Could we be in for a home buying surge? I am no economist and I find all the hugely varying perspectives very interesting. Remember to follow the simple of rules of investing to try to stay ahead of the crowd. If history in the OC has taught us anything it is to expect the unexpected.
Track the Market: Every month, follow the five key indicators. Start logging them. Use a spreadsheet to chart them. One or two months doesn’t make a trend. Trends develop over the long term.. At this point you might want to look backwards!
So what are those five key indicators? One indicator alone does not make a trend or a decision to buy or sell. The key indicators to watch are:
· Interest Rates. Rising interest rates have a depressing effect on real estate prices. Falling rates help generate demand. That helps prices go up.
· Building Permits. When demand is strong, builders pull more building permits so they can build and sell homes. Builders reduce the number of permits when demand drops.
· Home Sales. Simple principles of supply and demand affect home sales. When buyers buy prices rise. When buyers retreat so do prices.
· Loan Defaults. Defaulting home owners are having job or money troubles or both. That signals a weakening economy.
· Foreclosure Sales. Foreclosures signal even deeper consumer money troubles and a worsening economy. It also signals dropping home prices.
There are correlations to be found in any of our downturns and subsequent meteoric rises. Remember, when the stock market goes down investors look for some place else to put their money. Housing is fueled by supply and demand as well as interest rates. When interest rates go down-more people can afford to purchase a home and sales usually go up. When inventory goes down this generates increased demand. Currently many communities-such as Irvine-are experiencing decreasing inventory. Sales are up and fewer listings are replacing the sold homes. With the moratoriums on foreclosures there is no new supply of those either. Put this along with the scene being set by the government which is now putting in the original rescue plan!!!!- buying mortgage backed securities- this could lead to more available lending and a come back in our Orange County real estate! If you are thinking of buying get your loan approved and be ready to go! Every market is different and if you follow national trends you will not know what is going on in Orange County. This community has not experienced the blow that some areas in California and across the nation have. When the market does turn around it will not be reported until 4 months after is begins so be watching closely!