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Despite all the doom and gloom you hear in the media, I for one
believe we truly are getting close to a bottom in housing prices in
our area.  There are several reasons for this, but I want to focus
on one in particular today.

We are seeing the number of home sales on a monthly basis
consistently increasing each month when we look back on a year-over
year basis.  Let me translate that into English.  Each month, when
the National Assoc. of Realtors releases the prior month’s sales
figures, those numbers are typically compared to the numbers from
the same month the previous year (comparing the same months helps
to minimize seasonal sales trends).  So, when the January 2009
figures are released later this month, analysts will compare the
figures to the sales numbers from January 2008.  My guess is that
we’ll see an increase.  That’s what’s been happening for several
months now in some areas.

So why are house prices still dropping, you ask?  Well, first, the
number of home sales tend to be a leading indicator.  Thus, a
consistent increase in the number of home sales tells us in advance
that home prices will soon stabilize, if not increase somewhat.  We
are actually starting to see this already.  St. Lucie County,
believe it or not, saw a slight increase in the median home price
last month.  Since prices in St. Lucie have fallen as hard as
anywhere, in some respects, St. Lucie has a leg up on other areas
in seeing a recovery, as there is just not much more room for
prices to fall when you factor in the cost of land.  I expect Palm
Beach to be a little further behind in its recovery, but not by
much.   

Do you remember a few years ago when the market was going
gangbusters, appreciating at 30-40% per year?  The same phenomenon
happened – the trend in number of home sales foretold the direction
the market was heading.  Even while appreciation continued to
skyrocket, sales figures began to decrease.  Eventually, the market
reached a peak and began its long and severe correction.  Bottom
line:  focus on the trend in home sales to determine which way the
market is headed in the future.

Now, I’m not saying that we’re going to return to 30-40%
appreciation anytime soon (probably not even in our lifetime).  And
I still think there is reason for caution, particularly with
higher-end homes; I think higher-end home prices still have further
to fall. 

But, now is a great time to think about the opportunities that are
available in this market.  Buy-fix-flip is a great strategy in
bread-and-butter neighborhoods, particularly by selling to FHA
buyers.  Rentals once again make sense because it’s not difficult
to find a property that will produce a nice cashflow.  And where
else can you get a decent return on your money these days?  Not
from a bank, not in the stock market, not in bonds.  Real estate is
one of the best opportunities available right now. 

Apparently, others share my view.  Here’s a link to an article I just found where a well-known Florida economist predicts that house prices in FL are close to a bottom. 

http://www.floridarealtors.org/NewsAndEvents/n3-021209.cfm