What the LEADING INDICATORS Tell Us

All this stimulus talk is interacting with a lot of shallow and sensationalist press coverage. Each is feeding on the other.

The result is that we now have an un-natural context for our individual real estate decisions. I say "un-natural" because the familiar fundamentals of financial market forces and consumer behavior no longer apply as they did. That's not necessarily good or bad. But it is. The rules governing real estate decisions are now more complex and in constant flux.

Instead, as noted earlier, our Black Hills real estate market is in La-La Land. And our national mortgage markets are in Neverland. The best path for home buyers and sellers has gone from a walk in the park to a fearful scramble through a mine field.

With all this chaos of the present, and uncertainty of the future, then how are we to decide when is the right time to sell our home? Or buy a home?

There's never going to be a magic answer to those two questions. Certainly not now. And like I advised in yet another prior post, "hail-Mary investing" in real estate can no longer depend on assured price escalation to bail us out of sloppy decisions.

But there are a lot of legitimate "leading indicators" of what may be in store for the future. For example, if you saw that just about every economic forecast points toward fewer new-loan applications, or if the number of pending home sales is trending down, that would indicate the supply of viable buyers may be shrinking. That tends to create a buyer's market.
But if you saw that unemployment was declining, general consumer optimism has been on the rise, and non-mortgage personal credit growth were levelling off, then one might tend toward greater optimism for an influx of buyers to turn this to a seller's market.

So all that is a lead-in to suggest to you a number of "Leading Indicators" that you may want to watch on a daily/weekly basis along with me. Each day I examine a steady flow of independent and respected market research data. These data cover such topics as consumer sentiment, pending home sales, unemployment nationally and locally, number of new-housing starts, number of applications for loan pre-approvals, and number of applications for new-loans versus refinancings.

There is no end to the number of these Federal, State, university, and industry-produced leading indicators. Collecting these data is a science. But deciding which ones to study, and when, is an art.

You can see here a number of the Leading Indicator charts we track as part of my real estate investment consulting practice. Any time you'd like to call and chat about what these Leading Indicators mean to you then give me a call at 605.863.0806.

-Lee