| How is Your Housing Market Relative to Mine? |
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| Written by Investors Lounge Online | |||
 Determining the period of time when house pricing will stabilize in the U.S. can be equated to playing a game of chance in Vegas, and placing $20,000 on Black at a roulette table. While the talking heads with their doctoral degrees may disagree as to when exactly housing markets will stabilize one thing is for sure, sometimes when you are told that the sun will shine, all your given is clouds and rain. This is the dilemma for buyers and sellers in the U.S. housing market. With a changing housing market the need to make informed decisions based on successes, not theories or hunches becomes critical.
Two examples best illustrate the different opinions of respected economists. Crusaders of optimism believe that a rebound of the housing market is within reach, while proponents of methodical thought believe that a recovery could take years to get started. The question for most buyers and sellers remaining is "which stream of thought best suits me, the path of optimism or the trail of history repeating itself?" Despite the journey potential buyers and sellers may find themselves on, a predicted trend of the housing market and national economy is expected to be soft in the first half of the year with a notable improvement during the second half. However, others have predicted a lengthy period of restructuring and adjustment to housing markets. Figuring out which school of theory is correct can be equated to picking the winner of a three game series between the Boston Red Sox and New York Yankees. While both teams look good on paper, determining a winner of the series can only be done by looking at the trends of the past and current performance in the year up to this point. The same can be said about housing markets. Both schools of theory can prove to be correct based on the notion that the national housing market is large enough to take into consideration a wide variety of trends in different locations and compare them against one and other. For the ‘Average Joe' buyers and sellers local information on trends is most important. Being able to research and figure out local trends will be critical in determining when exactly to attack the market. Information regarding recent trends and shifts of local housing markets should be used in congruence with information on the national scale, in an effort to formulate your own conclusions as to when would be a good time to make moves within the market. The information is at your fingertips, the only issue that remains is finding the time to do it. If phrase "time is money" is relevant to you, then you should be able to find the time to make your future investments grow inside your wallets. For starters, one of the best places to find information on the housing markets would be from the wealth of knowledge known as the internet. The following sites are full of information regarding housing trends and are great places to begin gathering data:
Median home prices Residential construction starts Volume of homes sold Residential building permits Employment and unemployment rates Homeownership and housing vacancy rates
In order to gain an understanding of how the inventory of for-sale homes in a local area is calculated, the inventory is derived from a measure of months' supply at a current pace of sales. Now taking into account information from the California Association of Realtors for example, in March 2008 the inventory of existing single-family detached homes was 7.6 months, meaning that it would in fact take 7.6 months to put dent in the amount of homes for sale at the current sales rate. A good rule of thumb is that more months of supply indicate a weak housing market, meaning that there is either a substantial amount of homes for sale, or the slow pace of sales is lagging behind the tortoise. In contrast a few months suggests that there are a limited number of homes for sale or the pace of sales rivals the speed of a gazelle running for its life on barren African soil. Whether fast or slow, by paying attention to the inventory months you can determine which markets favor sellers. Helpful hint: Many local realtors and multiple-listing services collect and publish this type of information (You're welcome). There is two other important housing market indicators that you should take note of. These are residential building permits and new-home construction starts. Keep in mind that these are regulated by local government building officials and the U.S. Census Bureau. Seeing a spike in permits or starts typically put smiles on the faces of homebuilders and often suggests a rise in the supply of for-sale homes in the near future. Another rule of thumb is that housing starts are a better indicator than housing permits because housing starts turn into homes for sale very quickly. Also keep in mind that employment trends also reflect local economic and housing conditions, after all people who work need a place to rest and communities to live in. Newspapers can come in handy here, especially local newspapers that can specifically target stories about companies expanding and downsizing within certain locations. Lastly, just know that entering the realm of real estate is not an easy path to riches. Like any unfamiliar endeavor it takes work and patience to see results. When gathering information be sure to make sure that your data isn't outdated and actually reflects the area which you'll be working in. Track inventory, starts, unemployment, and other figures over time and compare them to historical highs, lows, and averages to understand trends within the area. When all else fails, just trust your own judgments. After All you're in this to make the best deal for yourself, with that said don't do anything on a whim or make quick judgments. Think your decisions through, do yourself a favor and educate yourself on your area and believe in your instincts. When it's all said and done, a smile of success is more fulfilling then the frowns of frustration.
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