OK, so consumers shopped at Nordstrom's and Wal-Mart instead of buying ovens and dishwashers from Sears. The retail report was so good for June that the Dow Jones stock market hit an all-time high of 13847.83. It's not that retail did so well, it's that it didn't do as badly as anticipated by investors who had already priced their uncertainty into the equities market. Mortgage interest rates sank a little on the good news and everybody's happy. Or are they?

In real estate, the news wasn't so wonderful. It was all about the earnings -- or lack of earnings -- reported by some of the biggest corporations that cater to the real estate consumer.

Home improvement leader Home Depot won't improve much this year, the company warned investors. Down 9 percent through May, earnings are likely to decline by 15 to 18 percent for fiscal 2007. Cited as the reason was a "challenging" real estate market, which is expected to continue into 2008.

Reluctantly joining other giant homebuilders losing money, D.R. Horton Inc. said its second quarter orders for new homes fell 40 percent from last year. That discouraging report echoes the quarterly losses also reported by KB Homes and Lennar homebuilders. To blame are rising home inventories, cancellations and continuing fallout from the subprime market.

Meanwhile, interest rates are rising again, says Freddie Mac, which is putting pressure on adjustable rate loan holders, many of whom took advantage of teaser rates to get into homes they can no longer afford.

Fixed rates of four percent are coming to an end, and are resetting at nearly six and three quarters. That's a rise of half a point since May 10. To put it into perspective, every eighth of a point raises typical monthly mortgage payments about $25.

As these ARM borrowers attempt to sell their homes or default on their mortgages, inventories for existing homes also rise, a problem alarming communities from Atlanta to Detroit.

Two drivers move markets -- fear and greed. Right now Fear is in control.

So the short-term outlook appears to be more of the same -- rising inventories, desperate sellers and skittish homebuyers. But as inventories are slowly absorbed, the market should improve sometime in 2008, according to economists with the National Association of Realtors and the National Association of Home Builders.

That's when Greed will take over.

If you're a home buyer or an investor, you need to ask yourself a question. Should I buy now, while interest rates are still below forty-year averages? And while inventories are at multi-decade highs? Or should I wait until other buyers have picked off the best selections in the marketplace before I get brave enough to jump in?

Sellers, meanwhile, need to examine their motivations. How badly do you need to sell? If you're selling out of fear, don't add your home to an already saturated market. If you can wait until your market stabilizes, you'll get better offers for more money.

If you must sell, take advantage of a not-so-great offer to get out, but use that opportunity to buy something more desirable with a greater chance to appreciate. A buyer's market is an excellent time to trade up. Don't lose sleep over what you're losing -- think of what you're gaining. More square footage, a better neighborhood, or an improved lifestyle, even that means buying a smaller house with a smaller mortgage payment.

Think long term. If you can qualify for a fixed rate loan and you don't plan to occupy your home less than three or four years, buy a new home and help DR Horton out. Or refinance your home, and pay Home Depot a visit. New bathroom, anyone?

Remember, the more others are hurting, the more opportunity there is for you.

Published: July 13, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.