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Signs Of A Real Estate Bottom

Apr 20, 2008
Well everybody wants to predict the future about real estate. The reality is that it is impossible to predict what the future market is going to be. There are too many conditions and untold events that will happen in the future, but there are some things you can look for to determine the current market conditions. Before the real estate recovers there has to be a bottom where the depreciating market transitions to an appreciating market.

Common sense is often your best asset. Everybody knows what goes up must come down. But If you graphed the market it wouldn't be a straight line down and a straight line up. It reacts in waves. The top has a steeper slope and it gradually lessens as it approaches the bottom. For those calculus experts if you pick the very bottom of the curve and graphed the slope of the bottom it would be virtually be flat. So common sense tells one that before the market stops going down and begins to go up, it must go flat first.

Well what should you be going flat. For one thing it should be the inventory of homes. Look at the different months where more and more homes came on the market for sale and less and less homes were selling. The inventory of homes for sale went up nearly to 60,000 in Arizona alone. For the past few months the inventory of homes has been hovering around 55,000 in Arizona. So is this a sign of the bottom. The answer is.... maybe.

There are other things to consider. Think about the time of year of the state you live in. I'm using Arizona as an example because it has been one of the spot lights for real estate for the past decade. The time of the year makes a big difference. Arizona has winter visitors from all over the globe and sells more homes in the springtime months than any other time of year. So if the market has been hovering around 55,000 active homes for sale on the market during the spring, I would hesitate to say it is the bottom until I see the inventory stay steady through the summer and fall months.

Now is the best time to buy at the bottom of the market? Well not necessarily. It is safer way to buy, but the best deals aren't always at the bottom. They are often times on the way towards the bottom. Banks monitor the market closely and they know when the market is recovering. They are less likely to let their properties go during a flat market than they are during a declining market. A declining market is a good time to cherry pic the best homes, in the best locations, at the best prices. There are a lot of opportunist who are waiting for that bottom. Then you can expect the American spirit of opportunity to be revitalized.

If you aren't willing to take a risk then the time to buy might not be right for you, but if you are looking for opportunity.. then this is the time.
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