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| In Search of Leading Indicators |
| Written by Jonathan Smoke | |
| 06.05.2007 | |
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Discuss this article on the forums. (0 posts) In our Real Estate News, we have a new depressing article about the national housing scene. In “No bottom yet for housing downturn,” several housing economists are interviewed and the conclusion is that we won’t reach the trough of this downturn until later this year and when we do it will be a slow recovery.  When we talk of a downturn in housing, generally people mean a decline year-over-year or month-over-month in home sales and/or home prices. But since both of these measures are lagging indicators (they tell you how good or bad the prior month was), using them to make decisions about opportunities can be dangerous. It would be like judging your business prospects on how much profit you made last year.So where do we look for leading indicators for a good housing market? For one, we can look at the factors that help produce a thriving local economy for housing, like job growth, rising incomes, trends in housing permits, forecasted house price appreciation, and positive trends in household demographics. These and other factors are all featured in our Market Dashboard Reports available to our enhanced subscribers. In addition, it would make sense that we should be able to harness other information for direction on local market activity. One example would be trends in listings. According to OSG’s Hardtack application, listings continue to rise nationally. Perusing each region of the country on Hardtack, single family properties listed have climbed in every region over the last three months, but this may very well be a seasonal pattern. Another interesting source to consider for residential real estate trends is Trulia’s monthly trends report. At the end of each month they report on listing, site traffic, and search behavior for the prior month. I think this reflection of Internet trends should be a strong leading indicator of local real estate interest. If that’s true, three cities in coastal states—Sarasota, FL, Boca Raton, FL, and Sunnyvale, CA, made the top 5 list of biggest winners in search queries in April. Maybe this foretells buyers getting off the fence, or at least thinking about it. Wouldn’t it be great if we could assess the web traffic of all listing sites, both for new and existing homes? What other data would you find most meaningful as a leading indicator of future market strength? 
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