We are often asked if it's time to buy yet.  Has the market hit bottom or is it still falling?  The simple answer is: If you are ready to buy, now is a good time.  "Maybe you're right Pat, but isn't that what you Realtors always say?"  Perhaps, but then we're usually right.  "Do I detect a hint of arrogance?"  I prefer to call it confidence, but bear with me here.

In every market there are a number of fairly priced properties, some bargains, and some over priced dumps.  Now is no different, except with a higher inventory and a number of motivated sellers, there are even more bargains out there.  So yes, this is a good time to buy. 

Still, many potential buyers sit on the sidelines waiting for someone (the media) to tell them that we've bottomed out and it's OK to buy.  A quote from one of my favorite real estate writers contributing to Inman News, Lou Barnes, "Nobody's going to ring a bell when it's time to buy."  If fact, when the media and Realtor associations report that the market has turned, the bottom will have come and gone.  Good luck to those trying to time the market.

Truth is the market decline and rise is not shaped like a V, it's more like a U.  We'll be sitting at what feels like a bottom for a while.  What we are really looking for are signs of stabilization, that we're not facing significant worsening.  And the Twin Cities real estate market is showing some signs of stabilization.

The sales to listing ratio is one of the most accurate indicators of market performance. This ratio has dropped considerably during the last two years, mirroring the market decline.  However, one of the two components, listings, has started to move in the right direction, down 3% this year.  The other component, sales, are down sharply (15%) this year.  However, we started to see some improvement in July.  But then the sub-prime crisis hit hard and August pending sales were down 18%, and September 24%.  But October showed a surprising bounce back, just 12.6% down.  If we include the sales of a large local auction, October was actually down just 4-5%.  The effects of the sub-prime crisis will be long term, but hopefully the worst is behind us.

A number of local markets are doing well, including SW Minneapolis, Eden Prairie, Chanhassen, Plymouth, Minnetonka and Maple Grove among others.  And the hardest hit local market, North Minneapolis, is showing a strong increase in sales despite a sharp drop in average sale price this year.  Investors have decided that it has bottomed out and they are buying up the foreclosures, because the prices are too good to pass up.

These are all positive signs amid mostly gloomy media reports.  And these are early signs of stabilization. But don't confuse these as signs that the market will be booming soon.  We're in the early stages of this buyers market.  See my blog "The Buyers Market, In It for the Long Haul."  And don't forget the huge impacts from the macro economy (interest rates, inflation), demographics (gen X and Y, changes in household makeup, immigration) and cultural changes (we tend to move more frequently now).  These factors are powerful and it's hard to measure their effects on the market.

I recall a "going out of business sale" at a big store once.  "Everything 25% off."  I ignored it.  Then it dropped to 50% off.  I thought, "Interesting, maybe it will drop further."  I was right; it went to 75% off of everything.  I hurried over, only to find that the good stuff was gone.

This buyers market is a tremendous opportunity to buy quality property at good prices.  It will not last forever.  At some point the good deals will be gone.

Notes: Excellent statistics and analysis of the local markets are available at the Minneapolis Area Association of Realtors and the Minnesota Association of Realtors.  The "going out of business" story comparison to the market, and V and U shaped market declines are borrowed.  I don't recall from whom, but thought they fit in well.