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I responded to the question on Anthony Corollo's blog earlier and decided I should share my thoughts here. The concensus seems to be as long as the supply is greater than the demand we will not see home prices increase. Although I agree with that analysis I believe there is a silver lining in the cloud.... below is my resonse.
I'm not convinced home prices have hit bottom either however I don't believe we are far from it. I am convinced interest rates are at, or very near, the bottom. That being said. it is a great incentive to buy now and not wait for another few percent in price drop. A 1% interest rate increase will have a more negative affect on affordability and/or payment. As has been said, we are enterring a typically slow season (winter) and that probably will not allow us to see an appreciable amount of sales or change the supply vs. demand situation. I look to the Spring to be the true barometer of where we are headed and how long before we see significant improvement in the supply and demand equation. The homes that are selling fastest in this market are those priced below market and there are many of them that will sell this winter. Appraisals on my two most recent transactions have both come in substantially higher than the sale price because of the agressiveness of the sellers in pricing to get the next buyer. Smart and agressive sellers will sell and some forward thinking buyers will get great deals. This is one of those markets where folks will be kicking themselves in the years to come for not buying now.