Finally something different on the Bank of America monthly real estate agent survey as lower prices help raise traffic (unusual for December) with price declines making buyers think twice.

The traffic was up probably due to the fact that lower prices and mortgage rates attracted those who had been waiting to see where the market was going. Months after months of foreclosures are finally driving prices down enough to get eventual buyers looking. Price declines were felt in every market driven by foreclosures undercuting prices, forcing sellers to match them. Now we are in the final approach of the waiting game. As buyers feel prices are coming down, they will most likely wait to see how low.

Inventory seems below average for this usual slow December month.

“Inventory levels would typically fall 10% in December, but higher foreclosures and the lack of demand will likely lead to a shallower decline. Inventory remains the biggest issue and we do not believe stabilization can occur without a severe reduction in inventory.”

I have to agree on that last one. With the glut of homes on the market, hard to get loans and prices falling are not the right ingredients for a stable market. As usual, sellers who observe the local market carefully and find seasoned reputable local (make that a priority!) Realtors who have lived the last few downturns should be able to get as much as possible in this market. Sellers who will continue to dictate their prices, as they have the last two year, will continue to wait and lose opportunities to sell at current price. I have seen it for two years and it wouldn’t surprise me if it continued a little longer.

I’m not really pessimistic about this market despite what I just wrote. However, we need to wait and see how the mortgage market shapes up and starts lending again. Once money is going out in loans, the real estate market will come back to life. In the meantime, it’s a wait and survive game.