[quote=sdduuuude]The good news is – the inventory flow isn’t really all that bad, though the months of inventory is still low.[/quote]
I agree. In the area that I am familiar with (Temecula), the inventory has stayed flat at very low level for almost a year but the price appreciation is not that dramatic until recent months.
Real Estate price is sticky because you have appraisers that come in with a value that reflects past/recent purchase. I think to make the price change, you not only need limited inventory and good demand, but also a sentiment in the right direction. If the sentiment is bullish, appraisal no longer determines your purchase price but your loan amount.
On the demand side, the FHA/VA buyers are probably the ones who made 20-30 offers and not getting a single one accepted so they created an illusion of higher demand. Some of these buyer learnt and adjusted their strategy by bidding higher recently in my valley. But the banks also have learnt such that they now request these buyers to have proof of funds to go beyond the FHA limit in case the appraisal would come in lower (which happens quite often).
The sentiment has changed such that it is now very hard for the seller to make price concession with lower appraisal because they think they can wait for a higher price later on. That will gradually drive up the comps and the price will then eventually rise.
