After 2 years of imperfect and unreliable forecasts, you can call me jaded.  Trying to interpret housing data can make me crazy!  Most data that we read about in the headlines references "median sale price", and I am not sure that's a valid way to gauge the market. Here's an example:  At the end of 2008 and into  2009, jumbo loan rates and products were dismal, and fewer high end homes sold as a result. Then we saw tax credits for first time buyers, so more entry level priced homes sold.  That put a definite drag on the median price, and made us all feel like the value of our home was falling off a cliff. 

I much prefer looking at the price per sq. ft. in a particular area and price range when there is enough data. Not only does it better reflect the true changes in the market, but for the most part, it's not nearly as dire!

Now, let's get to 2011.  I am still jaded...and I hope the market proves me wrong!  There are indicators that the economy in general is improving.  Retail sales, new car sales, consumer confidence, are all looking a little better than anticipated.  That may bode well for the housing market, and I hope it does.  My concern is that until we see sustained improvement in the unemployment rate, we simply can't expect much improvement in the housing market prices in the St Louis Metro area or the nation as a whole.  In recent months, nearly one third of all home sales have been "distressed", either foreclosure or other sharply discounted sales.  That probably won't change in the next 12 months, and that's another drag on prices. 

All that being said, this is a great time to do what really smart people do...buy when others are selling.  This is a profound "coulda-woulda-shoulda" moment in real estate, with great prices and great interest rates - neither of which will last. 

I have a collection of newspaper headlines from every decade since 1900.  They each  proclaim the end of real estate as an investment.  And yet, within the same 10 year periods, real estate ended up outperforming other investment vehicles, and real estate continues to be a huge source of real wealth.   A gradual, sane and sustainable recovery will probably sneak up on us in the next 12-18 months...if nothing else comes along to upset our apple cart!!