Unfortunately, it looks like the latter was more accurate, as the market hasn't given us much good news since then.
Here is a graph showing the history of all Single Family Homes sold in Peoria over the last few years. I realize you might not live in Peoria, but I'm willing to bet the trends are pretty similar in your neighborhood.. My thoughts and explanations are below (click the image for a larger view):
Price per Square Foot (Green line) had been holding fairly steady at about $160/sqft. But notice the significant drop over the last few months, down to about $140/sqft (a 12.5% drop in 4 months!)
Number Sold (Red line) is fairly unpredictable from one month to the next, but when you step back and look at the whole picture, the consistent downward trend is unmistakable.
Average Days on Market (Blue line) is a mirror image of the Number Sold line. It trended sideways this spring, just enough to give us some hope, before ascending upward once again.
Phoenix is still a destination city, with people moving here from all over the country (10,000 net new people per month was the last figure I saw). These people will act as a sponge, soaking up extra inventory like spilled milk on the counter. And there simply has to be an end to the number of homes going up for sale (increasing inventory); at some point the banks will take back, and put up for sale, every home owned by someone who could not afford their ARM, or their investment home.
Unfortunately, that time isn't here yet. We are still in the process of "purging", where people who bought homes at the top of the market, using high-risk mortgages, will be forced to either step up or walk away from these homes. It's too bad that this is becoming the largest purge/set-back in Phoenix's history, but I guess that's the price we pay for 2005 being the greatest market frenzy in Phoenix's history.
Once this purge is complete, then the sponge-like effects of our traditional market will go to work, and we'll begin to see numbers that look better each month.
When will this happen? Nobody knows for sure. Every expert seems to have a different opinion, and none of them have been right so far (myself included!) My gut feeling is that we've passed through the first part of the storm, and then the calm of the storm's eye, and now we are heading into the second half of the storm.
Your fastening his seatbelt Realtor,
[tags] Peoria real estate; market analysis; real estate forecast; Fletcher Heights [/tags]