In our first publication this past February, I reported that there are and have been multiple signs of why we were at, or very near the bottom, of this historically low business cycle for real estate. Since that article was written in late December, we have seen several statistical metrics and even press and media reports, that support the concept that we are at the bottom or at a minimum, just arrived. While the definition of the bottom varies based on what part of the country, state, city or community you are in we will probably find that we may linger at the bottom throughout much of the year and possibly into next. The market; sellers, buyers, mortgage industry as well as realtors, and appraisers, needs time to see how inventory levels (supply), will affect and interact with new price points, and interest rates to determine sales (demand).

In an attempt to provide a balance perspective table “Number 1” provides some selective review of area (Orange and Seminole) resale statistics of Inventory, Sales, and Average Days on Market, (ADOM) from January 03 through March 08.

What is striking from this sample data is the tremendous run up of inventory from a low point of 2947 in March of 05 to the peak in October of 07 of 26,330. Sales correspondingly look to have had a seasonal high in June of 04 (2952), ramped up again in summer of 05 and in March through June of 06 peaked over 2800. Then our downward sales trend started in late 07 and culminated in January of 08 with a low of 813.

ORRA’s most recent data released mid-April shows positive signs of inventory continuing to level off. The high water mark of 26,330 homes in October of last year has slowly begun trending downward and flattened out over the first three months of this year. Correspondingly, sales have begun to trickle up in the same quarter and have again exceeded the 1,000 mark for the month of March. Specifically, the latest numbers for the first quarter shows inventory holding if not slightly decreasing at 25,472 and sales moving upward to 1,080 for March. While these metrics certainly don’t support a turn-around I believe they do support evidence of the bottom. And again, we may be at the bottom for a while but the best news is I do think we have arrived.

The media is reporting many conflicting opinions offered by “experts” from mortgage and banking, real estate and ancillary business professionals. The Orlando Sentinel in one of their head line articles published “Home sales may have bottomed out” in the March 12th business section. Based on opinions from Steve Moriera, President of ORRA, author Christopher Boyd wrote that while Moriera won’t offer an opinion on a time for recovery he quoted him as indicating “The market isn’t moving down very much now, nor is it moving up.” Boyd also offered opinions of well known Orlando economist Hank Fishkind who felt the market is beginning to stabilize from a price perspective. “Although the backlog remains near record highs and sales prices are down by doubledigit percentages, the market is beginning to stabilize” Boyd attributes to Fishkind.

On March 14th the Sentinel business section reported that while Standard & Poors increased their forecast for sub-prime defaults from $265 billion to $285 billion the report also added that “the end of write downs is now in sight for large financial institutions.” That’s good news in that combined with the stimuli applied by the Federal Bank to lower their discount rates, boost in money supply for loans and the curtailment of sub-prime defaults the necessary corrective measures for a stable financial market may be at hand some time by the end of this year. These recent media and press perspectives are very encouraging in particular when you consider these articles and quotes were released long before the latest statistics of slight improvements were released. So while the latest numbers show we might have just arrived at the bottom we may find ourselves there for the rest of the year. We may need that amount of time to ensure meaningful stabilization in housing inventory, pricing adjustments, mortgage instruments, government policy and stabilization in the insurance and tax issues. Of course the wild card in all of this is the Iraq war and the price of oil. The course of these two world issues will have dramatic and immediate impact on our overall economy thereby a correspondent affect on our housing market.

If your life situation dictates it is time to place your home on the market you must ensure it will compete with all the other homes on the market. It must be exposed better than your competition; it must show better than your competition and it must be priced equal to or better than your competition. And the single biggest competitive advantage you can have as a seller? Don’t be one, be a buyer. Put your buyer hat on and attempt as best you can to look at your property as a buyer. Dismiss your self and your emotions from your home. Forget about all the renovations and improvements you have done for the home. Improvements to a home in a market that has or is experiencing downward price adjustments are negligible. A great way to accomplish the necessary objectivity is to obtain an appraisal. Sure, you can have the real estate agent perform a Competitive Market Analysis; all real estate firms are capable of performing a CMA. But CMA’s are prepared by an agent representing an interested party, you! And as such are very difficult to defend and use in marketing the home. An appraisal however can better represent more of an objective opinion as to the market value of your home to a prospective buyer.

Conversely for buyers; what a great time to be a buyer!!! If you have qualified your mortgage amount through a mortgage banker or bank and have a loan pre-approval letter you are in a tremendous position. The number of qualified buyers has been at such a historical low since October of last year that buyers can even negotiate with new home builders. Inventory is still so historically high for both re-sale and new construction that there are great deals in the market.

Many buyers say they don’t want to buy until they are sure the market is at the bottom. Well consider this, by the time we figure out that the housing data proves we are at the bottom, the market we will have passed it. Don’t attempt to time the market like you are playing with a commodity. Make this long term asset purchase based on your ability to find the right home at the right price and mortgage terms. With so much inventory and interest rates maintaining significantly favorable rates, there may not be a better time.

In summary, I believe we have arrived at the bottom of this current real estate business cycle. We may be here till the end of the 3rd quarter this year or, depending on other significant world factors; the election, Iraq war and oil prices, we may be at the bottom into 09. What ever the case, prices have had to depreciate from their abnormal highs and downward pressure may continue dependant on geography. Although not tremendously significant just yet, inventory and sold data seem to indicate the potential for market stabilization and an ever so slight up-tick. And in reality what we should be looking for are signs of stabilization long before we can even anticipate a recovery. Defining “recovery” is going to be an interesting concept for our area; what amount of inventory will define recovery? What amount of sold homes or Average Days on Market will constitute a return to a normal market? How far below the average 130 ADOM will be perceived as a normal selling time? Will selling 1,800 homes per month be normal or with our population increase will 2,500 per month be a nominal metric? For answers to those questions we will have to wait and see. In the interim we can be appreciative of some positive signs and improving trends.