It sounds like a contradiction, but strong arguments can be made that the East County housing market is both a seller’s market and a great time to buy.

It’s a seller’s market because there is currently a limited supply of houses for sale, prices are no longer in free-fall and many sellers are receiving multiple offers above the asking price in bidding wars. Attractive houses at attractive prices are snapped up in fairly short order by eager buyers. On the other hand, buyers have a lot of things going for them right now: discounts of 50 percent or more on fairly new houses, $6,500-$8,000 federal tax incentives if they buy soon and interest rates near historic lows.

“It’s a pseudo-sellers market,” said Shawn Beddingfield, broker associate with Coldwell Banker Amaral & Associates. “We went from a buyer’s market two to three years ago to where it switched over the last year to a pseudo-seller’s market. Technically speaking, it’s a seller’s market. But because prices have come down so far, it’s still a buyer’s market.”

It’s definitely a bonanza for bargain hunters, particularly compared to what houses cost just a few years ago. In Brentwood, a five-bedroom Inverness Court house that sold for $820,000 in 2005 was recently picked up for $365,000. A three-bedroom house on Morro Drive in Antioch that sold for $489,000 in 2006 was recently purchased for $182,000. A three-bedroom Discovery Bay house on Merritt Court that sold for $645,000 in 2006 was snapped up for $305,000 last month. In Oakley a four-bedroom house on Puffin Circle selling for $654,000 in 2006 recently went for $270,000.

“I think the height of the market was four or five years ago,” said Beddingfield. “It took the first couple years to start trending downward. Two years ago and last year we had the inventory glut. It stabilized in the $500,000s and started coming down. The last 10 months to a year we have been below $300,000. Once it flattened out to where we have a month’s worth of supply, that’s where it became a seller’s market, so to speak.”

The real estate bubble was bound to burst because as prices soared into the high six-figures, the affordability index declined to 12 percent – only one in eight Californians could afford to buy a median-priced house. “That’s why so many homes accumulated,” said Beddingfield, who noted that the affordability index is now up to 64 percent. “A much better pool of buyers.”

But making life difficult for that Olympic-size pool of buyers is the wading pool of available houses. There are currently 149 active listings in Brentwood, 82 of them bank-owned and 67 short sales in which the seller owes more than the house is worth. Three years ago there were about 700 active listings.

“Essentially we have a stabilized (market) bottom because we are getting multiple offers and over-asking prices on a lot of them,” said Beddingfield. “A lot of people think the market is still dropping. It has stabilized and if anything taken a slight upward tick. My forecast is that it’s a false bottom and we will still see home prices fall, but not in the rate it has in the past two years – probably in the single digits, somewhere around 5 percent rather 20 or 30 percent. The limited inventory makes it very competitive for buyers.”

Also making it frustrating for buyers is that making an offer on a short sale house can be a long, involved process. “You have to go through a negotiation process with the bank that can take months – one took over a year – to get a transfer of the title for less than they are owed,” said Beddingfield. “To get a short sale there’s no guarantee if you write an offer. It could be months before you get any word back. At the end of the process you could find that it has not been approved. Ultimately that house could end up having a foreclosure.”

But that experience has not prevented buyers from looking at and making offers on short-sale homes. Ten groups of prospective buyers showed up on a gloomy Saturday afternoon to view an attractive, five-bedroom, 3,200-square-foot short-sale home on Saint Augustine Drive in Brentwood with an asking price of $365,000.

Although it had been on the market for only a few days, Matthew Anderson of Coldwell Banker, who was showing it off Saturday was expecting a couple of offers to come in that afternoon. “It’s a nice house, nicely maintained,” he said. “Everyone who has walked through here has commented that it’s a beautiful house. Especially because it has that junior suite downstairs, which is a unique feature that people seem to like.”

One prospective buyer checking it out was Ray Valverde, a board member of the Liberty Union High School District, who was impressed. “This is everything that we are looking for,” he said. “I think there’s some very nice homes out there and some very good prices out there.”

The crystal ball is a bit cloudy in predicting how the real estate market will shake out in the coming year due to a variety of factors working for and against buyers. One of the things working against them is the fact that the federal tax rebates of $8,000 for first-time buyers and $6,500 for repeat buyers will expire in April and home loans need to be in escrow by the end of March. “That was a great stimulus, and helped create the current situation we are in, which is very competitive,” said Beddingfield.

Also potentially hurting buyers is the possibility that interest rates, which have been at or near historic lows, could increase later this year as the recession winds down and the federal reserve seeks to head off inflation and strengthen the dollar.

On the plus side, banks, which have been holding onto foreclosed homes, might begin releasing them for sale, increasing the supply and putting downward pressure on prices as fewer buyers seek more houses. “In the next six to nine months we do expect some release of inventories,” said Beddingfield. “That should stabilize or decrease prices.”

Potentially adding to the inventory is the fact that below-prime loans taken out four and five years ago might adjust upward in the next year or two, perhaps leading to more foreclosures and short sales as owners are unable to make the higher mortgage payments. “Inventory could be going back up to 500 to 600” actively listed houses, said Beddingfield.

Asked to summarize the market, he said, “Currently things are very competitive. Technically it’s a seller’s market, but still a good time to buy. But it is a false bottom. We have taken a bounce off the false bottom, but all indications in the future are that downhill trend in pricing should occur again.”

Anderson agreed, saying, “I think it’s a great time to buy. I think it’s going to be an interesting 2010, and I think we’re going to have a lot of activity. As long as interest rates stay pretty good we’ll be in good shape.”