The Spring Boom That Isn't

Spring is the busiest season for real estate and typically when prices rise the most. Some real estate agents are hoping that a spring boom will reverse the current price declines that are occurring in most bubble markets. The hope is that with the spring season a large amount of buyers will swoop in, raise demand, and bid up prices. Real estate 'guru' Blanche Evans wrote on January 23rd "What about housing? There's a lot of positive news that suggests that housing may have had its "rest." Spring might catapult housing into another record year."

While it is still somewhat early in the spring selling season, so far it has been a disappointment for the housing industrial complex in the bubble markets. Inventory continues to increase in the overwhelming of the bubble markets as prices are either declining slightly or remaining flat.

For example, in metro Sacramento on March 20th there were 11,560 properties which increased by 2001 (16.9%) to 13,521 on May 6th [about 1.5 months]. Meanwhile, if we compare the year over year (YoY) for sold inventory we see 2,489 properties sold in metro Sacramento in March 2006 down 7.7% from 2,965 in March 2005.

In Washington, DC the median price selling price in February 2006 was 400,000 which then declined slightly (-0.75%) to 397,000 in March 2006. If you compare that to the same months in 2005 when the median price jumped (+5.5%) from 379,000 to 400,000 between February and March (Source: MRIS).

The false hope of the 'spring boom' is being shattered by the harsh reality of a declining housing market. The spring boom is dead on arrival (DOA).