I read an article in my local newspaper recently written by a corporate real estate salesperson that really irritated me. In it, he ‘exaggerates’ the current real estate market as having bottomed out and is now accelerating upwards. “Don’t miss the ship,” he implies, “lest the new ‘boom’ sail without you!” Pure, unadulterated advertising designed to scare a buyer into the market now and not later. It bothers me, do you too?

In my area, San Diego County, California, we haven’t hit rock bottom yet. The reasons for this are many, but the foreclosure numbers alone indicate that there will be a large number of homes on the market at reduced prices for an extended period of time. This factor itself will inflate inventory considerably. Supply and demand applies especially to real estate. Bank ownership in the market in large numbers is never a good thing. Banks will and will accept offers well below market value. That sale becomes the next comparable for the neighborhood, causing sellers to adjust their listing prices downward, which they most resist.

Here in San Diego, there was a small increase in sales activity and even in prices for April over March. That’s to be expected since spring – summer is the peak period for home buying. Is this slight upward move enough for real estate agents to start “overdoing it”? Hardly. Even experts warn that a trend will not be noticeable for months.

In the San Diego Union – Tribune (Tuesday, May 20), DataQuick analyst Andrew LaPage is quoted with a little glimmer of positive activity tied in as saying, “For the most part, this is a good old-fashioned blue-plate special.” : this is discounts that stimulate more home sales for the most part.” That is, prices discounted by short sales sellers, which are becoming fashionable, or bank sales. Not by eager sellers willing to accept rock-bottom prices. Not yet.

LaPage and other experts warn that the booming market of the past has not returned as of now. And it can take more than a year to do it in a positive way. The increase in sales in April was greatly influenced by the 35% (869 of 2,475 sold) foreclosures. The current San Diego market inventory of over 18,000 with a sales factor of @3000 per month will not deplete inventory much even if no other home comes on the market. However, foreclosures will continue to be added to inventory for the foreseeable future. These will influence the sale prices.

Buyers tend to ‘wait and see’ in this type of market. That’s their prerogative, but that attitude frustrates real estate agents to no end. With no buyers, they have no profit as real estate is a commission only business. No sales, no income. Therefore, there is a trend these days to try to influence game goers whether they are ready or not. This is where my favorite bummer, hype, comes into play, and where you’ll start to see pontificators like “Better get on the shopping train now before it’s too late!” However, “prices are rising and the market is heating up… don’t miss out!”

Now, I don’t envy a salesperson who tries to persuade me to buy something if he uses fair and accurate numbers and tactics. I do not agree with those who would use bragging in their attempt to sell me their products. That’s become an all-too-common trait of real estate sellers, some of them, that is. Since homebuyers rely on expert advice, that advice must be accurate and not exaggerated. The real estate agent is bound by ethical standards to give an accurate assessment of each possible ramification of the purchase or sale of the house in question. Even if it’s not positive in nature.

Can we expect a lone real estate agent to determine the exact bottom of the market for a potential buyer? NO! Not even the most esteemed experts know exactly when the real estate market is at the bottom. What the real estate agent should do is give the best possible evaluation and the best advice they can muster, and let the buyer decide, without exaggeration. The buyer who will keep his home for an extended period can and should buy when he sees fit and feels comfortable doing so. Real estate prices have always been cyclical in nature: what goes up, goes down, and then rebounds after a period to even higher levels. A house bought with the intention of being a home first and an investment second has always been a good investment.

The overheated market of the recent past was fueled in part by speculators and so-called ‘flippers’ (greedy little bastards I say) encouraged by real estate agents to no small extent. Their hype leads to overpricing and an unhealthy market. Realtors must accept partial responsibility for this current disaster along with their minions, the mortgage brokers. Estate agents are cautioned to proceed with caution during these times lest they cause false hopes and undeserved purchases before the ‘right’ time is. There is no need to overdo it.