I have not written recently because for the most part nothing material has changed. The real estate market has been steady, after an initial drop, and no major economic trends have emerged.

Local and national employment is still good. Liquidity is still good, though not as great as it once was. This is by no means a tight credit market and arguments still rage about the possible large economic effects of the changes in the real estate market.

So let's focus on how we will know when a bottom occurs. First, we won't know until after the bottom occurs. Unlike the equity and futures markets which have tremendous volume and almost instant reporting of price data, the real estate market has neither large volume nor quick data reporting. Thus, getting in at the bottom through planning is very unlikely. Second, volume may never return to the level seen during the unprecedented real estate boom as the speculation boom is over. Thus, we must look at relative volume, incentive availability, and price.

Once a real estate bottom has passed we will see volume increase on a year to year basis, incentives will become increasingly unavailable, and prices will show modest year on year increases. Until there are signs that a bottom has passed, volume will be lower or steady on a year to year basis, incentive will be easy to negotiated, and prices will be lower to steady on a year to year basis. Prices will not likely significantly fall unless there is a material change in local employment. Further, the recent fall in the US dollar may also help support prices in the Southern CA region as foreign buyers continue to buy real estate.

Is now a good time to buy? That depends on your specific situation. A good lender, real estate agent, and tax adviser can help you determine if now is the correct time for you to buy. If you are in Southern CA, please feel free to contact me for an objective analysis of your situation.

Terri Champlin