What constitutes the "bottom of the market"?

I get this question all the time: have we hit the bottom yet? Market by market, that's what's happening across the country. I've been tracking "hot" markets for RealtyTimes.com (http://realtytimes.com/rtpages/manthonycarr.htm) for the last year and I'm seeing very healthy markets across the country in state after state.

The strongest market in the country is nearly any county in Texas. As far as comeback markets, where ever the foreclosures hit the hardest is where you'll see the biggest come back. Prince William County, Virginia (outside Washington, D.C.), many markets in the state of Florida, Los Angeles, Las Vegas, all are in the middle of a recovery.

Now, recovery doesn't immediately mean increasing prices. So when I refer to a "recovering" market, I'm looking more at pending sales; list to sold price; the level and direction of seller subsidies; and sustainability of the market, such as job growth and the housing inventory.

When inventory begins to drop, with pending sales moving upward - that's the beginning stages of a recovering market. That's what's happening all over Northern Virginia, for instance, in the shadow of the White House. In Fairfax County over the last month, pending sales have jumped above last December's levels by more than 50%; sales are up in the 30% range and inventory has dropped by about 35%. This has been happening for most of the year (2008).

Does the mainline media pick up on it? Of course, not, because they think a recovering market means one thing -- prices. Unfortunately, by the time you put in a contract on a home when prices are moving up - your chance for a great deal have already disappeared. Most likely, you'll pay at or above asking price and must bring your own money to the table without the benefit of seller closing costs to help you keep your own cash for redecorating, fix ups, etc.

I recently competed on a foreclosure property in Springfield, Virginia against four other investors. My buyer won, only because we came in closer to asking price more than anyone else and asked for no closing costs at all. We got a good deal, as the houses are selling for more than $100,000 more than what we pulled in on the property -- of course, it needs fixing up.

So as you look around for that "great deal," look at the underlying numbers that reveal the bottom of the market - not the sales price which tells you nothing more than the fact that the bottom's already hit.