The economy seems to be making those little signs that indicate some kind of recovery. Whether it will be like a man coming out of a coma or a volcano erupting is yet to be seen.

But, here are two stories that illustrate how recovery happens: when prices get so low that investors and consumers can’t help but get back in the market.

First, from the Arizona Republic, this article illustrates how developers have started building homes out in the burbs again. However, instead, this time they are doing it more cheaply because they are building homes where previous builders had to abandon ship.

Okay, set aside for a second what a bad idea it is to keep sprawling out in the desert. Also set aside just what a negative influence some developers are on the state. In my experience when I was in the Energy Office, they resisted all attempts to make more energy efficient homes and are currently going to far as to trying to undermine local ordinances that require more energy efficiency.

But, aside from that, this activity is a really good indicator of how the market is moving. First they make money on the cheapest property. Then they move on to scraping new land, etc.

Obviously these builders are watching the existing home market and are seeing that the current inventory will exhaust soon. We had an inventory of over 56,200 homes  last November. Now we are down to 31,400 homes, with a monthly sales rate of over 9,000 per month.  These guys know that it won’t be long before people are looking for new homes.

Obviously, I would like to see more incentives for smart in-fill. But I don’t expect to see that soon.

Second, the rage of multiple offers indicates where we are headed. Check out this article from Inman News.

Five months ago, you could low-ball an offer for a home. But not now. If the home is at all good looking and well-priced, you can expect to see multiple offers within 48 hours. I don’t know for certain, but I don’t think as many of those are full-cash offers because prices have gone up. But, they are definitely more aggressive.

So, this is a turning  point. A few months ago I told you how the prices started going up (the second week of April) for homes under $200,000. Now, you are seeing multiple offers on those lower-priced homes. Next you will see quicker sales on homes over $200,000.

It begs the question of whether we need another $8,000 tax credit package next year.

If one is to believe that there are a whole bunch more foreclosures coming down the pipe, then we might need that. However, I think talk of a second wave are over-rated. There certainly are more short sales on the market, but only proportionally. They are not moving and the banks don’t seem to be interested in moving them all in to foreclosure all at once.