If in fact “There is alot more demand than supply right now” then home prices would be rising in San Diego right now. That is clearly not happening. While everybody knows that supply is being artificially held back, obviously not enough to cause prices to rise. Bottom line, there is NOT more demand than supply. [/quote]
In areas and price segments where there are tens of offers on properties there certainly is excess demand relative to supply.
There are areas and price segments where this is the case and where there are actually price increases.
What some of these guys see on a daily basis today shows up about 2-3 months later in Dataquick and about 5-6 months later in Case-Shiller Index because of lags in reporting.
We saw this as we approached the peak in 2005. Aggregate Demand was down in 2004 (number of sales decreased) supply increased dramatically in 2004-2005, yet prices reported continue to rise through late 2005.
Either fundamentals of supply/demand economics were wrong at that point OR the measures of price used were lagging the actual market supply/demand.
I believe that the same thing is happening in reverse now.
Arguments for a market bottom forming (at least in some areas) centers on supply/demand and affordability, while the direction of prices indicates otherwise.
Back in 2004-2005, arguments for a market bubble centered on supply/demand and affordability, while prices indicated otherwise … for a while.
