Housing Market Offers Mixed Picture

So are we in a down housing market or what? Most people out there are becoming fairly blunt when asking about the housing market these days and I can't say that I blame them. For most, their home is or future home will be their single largest investment. (Whether it should be or not I will leave to the Suze Orman's of the world to debate, though I have my opinions.) Everyone wants to know whether they are going to be losing equity in the near future and if it's finally time for those who have been on the sidelines to get a deal.

Unfortunately there is not a simple answer that that question. On the one hand, the August housing market figures were weak. 6.3 million units nationwide were sold last month compared to 7.2 million units in the same quarter last year. And median home price nationwide has dropped in year-over-year numbers for the first time in 11 years, albeit was only a 1.7% drop from $229,000 to $225,000. But the signals are there, the real estate bull-market days in the short-term are over.

So why is it not such a simple answer? Well for one the new home sales numbers were up in August almost 5% over July (though still down from last year). And the other is that with the Fed slowing and the long-term bonds not moving up, both home equity money and mortgage money are in better positions now than what was anticipated at the beginning of the summer.

But at the end of the day only relative conclusions can be drawn. Yes, price appreciation has slowed considerably as compared to last year. Although not as good as it was at this time last year, it is much healthier than what the doom and gloomers have thus far predicted. Rates are lower than they were a few months ago which signals that lenders are not yet ready or willing to give up on the at times gaudy amount of business that they've transacted over the past five years. So there is a delicate balancing act going on to keep the housing market level.

So what's the upshot? Stabilizing rates with flattening appreciation means for a good buyer's market, not a great one because home prices are not getting slashed just yet but a good one. Our advice is to look for the house you want and be patient, there is no reason to rush into anything in this market. Plus, although real estate is becoming increasingly global, investors and homebuyers looking at more geographies around the world than they have at any previous point in history, housing markets still tend to move locally and factors in our home market must be considered. In the Bay Area the economy is still vibrant and the job market it good and everyone will always want to create the next Google so borrowing the line from the Kevin Costner movie Field of Dreams -- "If you build it they will come" -- if businesses keep forming and growing then people will always be drawn here -- which is a good thing for real estate in case you are keeping score.