** CALLING IT HERE - ECONOMY STARTING RECOVERY

Seeds of Recovery:

Lately I've been seeing reports that I think shows we've hit bottom and starting an economic recovery back up. It takes time for these things to filter up through the economy and we may not show major signs of the recession over for a year and a half but here's the scoop. Keep in mind I was one of the few people saying we'd entered a recession in 2007 and have followed the Fed movements for nearly 2 decades.

Its the collapse of the Real Estate market that brought us down. Originally, you were seeing foreclosures outpacing sales of homes. There a point where lowering the price of something at certain levels can start increase the demand for it. Plus, we have interests rates at a 40 year low to encourage buying. We are seeing that price=demand emerging in Real Estate Markets. Right now, markets are reporting that while foreclosures are still happening, sales of homes to buyers seeking the low prices are jumping. Sometimes as much as 100% in markets like California and Nevada. In addition, your finally seeing inventories of homes go down.

One of the things that drove the collapse regardless of what you hear was investors drove the market and (some qualified, most not) over inflated the housing market much like what happened during the dot.com era (read my prior blogs). Now that that excessive inventory is dissipating prices are/have dropped to spur demand.

These are the seeds of recovery, once prices get so low, demand has to kick in. According to NAR: "More than half of those planning to buy a home in the next 12 months would be first-time homebuyers (53.5 percent), which compares to the 41 percent market share actually taken by first-time homebuyers in 2008."

Also note when we come out of this recovery it will increase home values again because builders and sellers have less inventory. Eventually thats going to catch up to us again with another boom.

Keep in mind you'll still see foreclosures and layoffs steady and more prices drops until demand takes fully over.