subject: The Top 4 Real Estate Market Indicators [print this page] Knowing when real estate markets are headed into a decline or showing appreciation is the key to real estate investing. These key real estate market indicators are used by experience investors to gauge the up's and down's, allowing them to time their prospective real estate markets.
Key Market Indicator: Know Your Markets Home Sales
Timing a real estate market requires you to do the necessary studying of existing home sales numbers. You have to know which homes are selling, which homes aren't selling, and the areas where they're selling. Talk to a real estate professional about existing home sales, ask them to gather enough data for you to feel comfortable. Chatting with your agent is the best way to gauge your state's sales, and will help you with the first step in timing the market.
When researching the existing home sales numbers, you should be looking for high performing assets. You should look for areas with good inventory to sales ratios. Once you find the neighborhoods that show promise, you should lookout for foreclosure and short sale properties as they will provide the best deals.
Key Market Indicator - New Home Starts
New home building permits is where construction companies apply for a new build project. The construction market will indicate real estate market trends. As home building permits rise, it indicates low inventory levels as home buyers can't find what they want on the market, so they decided to build a new home. As new construction goes down, it shows market volatility, as home buyers don't want to take the risk of building.
Watching new construction trends should be a long term assignment, as long term trends will show the true nature of the market. Studying the trends of past decades will give you a good standard to compare how the new construction markets are trending today. As you get more educated on how your market follows the trends, you can then move on to the next real estate market indicator.
Key Market Indicator - Notice Of Default
When home owners can no longer pay their house payment, banks will move to foreclose. The first step for a bank to foreclose is to file a notice of default. You can gather this information by heading to your local courthouse or county record holders. They are the first to report the notice of defaults.
Studying the notice of default records will give you insights into where a market is going before it happens. Neighborhoods with high pending foreclosures will be in a sharp decline within the year. Of course, not all notice of default's foreclose but a great many do. As you look for great deals, be wary of neighborhoods with a high ratio of homeowners pending foreclosure.
Key Market Indicator - Short Sales And Foreclosures
If you want to time a real estate market, knowing when it's a good idea to buy a foreclosure or short sale is key. Watch out for neighborhoods with many of these listings, as they will continue to decline. Instead, try to find a neighborhood with one or two foreclosure listings, as these will be cheaper, yet the neighborhood will maintain value and appreciate.
