September 25, 2009

Bottom's Up!

Posted to Julie Sarton

Or is it? After the fifth straight increase in the index of leading economic indicators for August, economists of the Conference Board are announcing that the US recession is bottoming out and a recovery is near. The four coincident indicators (industrial production, personal income, business sales, and nonfarm payrolls), designed to measure current activity, are the same ones used by the National Bureau of Economic Research (NEBR) to judge whether the economy is growing or shrinking. Even though these coincident indicators have shown a gain in the last several months, the NBER is conservatively holding off on making a prediction for the end of the recession.

The big question is whether the housing recession, which started all of this, is finally bottoming out. There’s a wise saying: “You can recognize the bottom of any market by looking in the rear view mirror.” In other words, once the bottom is evident the market is usually on the way back up and you’ve missed it. Experience tells us that waiting for the bottom to make your buying decision is risky, since unless you react fast the market will leave you in the lurch.

So then how can buyers know the right time to buy? Aside from being aware of external indicators, such as the strengthening of the stock market, interest rates starting to inch back up, and the national media actually starting to report positive statistics, there are indicators specific to the real estate market to ask your realtor about. Is the inventory of listings starting to decrease and sell off? Are there fewer signs in your neighborhood or neighborhoods you would like to live in? Are the “days on market” for a listed home before it sells getting smaller? Are sales volumes in your agent’s company increasing? Are the number of showings of properties revving up? Are prices starting to stabilize instead of dropping? Are local banks becoming more willing to lend on properties? All markets are different, and historically the bottom of a market has a shorter duration than the top; most buyers make their purchase somewhere in between. Work with an agent that is knowledgeable about the current status of his or her market, as well as the overall market, and can help you analyze the indicators. There is abundant inventory available, the lowest interest rates in many years, motivated sellers, and the best affordability index in the history of that index…take advantage of it all!

Posted By: Julie Sarton

Leave a Comment