Some say a recession is coming, depending on who you ask, it is already upon us. Some day the economy will improve again and it will be time to act accordingly, but how will we know when that is? Here are some key indicators from the housing market.
New Jobs vs. New Housing. In the past there was about one new home owner for every two new job openings. If your market has builders scaling back, like we do, but new jobs are still being created then at some point the builders will have to pick it back up to meet the new demand. That is a good sign that we are on our way back.
Fewer Builder Concessions. Times like these it is easy to get all kinds of free stuff and offers from home builders just trying to get rid of their abundance of inventory. Concessions like free mortgage payments and toasters are taken off the table once the economy picks up because people are going to buy anyway.
Months' Supply. A normal housing inventory in months is usually around six. This means that it takes about 6 months to sell all the houses that are currently on the market. At the end of '07 the nation was at 10 months and some areas of the country were much higher than that. When the inventory in your area starts coming down to more normal levels, good things are on the horizon.
Visitors Per Listing. It's Spring time and showings for home listings are naturally on the rise, but for this time of year it can still be considered pretty low on number of views. If showings, and length of showings, increase a noticeable amount we could be making a turn for the better. More showings means people are actually considering buying a new home, which usually indicates a general confidence in the economy.
Rising Apartment Rents. It is a great time to own an apartment building right now, or so I've been told. No one is buying and they seem to be able to charge anything they want for rent. Eventually it will go on too long or they will raise the rent too high and renters will start checking out some of those home listings.
Realtor Magazine - April 2008 - Page 21 - 5 Signs of a Housing Market Pickup
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