The Tipping Point of Supply and Demand

The National Association of Realtors reported today that existing home sales for April increased 2.9 percent, but were still down 3.5 percent from April of 2008. From a trending standpoint, many experts get the feeling that we are bouncing along the bottom...which is certainly better than still free-falling!

If you look at the major factors that create positive or negative buying conditions in the market, all signs point to favorable conditions.

• Interest Rates at Historic Lows
• Inventory at Very High Levels
• Median Prices Low
• Home Prices at or Below Replacement Cost
• Government Incentives at All-time Highs ($8,000 first-time home buyer tax credit)

The only two factors in my opinion that continues to keep buyers out of the market are a) decrease in capital/equity and b) fear of further price reductions in the market.

The continued rebound of the stock prices for undervalued companies continues, and April consumer confidence was at its highest since September of 2008 - this should begin to ease the first negative factor. Further price reductions in the market will continue to be resisted by the replacement cost factor. Homes that can be purchased well below the cost to build will not stay in inventory for long. This is particularly true for areas like rural Montana where an land and hungry contractors abound!

Overall, I truly believe these positive factors will begin to lure buyers back to the market as there are opportunities that just cannot be passed up!