Interesting CNN Money Article a few minutes ago about the rising pace of existing home sales over the past 4 months, including quotes from the Chief Economist from NAR.

I'm not sure I agree that it's going to take 5 - 7 years to reach 2005 price levels. I don't think you can predict that. If you look at this chart of median sales price for Daniel Island, SC, it's clear that prices peaked between 2006 and 2007, while the current median sales price level is exactly the same as mid-year 2005. That market that saw a precipitous decline from mid-2006 to mid-2007. Since mid-2007 the market has been highly volatile but statistically it has not been in a declining trend, a trend line through that period would be flat. Statistically speaking, I don't see how a 5 - 7 year recovery can be substantiated from this data. It could be 5 -7 years or it could be 12 months. The predictabliity of the market is that it's unpredictable and past data provides very little trend information.

The price of the current supply is so depressed, particularly in the $300,000 to $600,000 range, that in order to compete, all prices must remain low regardless of decrease in supply. Additionally, there has been a government imposed moratorium on foreclosures in SC for the past 4 months and that artificial measure is about to expire. And when this happens, a new onslaught of supply at depressed prices will hit the market. Therefore, if you are hoping that the market has turned around and the price of your house is stabilizing and going up, you are mistaken. We are probably looking at a 5 to 7 year turn around to return to 2005 prices.

Until all price points reduce their inventory levels to a 6 month supply, we will see continued prices decline. Also, foreclosures and short sales are dragging prices down as well. The banking association is also suggesting that there is another wave of foreclosures coming in the 4th qtr of 2009 and 1st qtr 2010, this will drive prices down as well. Fortunately prices have slowed from an avg 2% decline per mo to 1/2% decline per m onth.

Dear Homeowner - I agree, it's a pretty complicated situation, and right now, there is still a lot of "volatility" - meaning prices and inventory change rapidly. To give you a one or two reason answer would be oversimplifying the situation. There are many factors at play in this "micro-market", including the economy with rising foreclosures that puts more houses on the market with a "fire sale" mentality, tighter credit which is keeping many buyers out of the market, speculators/investors pulling homes off the market and renting rather than trying to sell, the variety and uniqueness of the different Charleston neighborhoods, to name a few. I think in Sea Island and coastal communities, the neighborhoods are more homogenous, and so the effect of one factor - such as decrease in the number of listings - shows a more direct correlation to the average list/selling price of homes.

In short, no simple answer! and don't let anyone tell you there is!

Very best of success to you, Homeowner!