Our residential market set a record last month. According to the MLS, there were fewer homes sold last month then there were in any May so far this decade. In fact, comparatively speaking, more homes were sold in May of 1999 than in May 2007!

Another interesting fact is that most of the homes that sold last month had one thing in common. They were priced right! The majority of those that didn't sell weren't. The good news is that it's going to get better. The bad news is, many market segments will get worse before they get better.

I know what some of you are thinking. "There goes Grimes killing the market again." But, what do you think would happen if all the so-called real estate experts, including me, started proclaiming that the worst of the market woes were over? Would the floodgates that are holding the buyers back immediately open? Would it look something like Black Friday as early Christmas shoppers bust through the doors at 4 a.m. to get one of those "tickle me" dolls? Not necessarily. The opposite could happen as well. Some could (and have) predicted our market was in for a catastrophic correction. Will that tank the market? I would say "no" to both.

People can be influenced, but the market as a whole cannot be manipulated. The reason is the market is efficient. Recently, there were millions of American Idol fans who thought they could short-circuit the system by catapulting Sanjaya, a performer with a clear talent deficiency, into the top spot. In the end, the majority of the voters acted rationally (efficiently) and a more talented person won.

The market doesn't read what we write. The market just reacts. Assuming the external factors remain the same, its primary focus is the change in supply and demand. This is where our market has a problem. Based on May's sales, we have between 16 and 103 months of inventory, depending on price range. That is why most sellers spend their free time throwing darts at their listing agent's photo instead of doing last-minute tidying - the kind they would do to get ready for a showing, but no showings are scheduled! It's painful for us to see the seller's anticipation turn to anger when they finally get a showing, and it turns into an offer, but it's 30 percent under the listed price. Talk about a reaction! We might as well paint the name "Enola Gay" on our car!

Unfortunately for sellers, it's going to get worse before it gets better. The builder's unsold inventory that is hitting the market at heavy discounts will continue for another year. Foreclosures and short sales will continue beyond that. Therefore, unless our sales receive an external stimulus in the form of property tax reform, or Kmart starts selling homeowner's insurance, the current rate of existing home sales will not make a dent in the backlog of homes for sale. Everyone wants to know when the floodwaters of inventory will crest. Well, it looks like it is going to rain for at least another year.

A Realtor told me his clients were waiting it out. Their investment properties that were purchased pre-construction in 2005 were listed, but at prices that would allow them to break even. However, their prices are above what the developer is offering, and what the market is willing to pay. What his clients fail to realize is that they have already made a bad investment and waiting to sell just makes it that much worse. It's pretty obvious that if you want to make money in real estate the appreciation rate better exceed the cost to carry it. Most mortgages are in the 6 percent range, and taxes, insurance and maintenance fees equal another 2 percent. Therefore, the property would have to appreciate 8 percent to break even, a rate we may not see this decade.

The sound you can probably hear now are greedy buyers pecking away at their calculator as they compute what the payments would be at a price 40 percent below the seller's asking price. Unrealistic offers will continue because buyers know the market value is somewhere below the asking price, but they are not sure how far below. That's why they start so low. One of their biggest fears is making a low offer, and then the seller accepts it. They would go to their grave believing they could have bought it for less!

The sooner sellers, as a whole, get to today's real market value, the sooner they will start receiving realistic offers, and they will find themselves in control of the negotiations. In fact, some sellers are getting multiple offers and are selling above asking price. Why? Because the market is efficient, and it knows real value. Every property can and will sell, if it's priced right, so put away your darts and take aim at finding today's market value.