence Yun, the National Association of Realtors Chief Economist has noted the increase in sales, and even gone a step further and stated that increasing sales “is the first and most necessary condition before any other housing measures can stabilize.”

But Why Do We Need Increased Sales?

According to Mr. Yun, the answer is simple. It takes sales to decrease the standing inventory and prices will not go up until the inventory goes down. Sounds like simple supply and demand, and it basically is.

So What Are Prices Doing?

Well ,on a national basis they have declined a little over 6%. On a regional basis the Western Region saw prices fall about 16%. Doesn’t sound good. But we need to consider two concepts: (1) It takes time for rising volume to reduce inventory; and, (2) These are national numbers.

If we go to the Market Trend data we see that in Orange County, California, price per has been basically taken no consistent direction between 1/1/08 and 6/1/08. This data seems to be saying that the increase in inventory is being absorbed more or less as quickly as it’s created.

How delicate is this balance?

We think it depends on a lot of general economic factors, many of which could go one way or another on very short notice.At best, the local market is showing some stabilizing trends and the next month will tell us a lot about where it’s all going. 

So the answer to the question, “Are we there yet?” remains, “Maybe.”