What is the bottom of the Market.

We are sliding down to the "bottom" - When will we know when we arrived?

We all have been bombarded with negative reports on the housing market and our economy. We have seen our home values plummet. We anticipated that the new bailout program was going to "save" us.

These negative reports drive the economy further down and create a down spiraling effect. Consumer confidence dropped to an all time low of 25 last month, the lowest it has ever been, and worries about job security and dwindling net worth can perpetuate this effect.

Last year 22.2 percent of homeowners in our fine state of California, sold their homes at a loss.

Nobody can predict when we have reached the bottom of the real estate market. We will know that when we have "left" that point and home values come up again. We can predict which direction the market will go by monitoring the statistics. What is the average time a home is on the market, how many homes are closing each month and what about inventory; is it shrinking or increasing?

In Gilroy we have seen prices drop a stunning 37.5% ($390,000 vs. $624,000) last quarter compared to the same period the year before. Gilroy has been hit harder by foreclosure than other cities in the Bay area. Unfortunately, a number of these foreclosures include homes financed by poor lending practices. A fine example is the single family home purchased for $1,350,000 in June of 2006 and recently sold for a "mere" $630,000 (53%). That is not the only home sold in that area for this low price. It's a domino effect.

Because of "fraudulent" practices in the past and other poor lending choices consumers made, either due to misinformation or other reasons, our home values keep dropping. This not only affects the people who "choose" these loans but also the homeowners who have not taken chances on subprime loans; those who work hard to make their monthly payments; those who didn't "cause" this increase of foreclosure and decrease of market value to their largest investment: their home.