Supply & Demand is the Theory is BROKEN?

As long as properties are being sold for less than their normal value due to short sales and immediate need to sell, we will not see an uptick in pricing in neighborhoods who are suffering through it.  No matter how nice my home is, it the one down the street just sold for a song, I am going to be out of luck with pricing mine to sell.

Susan,  We are seeing the same thing in Colorado.  I think the more stringent lending standards are also contributing by taking substantial numbers of buyers out of the market.

Susan ~ Last year, here in Pagosa, the Market was already showing signs of a turn around. (Rather early, I might add). There were some areas showing ever so slight price increases, but they were happening. This year we are now seeing, on average, listing prices up 10% and above where they were, compared to  '11. We are also seeing more bidding wars. The demand is there and we are continuing to see the inventory numbers fall. The Short Sales and REO's were major factors in both '09 and '10. The Appraisers certainly weren't any help. 2011 was finally a point where REO's and Shorts were not as prominent and the Appraisers (that were still here) were finally using accurate information to obtain a realistic number. It's happening, sometimes a little slower, but it's happening.

Susan - Your are correct that mix of sales regular/short/foreclosure has big effect on the overall market appreciation / depreciation.  As soon as your market clears out the shorts and foreclosures, normal economics should return.

Here in the close-in markets that I work here in Northern Virginia, we are experiencing an inventory shortage, multiple offers are semi-normal, but appraisals are coming in pretty well.  We were fortunate that shorts/foreclosures never got to a high enough percentage to affect the overall market appreciation.  Best of luck to you!

Hi Susan,

Prices have leveled out in San Bernardino/ Riverside County in the past 6 months but we are already pretty low so we have not seen any increases in pricing but we are seeing much more activity in Short Sales and Standard sales than in Foreclosures. This area has been one of the highest in foreclosure rates for the past 4 years so that is an improvement. Hopefully your prices and appraisals will go up soon. We all know that a bad appraisal can either lower the selling price or make the entire deal collapse. Good Luck to higher prices very soon!

Our inventory in some price brackets is getting really low....but seems like there's a bit of a time lag for buyers to see how little there is to choose from and be willing to pay a bit more. And even more time lag for sellers (and listing agents) to trust that the market is improving enough for it to be "safe" to price toward the upper end of the range instead of he bottom. But I think some price increases are coming....