Home Sales Jump - The Good and Bad

The real estate market has been so brutal for so long that it is often hard to find anything to be particularly excited about.  Well, there is finally some great news - home sales jumped over ten percent in October and are now 9.4 percent above 2010 levels. This news, however, comes with some good and bad twists.

So, let's start with the good news. The pace of sales jumped! This may seem somewhat ambiguous, but it is not. One of the huge problems in real estate is the simple fact that there is a mass of inventory sitting around. As with any product, excessive inventory will drive the price of the product down. Between short sales, foreclosures and bankruptcies, the real estate market has a ton of inventory sitting around. The fact that we are finally seeing a pop in sales rates is indicative that the inventory is starting to drain...or is it?

While the home sales jump is a great development, the reason for the jump takes more than a bit of luster off of the news. Are real estate investors coming back into the market? Are banks lending again? Are we past all the horror? Um, no.

Given the current state of the economy, there appears to be no objective reason that home sales will continue to rise substantially. 

What is the key to turning things around? The answer is simple - jobs. The economic outlook is highly dependent upon consumer confidence. For consumers to be confident, they have to have work. Until the unemployment rate drops dramatically, the real estate market will remain tepid at best.

Raynor James writes about issues faced by FSBO sellers for FSBOAmerica.org where you can list your property for sale by owner for free for 1 month.