There is a lot of inventory available to buyers, and list prices have dropped – but sales prices have dropped further.  There are several reasons for the drop in average sold price:  1) buyers are shopping for lower priced bargains; 2) offer prices are generally considerably lower than list prices; 3) appraisals.  Few properties over $300K are selling, unlike the previous 3-5 years in the valley.  Buyers generally haven’t been willing to gamble on the higher priced properties, and sellers haven’t lowered their prices enough to attract available buyers – or in many cases, to a realistic appraisal value in this market.

For the patient buyer, bargains are available.  Just one example:  a custom riverfront home that listed for $899K two years ago sold for $650K this year.

The lack of land sales for the last 2 years points directly to a lack of confidence in the U.S. economic recovery.  For anyone thinking about buying land to build in the future, this is a great time to acquire land that will appreciate when the market does recover.

Bargain hunters with cash, keep your eyes open – there are great deals out there, but they don’t last!  Sellers, realistic prices are essential if you want to sell your home this year!

I just read a fascinating article from 24/7WallSt.com about housing recovery entitled “The Thirteen Housing Markets That Will Never Recover.” The facts presented, based on NAR home price data and Bureau of Labor Statistics unemployment data, present a convincing argument that any housing recovery is going to be a slow process. Here’s a link to the article: http://247wallst.com/2010/05/13/the-thirteen-housing-markets-that-will-never-recover/.

Despite government insistence that the economy is well on the way to recovery, the real story on unemployment paints quite a different picture – one that most Americans “feel”, but don’t really understand. Quoting from the article, “Government numbers for joblessness do not include part-time workers looking for full-time jobs or people who have become “unattached” from the work force. These additions would bring the national unemployment rate to 17.1%. That means that if a city has unemployment of 14%, joblessness could be closer to 21%.” Employment, of course, relates directly to housing purchases.

The basic premise is that in areas where home prices have dropped substantially, like 25% or more, and unemployment is greater than 10%, it is likely to be a very slow recovery in the housing market. Conversely, where housing prices have not dropped precipitously, and unemployment is low (relatively, anyway), there is at least a chance for housing prices to recover.

So, across the country the real unemployment rate averages at least 17%. So far this year 102 banks have failed. Last year 64 banks failed. The mortgage market is tight as a tick. The Fannie-Mae and Freddie-Mac debacle has not been fixed. Foreclosures are increasing, not decreasing. Businesses are afraid to hire because of economic uncertainty tied to the current Congress and administration. The just-announced GDP numbers are worse than expected for both 2009-2010. Just about any way you look at it, the numbers suggest that real economic recovery, including housing which is inevitably tied to jobs recovery, is a long way off.

But, I remain an optimist! The good news?  Interest rates remain low.  Housing inventory is high and prices are low.  If you can afford to buy, this is the time.  And fortunately, in this country, we, the people, have the opportunity to change our destiny every 2 years: remember in November!