While the nation’s housing market has bounced back from the depths of the recession, the nascent recovery has been slow and sporadic in many parts of the country, including here in the Bay Area. The question on everyone’s mind is, “When will the market return to normal?”  No one knows for sure when that will happen  (the definition of “normal” is rather subjective  – it seems today’s market is the “new normal”), but there are a number of signs out there that we should be watching for – economic indicators that will point to a  more robust recovery in the market.

 On a macro-economic level, consumer confidence and unemployment levels are crucial, along with overall economic growth figures such as the nation’s GDP. Buyers won’t take the chance on purchasing a home if they’re out of work, or concerned they may be before long. If they don’t have confidence that things will be getting better, they’re not likely to move forward with a major purchase.

 Additionally, because real estate is such a local business, our local market indicators will also give us some clear signals. In addition to seeing overall sales rise in our local communities, we will be looking for inventory levels to fall, median prices to edge higher, the average days on market figure to drop, and the upper end of the market to heat up. Historically, it’s been the high-end market that comes out of a recession first because buyers have the means to take advantage of good values.

 So are we seeing these signs yet? Nationally, it was a mixed bag this week.  We enjoyed a slew of positive economic data points early in the week – rising car sales, upward revisions to growth and productivity and a busy start to the holiday retail season. Private sector payrolls rose by the most in three years in November. And finally, the Conference Board reported Tuesday that the Consumer Confidence Index jumped to 54.1 in November, up from a level of 49.9 a month earlier. Although the index remains well below its prerecession levels (which were above 100), the boost provides an encouraging sign for the economy.

 But as we took two steps forward with the positive economic data, we went one step backwards on Friday when the nation’s jobs report was released. November’s job growth came in far lower than expected and the unemployment rate rose to 9.8%. U.S. employers added 39,000 jobs to their payrolls in November, the Labor Department reported. That marks a major slowdown from October, when the economy added an upwardly revised 172,000 jobs. The number also fell short of the 150,000 jobs economists were generally expecting.  However, most economists are concluding by week’s end that the mixed bag of employment data was overall a bit more positive than negative.

 Sales of million-dollar homes in Silicon Valley and the median sale price edged higher in October, according to Coldwell Banker Residential Brokerage’s luxury home report.  It was the eighth time in the past nine months that year-over-year sales in the luxury market increased.  Luxury sales also edged higher in the East Bay. In Marin, although sales dipped slightly in October, the median price rose 7 percent.

 The broader Bay Area housing market, however, is still working to move back to normalcy. Sales in October were off sharply from year ago levels. Analysts believe much of the drop had to do with the fact that 2010 home sales were “front-loaded” earlier in the year as buyers rushed to take advantage of the tax credit before it expired. But certainly tighter credit and concerns over jobs played a role. 

 So where does this all leave us as we head toward year-end? Our local housing market recovery – like those in many regions – has been slow and choppy at times. Yet we are seeing enough positive signs overall to believe better days are ahead of us as we move into the new year. For those looking to buy a home, the stars are in perfect alignment. Interest rates are at historic lows in the low-4% level in 30-year fixed-rate loans. Home prices are very attractive. And housing affordability is at the highest point in years. Buyers need to examine their own “personal economy” and decide if they’re in a position to invest in a home. If they are, there may never be a better time.

The average sales prices for a home in Santa Clara County rose 5.97 percent in October from September, signaling strong demand and increased buyer confidence reports the Santa Clara County of Realtors.  The average sales price for homes, including single family residences, town-homes, and condos, went up to $699,175 in October of 2010 from $659,798 in September, 2010.  The spike in year over-year comparison is even bigger:  It jumped 11.09 percent from the same month last year.  The price increase indicates that home buyers recognize the value of owning a home or buying investment properties in Santa Clara County said Karl Lee, president of the Realtors Association.  This continues to demonstrate that Santa Clara County is way ahead of most other markets in the nation on the path to full recovery.    Savvy buyers are now snapping up bargains while those who wait may look back a decade from now and wonder how they missed this opportunity.