I hear these questions often; how can we tell if we have hit bottom? Will prices continue to decline? When will they go back up?

As we all know, no one can predict the future. The only way we can tell we have hit bottom is when prices start to go upwards. In other words, once we find ourselves in a steady upward trend and we look back at the past, we can see where the bottom was left behind. At that point we can say with certainty that we did hit bottom.

On the other hand, there are some factors that can give us an indication of future trends. One of them is inventory volume or number of homes available for sale. Fewer homes in the market will cause an increase in demand causing prices to go up. Inventory is definitevely lower than a year ago. Another indicator is sales activity or number of homes sold. For May 09, there has been an increase in the number of sales as compared to the same time period last year (2008). See the MLS report for stats. Another observation is that the lowest priced homes are not dropping any further. In fact, these homes are stabilizing quite well and the homes that represent good buys are being sold with multiple offers. Once this pool of homes is exhausted, will cause the mid range homes to stabilize and increase in price. If you look at the median sales price of closed sales graphs, you will note that the median home price has increased compared to the last two months. This is a good indication of a recovery may be underway.

So far the last three months of data shows that we are currently testing the bottom. If you or someone you know is thinking of taking advantage of this opportunity this may be just the right time. The next few months will tell if we did actually hit bottom in March and April. If you are thinking of buying don't delay too long as this transitional state is usually very fleeing. Happy bargain hunting!