Tuesday, August 31, 2010

How you will know when the Market Trend is about to change

     Here it is in a nutshell: it's all about Supply and Demand. Just like the three most important words in Real Estate are location, location, location; understanding how to apply the basic economic Pillar of Supply and Demand to Real Estate is the key to knowing when to buy and when to sell.
     As long as there are more houses for sale than buyers interested in buying them, prices will decline. On the day 8/31/2010 there were 43,773 homes for sale in the Greater Phoenix market. One year earlier the number was 37,460.
     This tells us the Trend, is a rapidly growing number of homes for sale ie., too much Supply. So we can expect prices in this market to continue to decline.
     So you ask, when will prices bottom out and begin to rise? When the number of homes for sale reaches say, 20,000, we will be approaching the bottom of the decline.
     Home values have been declining roughly 10% per year for the last four years. There is nothing on the horizon indicating a change is coming to that trend.

Bill Gosiak
16+ years in the business
Helping clients make informed decisions

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