Appraisal Ace Blog

My crystal ball is a little cloudy right now, but I would agree with many observers who say we are at some kind of a "bottom" currently. I have even seen a few instances where prices in a neighborhood are rising slightly, most likely those neighborhoods where inventory is low and multiple offers are common. Getting those properties to appraise at the contract price is the problem as comparable sales trail the market.

However, we still have some distance to go. There are anywhere from 50,000 to 200,000 (depending on who you believe) homes in California still out there as hidden inventory, REOs that the banks have not released. Plus there is the current moratorium on foreclosures that will have to end someday and that will be more added homes that have to be resold. And into next year and the year after, there are a bunch of Option Arms that are due to reset in 2010 & 2011. I believe most of those will end up in foreclosure too.

So, while I think the bottom may be close as the housing affordability index increases, there is the unemployment situation that is affecting home sales too. People who are not working do not buy homes. And people who are afraid they may lose their jobs do not buy homes either.

So, what has to happen? All the hidden and potential inventory has to be revealed and absorbed over the next couple of years. And unemployment numbers have to go down. Plus the overall economy has to continue to recover.

Best guess, 2012 before the market really bounces back. 5-7 year cycles in real estate, if I remember my economics classes correctly.