Does this mean we are entering a slump in real estate prices? Is the bubble about to burst? Probably not say most of the economists. There is really no evidence of a bubble. This is just an idea that has been talked up by the press who seem to only want to report on bad news. Nevertheless, the market is definitely changing.

"Demand still seems to be there, but the sense of urgency seems to be a thing of the past. We don't expect the market to tumble, but we do expect price increases to level off between now and spring" says Marshall Prentice, president of DataQuick, a company that monitors real estate activity nationwide. Certainly there is strong evidence of lack of urgency. At the time of writing, 75 sales have been agreed in the Alamo, Danville, San Ramon area year to date. This compares with 102 for the same period last year. And there were far fewer homes for sale then!

We are experiencing a return to a more balanced market, in line with our expectations, although unsold inventory is still near historical lows, with a 3.6 month supply of homes for sale says C.A.R. Vice President and Chief Economist Leslie Appleton-Young. Time on the market also is nearly unchanged at 44 days in December compared with 40 days for the same period last year So certainly the market has slowed down. From discussions with buyers and other agents, there is a strong feeling that prices in many, although not all, cases are too high. Quite a few people believe that many homes sold in the second and third quarters of 2005 were sold for more than they were worth so they are reluctant to buy based on these comparables. Many sellers are unwilling to accept that premise so they are offering their homes for sale at prices that are unrealistic. This would certainly explain why fewer sales are being agreed.

February 5th is Superbowl Sunday. This is a day that many believe represents the start of the peak time for home sales in our area. By this time next month, with a few weeks normal real estate activity, we will undoubtedly have very strong indications as to the future of the real estate market in 2006