Michael Oliver says:

Same here in Tucson AZ only (well mostly) only the lower priced price range is selling. from 75k-150k homes are moving but from the abover average range of 250k-500k its almost not possible to get a home sold unless it is way under comps.

Patient Buyer says:

That is a hard question to answer.

One key to it would be finding out how many potential sellers have sidelined themselves due to the declining prices.

In other words, there are certainly some homeowners who would be interested in selling if we were in a normal market, i.e. flat or increasing.

One possible way to gauge this would be to see how much more inventory there is than normal, then see if that can all be explained by distressed properties (foreclosures, short sales) or other have-to-sell situations (moving, job loss).

Suppose a normal market for a given area is 1,000 houses for sale. Suppose in the current market there is 1,250 houses for sale. If the excess (250 houses) can be accounted for by distressed sales, then you probably have a normal market returning as soon as the excess inventory drops.

However, if the current market is 1,250 houses and, say, 40% of the market is distressed sales (500 houses), that means that ‘normal’ sellers only number around 750. This probably indicates that you are starting to have a pent-up supply of sellers waiting for better days, probably dreaming of 2006 prices (ain’t gonna happen in 2009, at least).

That inventory will likely dribble into the market slowly, as each seller finds their capitulation point and finally accept an offer that is reasonable. This will keep a lid on prices for a while. Anyone expecting price appreciation above 1-2% when this thing finally turns is not being realistic.

Housing is an illiquid market, and the ‘share price’ is high. Prices will probably taper slowly to the bottom and turn upward at a similar rate.

PB

Patient Buyer says:

Teresa-

Let me put a finer point on what I meant by ‘reasonable price’.

I have, for a few years now, read a lot of posts about what a house is ‘worth’. Really, this is a dead-end debate most of the time. A house is worth whatever anyone says it is worth to them.

Ahh, but market price, there’s the rub! What is market price? I suppose it depends on if you want to sell the day you list the house, within a week, within a month, etc. I would say that there is a range of market prices.

I should have phrased it this way:

“That inventory will likely dribble into the market slowly, as each seller finds their capitulation point and finally accept an offer that produces a sale within a normal market time.”

I say the bottom will be reached when distressed sales diminish as a percentage of available listings, and days on market for non distressed listings drops. It is impossible now to calculate the number of people waiting for higher prices to sell. Again, pent-up supply will likely diminish the effects of pent-up demand.

Hallie says:

Hi all!

Thanks for the great site & blog, Teresa.

I’m a broker in San Diego (left the Twin Cities after the winter of 1993-94 when the highest temp for 14 days was 25 below zero). Just so you all don’t feel bad, our market SUCKS (of course, that’s offset a little by the palm trees and 80 degree temps.) Median price continues to slide because a) most of the sales, as mentioned by the bloggers above, are at the low end; b) foreclosures are about 40% of our sales, further depressing the market; and c) investors are coming back into the market and all want “Deals.” We’re seeing multiple offers on “Deals,” but the investors are generally buying at the very low end…which brings the median price lower. And it’s not even Groundhog Day!

I’m figuring about an 18-24 month timeframe before we end the blue light specials. CA wrote just TOO many
100%, no documentation, no interest loans which are still adjusting. The good news is that the holding banks are starting to aggressively negotiate payments to keep sellers in their homes, and this may stave off some of the painful foreclosures.

So, throw a snowball for me, please, and hunker down in front of your fireplace; this will end…someday.

hallie