Welcome to the September 14th, 2009, edition of Twenty Something Finances. I hope that you enjoy the line-up today. There are a lot of great articles, so enjoy and spread the word!
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1. Inventory changes from growth to reduction.
2. Home Values Fall At Accelerating Rate
3. Year over year sales increase
4. Inventory levels reach 6 months of supply (balanced market)
5. Home Values Stop Falling/Start Rising.

I’m calling market bottom (I predicted between Aug and End of Nov) hopefully has occurred roughly 10 days ago. The increased sales represents the third of the five stages. The fourth stage shows continued declining prices (now at the fastest rate that we have seen) until market equilibrium is reached.

Thanks for the great comment. You are spot-on in terms of foreclosures not having had much effect on the market thus far, and future dominance of the market. Lenders are still sitting on their thumbs with delinquent borrowers, so this part of the market has just been simmering.

I do disagree with you on the “REALTORS” points. The fact is that REALTORs come and REALTORs go, but those of us in the business who are full-time professionals (only about 5% of the industry) stay busy in all cycles. REOs are just one aspect of the business, which historically is a niche, but currently is a large volume source. This only represents a shift in focus for us full-timers, not an increase in business volume.

Thanks again for commenting and I hope to see you here more often. Great input is always wanted!

Joe

In my opinion, swe’re nowhere near the bottom in terms of prices. Unfortunately, there is still a massive shadow inventory of REOs and eventual REOs that will flood the market in coming years. As I’ve written on your blog before, lenders are not taking actions on current foreclosures. I know of dozens of Florida homewoners who have not paid their mortgage in more the 12 months and STILL haven’t received a Lis Pendens. I also have seen public records where banks have foreclosed on properties as much as six months ago and the home STILL hasn’t been listed on the MLS.

Eventually, lenders will have to take action on these homes. They will have to start listing them. They will have to start foreclosing on borrowers who aren’t paying their mortgage. When this happens, the coming flood of foreclosures will flood the market.

What will happen when this finally starts to happen? Because these homes will be offered at huge discounts, you sales chart will take a turn. Sales volume will shoot up significantly. Realtors, especially those who specialize in REOs, do really well.

On the other hand, homeowners who are trying to sell will continue to see large price drops. Those considering buying need to consider when the eventual price bottom will hit (it’s still problaby 2 years away).