Years ago, during the days of the Asian Contagion that struck Wall Street and caused the New York Stock Exchange to close early because of extreme losses, there was an undercurrent questioning the Exchange’s intervention into the markets.
Let the markets run their course, the theory went. Market mechanics will take hold.
I’ve had the same thought every time there’s discussion of a bailout, or freezing of the foreclosure process, or whatever else may come out of the mouths of folks running for office. I’d rather they stay out of the way and let the markets run their course.
As my client, also a reader, put it to me yesterday as a conclusion to his e-mail … markets work. And he’s absolutely right.
Yesterday’s news that Phoenix real estate sales were up year-over-year for the first time in any month since July 2005 was good news, at least to me, because it indicates an increase in demand. Yes, the news was accompanied by a drop in the median price but at this point that’s to be expected. Banks are forcing the prices down in an effort to find the point where demand begins to erode the supply.
We’re getting closer.
Yes, there are 54,000 properties in the Arizona Regional MLS … yes, there are 38,000 single-family homes for sale in Maricopa County. But the latter figure has been dropping over the past several weeks.
It doesn’t take an advanced economic degree to understand what happens when supply starts to drop and demand starts to increase.
The worst isn’t behind us. But the beginning of the worst is.
[tags]Phoenix real estate[/tags]