insideyournwa.com

There are three phases to a “correction” in the real estate market.  Throughout the country, local markets differ as to the stage the correction is in and in how long those stages last. 

The first stage is denial…when sellers do not want to believe that the market has changed.  The result is that sales fall while prices rise. 

The second phase is anger.  Sellers are angry of the market, oversupply worsens, building slows, and frustrations mount.

The third phase is acceptance.  This is when sellers begin to drop prices in order to meet supply and the market begins to correct itself.

Our market saw a prolonged phase one throughout the second half of 06.  This explains home prices rising as sales fell.  It’s typical of a market that continues to experience growth.  Its hard to imagine an area with such positives facing a negative.

I believe we have recently entered the “anger” phase.  Builders are swearing to never enter real estate again and remain stubborn on home prices in many instances.  Will this be prolonged??  Perhaps through spring.  I believe you’ll see an “acceptance” of the market by early spring and the correction will be underway.

In summary, a market such as ours may suffer through stages one and two longer than other areas.  But because of strong employment and continued demand, phase three is much shorter, allowing for the return of a healthy real estate market.

06 Housing Report Through Oct 06