Forecasting: The housing market is in uncharted waters.

The protracted economic downturn has generated a lot of uncertainty. This is because we are in uncharted waters. Employment, housing, interest rates, deficits, credit, inefficient governments and more are in flux, and the U.S., Europe, China, and the rest of the world’s economies are all intricately tied together. All have been affected and a change within one countries economy, good or bad, has an impact on the rest.

Who could have predicted that the European financial situation would drive mortgage interest rates in the United States to an historical low, even as the prognosticators consensus predicted a rise in rates? The Achilles heel in economic forecasting is that it draws its conclusions from historical data. What happens when we have nothing to draw from?

This is where we are today, from the federal government to our own private finances. This lack of information puts everyone in a position to have to exercise their best guess. Most of us think a while when we have to come up with our best guess, sometimes aloud, to ourselves, our families, and friends.

Enter the instant information age. One Facebook post or tweet can go viral. Millions read it, many instantly. Because it can be read, people give it more credence than it may deserve. (Originally it was a communicated musing, after all.) Credibility is the foundation of perception, and perception often becomes one’s reality. People make decisions based on their reality. By the next business day, one thought spoken or typed out loud can cause the global financial markets to lose hundreds of billions of dollars.

Sound farfetched, maybe. It depends on who is thinking out loud.

Over the last two weeks our active inventory has been reduced by 34 homes to a total of 8,080 homes for sale. In the past two weeks, demand, has increased by 308 pending sales to a total of 2,528 pending sales. Our expected market time decreased from 3.65 months of inventory two weeks ago, to 3.20 months of inventory today. The inventory of distressed properties, as a segment of the overall inventory, decreased by 186 homes and now totals 2,990. The number of foreclosed homes for sale, within the active distressed inventory decreased by 50 homes, and now stands at 570 for all price ranges, in all of Orange County.