When Will We Return To a Normal Market? First, we all have to recognize that a normal market is not what we have been in for a number of years. Widespread stated income loans, 100% and/or piggyback loans and many of the interest-only programs were not “normal” as few as five years ago. So, seeing these programs disappear can be viewed as “returning to normal”. What needs to return to normal is the ability of lenders to package and sell their loans on to secondary markets, giving them the liquidity they need to lend again. Second, therefore, we have to get through the credit industry crisis. Financial assets must be re-priced so that “unrealized losses” stop hanging over every financial business’ head. Third, demand must begin to return to the housing market, so that a floor can be put under home prices. “We believe that revived buyer confidence is paramount to getting the market moving again,” said luxury home builder Toll Brothers in its most recent quarterly financial statement. “Only when customers believe we are done with housing deflation will the excess supply clear and the market return to equilibrium.” That may be starting to happen. On March 25, the Wall Street Journal reported that efforts of lenders to clear foreclosed houses, among other factors, “are starting to drive prices low enough to attract some buyers back into the market.” The paper also cited data from the National Association of Realtors that found sales of previously occupied homes jumped 2.9% last February over the previous month. Buyers waiting for ‘the bottom of the market’ may want to start looking around.