Instead, what the CAAR narrative focused on, and what it got local media entities to focus on, was the idea that a decline in inventory could actually "lift" prices.
This blog refuted that notion, with a post about why local declining inventory doesn't equal "health."
Now the WSJ has noticed the phenomenon on a national level:
(italics are this blog's) The article also uses the words "slim pickings," which certainly describes the $350k and under market in the Cville area. Read the whole article.While falling inventories are typically a sign of health, because reduced competition can boost prices, that isn't the case right now. Instead, real estate agents say, people are pulling their homes off the market rather than try to sell them at today's discounted prices. At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties. The shrinking supply isn't driving up prices because demand is soft.
"Waiting out the market" has proven itself, for the past 6 years in this area, to be a $$$ losing strategy. As the local housing market is nowhere near a recovery, and there are daily national headlines about how troubled housing is, why would anybody expect a "lift" in prices?
The idea that prices could "lift" is a disservice to sellers as well as to buyers.
Related: How to Make a Lowball Offer