There is no doubt that we are deeply embedded in a buyer's market. Wtih prices dropping and interest rates at nearly all time lows, as well as the amount of inventory that is on the market, buyer's really are in the driver's seat. Having said that, it is not an easy road for buyer's right now either. More stringent lending guidelines have made it more challenging for buyers to get their transactions closed and the poor employment situation that the country in currently mired in is also making it harder for buyer's to qualify for a loan.
As far as a reversal in the market goes, it would not be good for anyone to hold their breath about this. In my view, there will not be any turnaround in this market until 6 months to a year after the unemployment picture significantly improves. I think that once unemployment gets under 7% and is buliding momentum towards further improvement we should then begin to see a shrinkage of home inventories on the market which will in tun bolster prices. Unfortunately, there is no crystal ball that has the answer to this, but for the coming months expect nothing more than the same.
I don't think this will shift for quite some time - see here for my discussion on rates and foreclosure pipeline: http://our-big-house.blogspot.com/2011/09/low-mortgage-rates
Now if you're interested in investing in property in the San Diego area I am here to tell you that it is definitely a buyers marked at this point. But having said that things have begun to bottom out and for the first time in several years San Diego is one of the few places in the Country where values are actually starting to show signs of a rebound Good luck..
Buyer's Market > more homes for sale than there are buyers to buy them. It makes sellers do odd things like cut the sale price of their home to make it more attractive than others of its quality and size to attract more buyers to look at it and consider it above the many others in the same selling area.
Seller's Market > more buyers out there looking for homes than hoes on the market. Buyers place more demand on the supply of homes available, allowing sellers to raise prices and take advantage of the desperate needs of the buyer's looking to buy.
Fair Market > Homes for sale and buyers looking to buy are fairly equal and there is no pressure from any one side against the other to make the fields change. Prices are stable and are what we call at arms reach. Buyers are not in a situation where they have to make drastic decisions and make drastic offers to procure a home, sellers do not feel the need to compete by drastic measures in this market. This market is the healthiest for the country.
A seller's market will eventually lead to a buyer's market, seems Newton was a Real Estate Genius as well as a physics Genius. One action will cause another reaction of similar but opposite reaction. So we often see years of fair market, then somehow we start to build slowly the quickly into a Seller's Market for several years. The prices rise to awesome numbers, then break and we swing right into a buyer's market, once it slows down we head back hopefully to a nice fair market ,
To answer your question as to where we are now, I feel and truly hope we are at the end of the buyer's market and are slowly heading back to a fair market.