Since 1992, home sales in the metro area went to new highs rather consistently, month after month, with a "market" reasonably "balanced" for buying verses selling.
Then, early in 2004, residential real estate investors started to really focus here. This developed into a "buying frenzy" that peaked Spring 2005, when the typical "Days-on-Market" for a home was less than a week... and a really nice property would have multiple offers within hours.
Of course, that condition could not persist. Beginning June 2005, sales started to soften and the number of listed properties started to climb.
The media, and a few industry "experts", began proclaiming a market disaster early in 2006, and kept harping that despite clearly contrary facts through June. But if the continuous blast is negative enough, sooner or later consumer confidence is going to be affected. Despite a much softer second half, 2006 had the 4th all-time high for number of sales.
We expected 2007 to be a sluggish recovery year. The 12-month chart for number of sales illustrates that a bottom was starting to form late 2006 with November, December and January sales. But then the sub-prime mortgage fiasco started to make the headlines, and the residential housing focus for the entire USA became "foreclosures". That's about as negative a thought as possible for the housing industry.
There are three basic problems. First and foremost is very low consumer confidence. Second is the large number of distressed properties being offered for sale, and the pricing policies being used by lenders to get them sold. Third is the lending environment. Many mortgage companies are going out of business, and the remainder have enacted overly restrictive borrowing requirements.
Real estate has always gone in cycles. Ultimately, the metro area home supply verses demand will come into reasonable balance and prices will return to the inevitable assent.
The key questions: When? And, where's the housing market going in the meantime?
