The economic signals are mixed….and that’s a good thing. Investors seem to think the worst is over, and so the Dow is (albeit weakly and not without reversals) up. Home sales appear to be rallying (the pending sales index is rising) but March existing home sales were down. Consumer confidence is up, but job losses continue to be severe. All this is good because recovery comes in stages and we’re now in the stage where the bleeding has mostly stopped. In this stage, some things look better and some worse. The important piece here is that we’re still losing jobs at too great a rate. This economy will not turn around until the employment picture gets less worse. Notice that I didn’t say better—just less worse.

We will still lose jobs through the summer and into the fall. But as long as the losses diminish month to month, we will be in recovery. And this ought to turn around as the stimulus package begins to bite, and the credit crunch abates. So the next indicator to look for is employment. I expect that April’s number will be less worse than March and May better than April. We shall see. If that is the case, the economy will bottom out in late Summer and begin to grow again in the fourth quarter.

What about real estate? By and large, the existing sales numbers are improving. March may have been an aberration in a market where things are generally up. New home sales are still dismal, a hangover from the massively excessive speculative construction builders engaged in from 2003 to 2005. Areas where this speculation was a significant part of the real estate boom will show up for the next party later than the rest of us. But I hear from all parts of the country that Realtors who are serious about their businesses are back in the game—and that includes multiple sales and in some case multiple offers.

The best business is coming in the lower price ranges, either from distressed property sales or from first time buyers who are entering the market armed with low interest rates, attractive prices and that $8,000 tax credit from the stimulus.

But prices will continue to lag sales. I do expect that the real estate sector will be clearly on the upswing slightly before the economy, but that prices will not rebound this year. Your potential buyers need to know that their window is closing and that when sales begin clearly to rise, prices will soon follow.

The price issue, however, will linger on. Why is this so? There is a psychology at work here in that buyers are not yet convinced that the bottom is here and they have been told by the media that there are a lot of desperate sellers out there. Their willingness to approach asking price is very low. It’s a very good time for Realtors to point out the dynamics of housing markets and how quickly the market can run away from the consumer. In 2005, sellers didn’t want to believe and were left behind. Now, it’s buyers who are in danger of watching the train leave the station.