At least for real estate, it's possible to do the numbers and not rely on feelings or hunches.
And the numbers will show exactly what trends are alive and well in that market. For example, in Sonoma County to date, sales volume is up 16.6% over this time last year, but average prices are down 4.7%.
Bidding wars are up due to extreme teaser prices for distressed properties. But 53.4% of the home sales in this county to date were distressed. Not a good sign. Median price has declined 34% from 2007, driven down by 9,131 homes lost to foreclosure or short sale since 2008.
Oh, by the way, 616 Sonoma county homes are scheduled for foreclosure auction at the court house steps just in APRIL. That's 160% more homes than are sold per month in Sonoma County in 2011. Foreclosures are the driving force of our downward price cycle. And this cycle is locked in place until foreclosures stop.
According to an economist at the Senate Housing and Banking Committee hearing, this housing crisis will last another 5-7 years. I predicted our home value decline in 2009, and have been stating that the natural and logical conclusion of this foreclosure crisis is that eventually every loan will be foreclosed. These predictions ring true.
Low priced foreclosure/short sales force whole neighborhoods upside-down in value compared to loan debt, (sonoma county currently has 21% of loans upside-down - over 29,000 loans), which forces more short sales, strategic defaults, and foreclosures. A self-reinforcing downward cycle.
Don't kid yourself or your clients. We're currently locked in a fierce price reset market. That doesn't mean buyers can't buy or sellers sell. But it does mean every agent needs to be extra smart about what advice they give to their clients.
Beware and be truthful.