What do you expect?

The growing sense of optimism in a housing market "bottom" needs to be balanced with a realization that more challenges are ahead of us. There is a growing fear that the market will see a "glut" of new inventory as we appear to stabilize. Sellers who have been waiting for a "glimmer of hope" will rush to unload...after holding out during the past eighteen months. We have already seen a new wave of foreclosure inventory released into the market. We seem to be stuck at 10 to 12 months of inventory. It will be a necessary but not sufficient condition for "recovery" when we see inventory under six months supply. Inventory levels can drop through sales or through an increased demand.

Jobs will drive a housing recovery. Until we see the unemployment rate start to decline, we are likely going to see additional erosion in home value and housing demand.

Diana Olick at RealtyCheck and CNBC had an interesting perspective on seller expectations. The fact that the buying market seems to be "bottom feeding" on distressed inventory and driving pricing down for "organic" sales...all point to more discomfort for home sales.

Here is Diana Olick talking about falling prices on CNBC Friday...