By Mike Colpitts
Despite the troubled U.S. economy, some cities housing markets are hitting the bottom after nearly six years in the doldrums. Cities from the Corn Belt in Nebraska to Miami are experiencing upturns in home and condominium sales and higher prices. But not everywhere will experience the bottom of the market at the same time.
One thing clearly differentiates the housing market from other asset classes. Stocks, bonds and commodities have their own exchanges, where equities and products like corn, wheat and soybeans are traded. Art is bought and sold by dealers, who make a market especially for high priced works. But there is no centralized marketplace for real estate.
Determining just when the bottom of your local housing market is just might not be as quick and easy as you think. In fact, few homeowners will even realize when the bottom of the market is hitting their own neighborhood until after the bottom has passed.
In fact, the search for the elusive bottom to any housing market might be akin to finding the proverbial needle in a hay stack. But there are a handful of signs that may allow you to determine more easily when the bottom of the market has hit your neighborhood.
A major reduction in the number of homes listed for sale is usually one of the biggest signs that the bottom is near. But these days be careful to realize there have been several false bottoms as banks hold back the inventory of homes before listing them on the open market.
Fewer for sale signs use to be a major indicator that the bottom was close, but lenders in coordination with bank servicing companies handling the surplus inventory of foreclosures are instructing real estate brokers not to post signs on homes for sale.
As a result, the case of clearly or easily determining the bottom of the market has become more sophisticated as banks strive to net higher profits, despite the record foreclosure crisis.
Improving sales volume should develop before a bottom appears, and customarily higher home prices. However, higher prices have materialized in some areas of the country, including California as a result of incentives offered to home buyers only to once again later decline.
The mainstream media would usually be considered as a source of a bottom as news outlets report higher home sales and prices. Increasing telephone calls to real estate brokers are usually also an indicator of an improving market. But perhaps the best indicator that your local housing market has reached the bottom in the current economic climate might be the influence consumer confidence plays on the market.
When you can’t go any where in public without hearing people talking about buying or selling real estate, you’ll know the bottom of the market has finally arrived.