This one chart tells several tales. There is news here, good and bad.

First, the bad:

You may have recently heard news about the “bottom” of the real estate market. This chart supports the idea
that we are most likely experiencing a false bottom, as organic sales grab hold of the market during the same
time the banks continue to build their shadow inventory. This is due to a couple of facts not plainly obvious
on this chart. One, organic sales fetch a higher price then distressed and bank owned sales. Two, banks are in
fact currently taking back more homes then they are selling or even putting on the market for that matter.

The Good:
As organic sales grab a larger market share, home prices go up, indicating that people (buyers and sellers) still
hold value in a home, and when given the opportunity they will use their purchasing power to show it. What
that means is the current market is a glimpse into what the market will look like when the smoke has cleared
from this lending mess.

The Really Bad:

This glimpse at the light at the end of the tunnel is almost entirely smoke and mirrors itself, created by government
sanctions on foreclosures and incentives for buyers, which set the stage for a market that would lead to the data on
this chart. To some degree, these underlying factors are more of the same that has caused the melt down to begin
with, only this time it’s handed to the people on a silver platter by the government rather then hidden behind a brokers
mask in an automated underwriting system.

This chart is based on California real estate information courtesy of Mr Mortgage, Mark Hanson, but you may find it
to be comparable to your market. I certainly feel it is at least relevant to the Seattle real estate market where I work, if
not ‘very comparable’.