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...

Real Estate Investment Market Analysis

While some are calling a "bottom" to residential real estate, others are not so sure. Here is a sober analysis from Barry Sternlight, CEO Starwood Capital. He sees residential nearing a bottom while commercial real estate still has some trouble ahead.

Here was his interview on CNBC earlier today...

Cramer Calls "Housing Bottom"

While I believe the assertion that we have "the best affordability on record" is over-hyped, I agree that halting the constant value depreciation is the ultimate rainbow after the storm...Mr. Cramer has been predicting a mid 2009 housing bottom for a while. This video from TheStreet.com gives you Jim's "state of the market" view on housing.

Pending Recovery?

Today we received the April "Pending Home Sales" index results from the National Association of Realtors (NAR). The index saw its third straight monthly increase in the data and the greatest monthly increase in over seven years. This index is often less reliable than new home sales or existing home sales numbers but it can show a trend pretty well. The greatest increase in pending sales was found in the northeast and midwest.

Here is CNBC's take on the data this morning...