Bundle up for the winter months, real estate sales are freezing up.

     As reported in the NY Times today, the S.&P./Case-Shiller indexes released this week showed widespread declines in national home prices in the third quarter of this year. Prices aren't the only thing that dipped, sales volume is down as much as 9% in Orange County, according to the Orange County Register on Sunday. Lower prices+less sales = bargains for buyers, right?  Oh wait, to make things better...mortgage rates are at amazingly low prices....buyers SHOULD be flocking to purchase homes right? Then why aren't they?
     No simple answer to that one. It seems that for every good factor there is an equal or more powerful negative factor influencing buyers today. Over the next few days I will try to focus on some of the key elements that seem to be making our recovery out of this housing pit slow and painful. Seasonality, mortgage industry issues, unemployment factors, foreclosures & distressed properties, and credit chaos all make for interesting aspects of our teeter-tottering progress.
     First, the factor of seasonality is one that I referred to in my last blog. Tis' the season for everyone to forget about buying houses. Fall and winter have generally seen a drop off in volume (the number of houses actually sold) as less people shop for houses and instead shop for holiday presents. Even in those great booming years that everyone remembers so fondly, there were generally dips in volume during the fall and winter months. I wouldn't expect this year to be any different. In fact, this year's slump might appear to be a bit more severe.  This season's market is lagging additionally because those buyers who wanted to buy were prompted to do so earlier in the year in order to take advantage to the federal and state tax incentives. Those tax credit inspired "pre-season" sales led to a minor rally in prices and supported the sales volume for most areas of Orange County. It is my belief that those "Hurry up and buy now!" tax incentives pulled the rug out from under us when they disappeared. Now, left with no extra incentives,  we have a much more realistic picture of what true demand is, and that picture is not looking so pretty.
     Yes, there are random encouraging factors in the news leading to a few rosy, feel good days on Wall Street and in the media....but for me, the bottom line is that sales volume, week over week and month over month, is the best indicator of where we are headed in housing.  Until good news translates into the average person getting loan approval and then finding a house they want to call home, we might want to stay bundled up and working hard to do all we can for our sellers, because "Baby its cold outside."