TEAM Patterson Realty's BLOG - NorCal

Have you seen the stock market?! Wow!! Down huge one day and up huge the next only to Yo-Yo down again. I’m sure you’ve heard all the press and opinions too. How does this impact housing right here?! Let me offer My Perspective briefly…

Now those of you that know me pretty well already know that I like things simple. For example 422 homes closed escrow (a.k.a. –SOLD) in Placer County last month which is about 130% of what sold in Sept 2006. On top of that, inventories continue to drop to what should be "Seller’s Market" levels. 4.6 months in Placer county and a 3.5 months supply in the Tri-County area is where things stand. Yet even so, sold prices have trended down as inventories keep shrinking. Professor Walsh, my econ professor back in Indiana, would have been very perplexed at this as are many people. Econ 101 would say if sales (or demand) is increasing and inventories (a.k.a. –supply) are dropping, then prices should be going up.

What then is the answer? Well, a simple thought would be that this trending in the marketplace can’t possibly be sustainable. Something has to change, right? What will it be? My hunch is demand will continue to creep up and supplies will hold. Why? Demand will creep up because there is going to be $770 BILLION released into the credit market over then next several weeks that will continue to make it possible for quality credit buyers to purchase property. Additionally, supply will hold or even briefly trend down further because the government is working to do everything possible to slow or eliminate foreclosures. Bank owned homes have been the main source of supply increases the past 24 months. In addition, many homeowners have negative equity in their homes (including yours truly) that will prevent them from putting their property on the market until prices move up. Both of these things will keep supplies from the huge increases seen over the past couple years.

What is the impact here in the Sacramento Metro Area? Bottom line, my perspective is the great ship called the housing market is starting its slow turn towards smoother and sunnier seas! Simple, right?!