Good news and bad news seem to go hand in hand, and that's especially true in real estate. The good news is that the national economy is strong; the bad news is that strong economic trends encourage the increase of interest rates. When interest rates go up, home sales go down. When real estate sales decline, prices drop - making it a buyers market. Most real estate specialists have characterized the Phoenix real estate market as a seller's market.

In a seller's market, there are more buyers than there are sellers. Sellers have greater ability to price the home according to their idea of a fair price, instead of letting the buyers dictate prices. A seller's market also means that sellers don't have to negotiate much - they often receive their full asking price, if not more.

Real estate market demands are usually a result of an increasing population base due to economic expansion. In some communities, home prices increase if the real estate was undervalued, especially when compared to other home markets. When new residents move into a market like Phoenix, they often bring with them a great deal of equity from their higher priced communities. This increase of readily available cash pushes up the prices of real estate. Eventually, prices climb to a more realistic level and then begin to level off.

Real estate prices also rise and fall slightly according to a seasonal sales cycle. Typically, buyers look for homes in the spring and summer months to make moves within school districts easier. That means there are more buyers looking for homes, and sellers often tend to wait until those months because they'll get greater value for their home. These months tend to be more of a sellers market.

Conversely, winter months, such as November, December, January, tend to be slower for real estate sales. If a home owner desperately needs to sell his or her home, the buyer has a clear advantage. But there are also fewer homes to select from. If you've put off a move or home purchase because you've heard rumors that the Phoenix's real estate "bubble" may burst at any time, you may want to reconsider. Few markets have a bubble - a sudden decrease in home prices. More commonly, prices level off and maintain for a few years, especially if the economic community is viable, as it is in Phoenix.

This could be the perfect time to find a home in Phoenix. The market is beginning to become level, the inventory of homes is substantial, you have time to consider whether a particular home is right for you (as opposed to making an offer after seeing it once), and interest rates are still low. It's the perfect time to make a competitive offer for a home and begin to watch your equity steadily grow.

Go to www.central-arizona-homes.com and get a free copy of Reg Gustin's 2005 Housing Appreciation Report. A 10-page report with data analyzing the housing appreciation throughout Maricopa County.