The California Association of Realtor recently announced this forecast as of 10/20/2011:

Economic growth is expected to be no greater than 2 percent through the end of 2012 – a growth rate that makes the economy very vulnerable to any external shock that could trigger a downturn, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.

External factors, coupled with uncertainty surrounding the degree of domestic fiscal austerity, including the scheduled expiration of various tax cuts and unemployment benefits, and the impact of forthcoming regulations, will determine how fast the economy will grow.

“There’s been a little seasonal cyclical pickup in housing activity recently, as spring and summer sales are generally stronger than fall and winter, but leading indicators point to housing sales bouncing near the bottom at least through the end of 2012,” said Fannie Mae Chief Economist Doug Duncan.

“Home prices are a key factor for any positive movement in the housing market, and the large inventory of distressed homes working their way through the market is putting downward pressure on prices. Now that we are entering a traditionally weak seasonal sales period, we expect home prices to show renewed declines after firming for several months,” Duncan stated.

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Real estate activity is very fluid. In only a few months’ time, a town can change from being a “buyer’s market” to a “seller’s market.” It depends on supply and demand and price point.  Interestingly, the third quarter mirrors the first quarter, not the second quarter. There are six towns that are considered a “neutral” market (a balance of supply and demand) and five town that are considered a buyer’s market (more homes for sale than buyers, a benefit to buyers). The other two towns in Marin are considered a “seller’s market” (more buyers than homes on the market, a benefit to sellers.)

By price point, not much has changed since the beginning of this year. The low end of the market place remains in a seller’s or neutral market, and the high end of the market ($1.5 million and above) remains in a buyer’s market.

Below are two charts that provide an overview of the market conditions for the past three months. For example, the market is in the buyers’ favor if they are looking in the $1.5 – $2 million dollar range. However, if they’re looking in Greenbrae, they’re looking in a seller’s market since demand is very high there right now. It is also interesting to note that typically the more days on market, the lower the selling price. The towns that are in a seller’s market have a much closer listing price and selling price.

Opportunities abound in real estate right now (low prices, low interest rates) but a variety of factors come into play when you’re deciding where to buy or when to sell. I strongly recommend that a seller or a buyer carefully review the sales of homes by price point and town in order to negotiate the best price possible given the market conditions.

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