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Don’t Look Now, but Home Sales are Rising!

Posted on | January 27, 2009 |

Las Vegas, of all places, is seeing an increase in home sales!

This is a good sign, because Vegas was one of the hardest hit when the bubble burst. Since last year, home sales have risen 15%.

The flip side of this coin is that the home prices have fallen 28%. Ouch! But this is all part of what has to happen.

The nature of a bubble is that prices get bid up to an unsustainable level. When the bubble pops, or deflates, prices must fall in order to reach the sustainable point.

I found this in an article on Yahoo! finance:

“The reason? Motivated sellers–those in distress or foreclosure–or banks with too many homes on the books are slashing asking prices in order to unload their properties.”

I think it’s also non-foreclosure sellers coming to terms with reality.

Back when we sold our house, my wife an I were in awe at the other houses in our neighborhood. Every house was identical, save for a window or two over the front door, it was a real cookie cutter neighborhood. Great starter homes though.

Our house was the first (and only in the last 6 months!) to sell. Our secret was that we priced our house at fair market value. There were 7 other homes for sale at the time our sold. Each one of them was asking a price that was the going rate - 6-12 months earlier! They were out of touch with the market place. I can understand that, but I never did understand what realtor in his right mind would take a client that was going to ignore reality and ultimately bring down the realtor’s sales statistics.

Eventually, even these stubborn and fanciful sellers face reality and lower their prices (usually much lower than where they could have started).

That’s what’s happening in Vegas, Phoenix and San Diego where home sales are up 10% and 90% respectively.

Eventually the prices will bottom out, sales will level off and prices will begin to rise again.

Also, remember that real estate is  local, even in the post-bubble era. The part of the country where I live never saw the outrageous hyper-inflation of housing prices, and the median home price has gone up 3% over the past year.

Whether you’re a buyer or a seller, you must know your market.

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Comments

One Response to “Don’t Look Now, but Home Sales are Rising!”

  1. Lambros Estate
    January 29th, 2009 @ 11:52 am

    One of the best perks of real estate investing is cash flow investing. It is best to invest in homes.

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