Have you ever wondered how the pro’s time the rivers and peaks of a real estate market? If you plan on making money by investing in real estate, knowing the key real estate market indicators is essential to timing the up’s and down’s.
Key Market Indicator – Gauge Market Activity
Doing your homework first will help you time the real estate markets. By understanding which properties are moving, not just laying dormant on the market, is very important. For you to understand the existing sales markets, obtain market data from your favorite Realtor. Communicating with a real estate professional about the local sales in your area should be the first step to successful real estate timing.
As you go through the home sales data, try to distinguish between garbage and great performing investments. Once you distinguish good neighborhoods with low levels of inventory and high sales ratios, you are on the right track. Lookout for properties heading into foreclosure or short sales homes, they will provide the best prices.
Key Market Indicator – New Construction Starts
A new construction start is where a builder applies for a permit to start building a home. New construction is a great indicator where the real estate markets are going. If new construction starts are up, that means inventory levels are low, and home buyers can’t find what they want therefore they decide to build. If new construction sales are down, markets usually have a lot of inventory, and buyers are more cautious as they don’t want to take on a home building project. Building a home is more risky than purchasing an existing home.
As you watch new home starts and the construction market, it’s important to realize you have to give it time to show underlying trends. The best way to understand trends, is to follow history closely, and use the trends of the past go understand the trends of today. As you get an understanding of where your markets new construction trends are headed, you should use move to the next indicator.
Key Market Indicator – Notice Of Default
Home owners that are behind on their mortgage payments are sent a notice of foreclosure. The first thing a bank will do to start the foreclosure process is file a notice of foreclosure. Check with your local county record holder as they are the people who file these notices for the banks.
The notice of default records should provide great data for you to study, as they will tell you where a real estate market is headed. The areas with a lot of default notices you should stay away from, as sharp declines will be on the way. Not all notices turn into a foreclosure, so keep that in mind. Neighborhoods with foreclosures may have great deals, but you could lose a lot money, so be careful.
Key Market Indicator – Foreclosures And Short Sales
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.