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I think that the underlying question the housing industry as a whole is asking is,

Where is the floor on housing prices?

Once that is determined, either on a macro or a local level, then the market can re-assert  itself and the real estate industry can make plans. Barron’s has an interesting article today on the topic. Here is an excerpt but follow the link to read the whole article.

From the peak in 1989 to the trough in early 1997, inflation-adjusted home prices (using the Case-Shiller 10-City Index and the CPI) fell 26%. Yet inflation-adjusted household net worth rose by more than 20% over the same period while the American economy created 13.4 million jobs and real disposable income per capita rose more than 8%. In the current environment, equity price gains and income/wage increases are adding to the stock of wealth even with a headwind from falling home prices, which his why inflation-adjusted household net worth rose to a new all-time high in the third quarter of 2007. Real household net worth is up more than $2.7 trillion in the seven quarters that housing has been a drag on U.S. GDP growth. via Barron’s Online.

As responsible agents it is your duty to sell homes for the highest prices or get buyers the best possible deal. With a market like the one we are facing in many parts of the country, it is very hard to give solid advice to either party. Obviously pricing a home right is part of the equation, but even a right priced home will give a buyer pause if they think it will decline over the next year.

The build up of potential buyers is occurring, the 20 somethings are still planning on living the American dream of buying a home, but they also are news savvy and will not leap into a bad deal just to buy a house now. No one wants to overpay.

But once the market hits a firm bottom either locally, but preferably nationally to get the media talking about something else, then they will come out in droves.

So keep an eye on the economists because this is one time they probably will have some effective feedback as incomes rise to make housing more affordable.

Related posts:

1. Have We Touched The Bottom Of The Real Estate Market?
2. Housing Prices Rise at Lowest Level in 7 years
3. Harvard Housing Study Predicts More Pain For Housing Markets
4. Why Housing Prices in San Francisco Will Always Remain High
5. First Quarter Loss For Weyerhaeuser Due To Slow Housing Starts