This week Newsweek’s cover article announced “The Recession is Over”. I tend to be dubious when anyone declares a trend dead, so I wondered whether there was any nugget of truth in this broad statement.

In the Bay Area, things are definitely looking up.

• Between the first and second quarters of 2009, SFR prices in the Bay Area increased 28% (Source: MLS)
• In the same time period, quantity of units sold increased 66%

Those are great numbers, and they reflect other recent news that prices and sales were up for the third consecutive month in June and national new home sales increased 11% in June, the biggest gain in 8 years.

But this is not surprising news. Sales and prices always increase month-over-month in the Spring. This tells us that we are no longer in a sharp decline — the market’s behavior is somewhat “normal.” For example, see this chart on sales by month in San Francisco.

The real test is how the market is performing year over year.

• Comparing Q2 2009 sales to the same time period in 2008, quantity of units sold is also showing strength, up 2%
• Average price is down 29%

But even with this bad news there is a silver lining. It appears the rate of decline is slowing.

In San Francisco for example, prices were down almost 30% year over year in January. But through 2009 we saw a steady decrease in the decline, where June’s decline was just over 10%. Declines in value are never a good thing for property owners, but at least the signs are pointing in the right direction.

According to this data San Francisco did, indeed, hit its bottom in January. While we were uncertain the Spring buying season would show up at all, it did. And it appears the season is sustaining it’s strength later in the year than expected.

While the right metrics are looking positive, all we can do is hope that confidence is returning to the Bay Area real estate market and that this is not a dead cat bounce.