Major Real Estate Market Indicators

Real estate is local.  That is a truth especially for California.  But the various forces that push and pull on supply and demand can be national or even global.  Forces that cannot be tracked or quantified (e.g., election years) may have a greater impact than the forces I track.  Please tell me what you see or read in these indicators.

Major indicator definitions:

  • Summary – this is a summary showing my main indicators which make up most of the “story” describing the market.  Some indicators drive the results of others.  That means some are symptoms of others.  For example, inventory always affects price; not always vice-versa.
  • Mortgage Rate – charts showing 19 years and the last 3.25 years of the average (national), 30 year, fixed mortgage rate published each month.  Also shown is the momentum of the change in the rate.
    • The general cost of borrowed funds represents a major force of demand.
  • Distressed – charts showing 19 years and the last 3.25 years of the number of Resales which qualify as Distressed (REO, Short Sale).  Also shown is the momentum of the change in the number of Distressed sales.
    • The presence of Distressed sales has all but disappeared from the current market.  The re-appearance is 1) hard to avoid and, 2) can indicate economic malaise beyond the real estate market.
  • Financing – charts showing 19 years and the last 3.25 years of how the Resales were purchased; all cash, using a conventional, FHA, VA, or other loan or financing.
    • The presence of cash says 1) the inventory is priced such that investments provide a healthy return for investors, or 2) the inventory cannot qualify for a loan due to property condition, or 3) owner-occupant buyers are opting to use cash instead of other people’s money (OPM).
    • The presence of VA financing says 1) the buyers are returning from service or are finding that sellers are favoring these buyers, and/or 2) the inventory is well-maintained and prepared for clean inspections.
    • The presence of FHA financing says that the government is guaranteeing loans, which is not a good use of tax dollars, in my opinion.
    • The presence of conventional financing says that 1) the definition of ‘conventional loan’ has been broadened, or 2) home ownership is alluring to those who have saved and prepared themselves to ‘put skin in the game’.
  • Swing – charts showing 19 years and the last 3.25 years of an aggregation of the Zip Code momenta.  Like an EKG, this can be used to support or further define the market story – a “heart monitor” of sorts.
    • The Swing Indicator shows an aggregation of momenta changes for all of the 54 Median prices tracked in my No BS System.
    • The 3 Counties and 51 zip codes comprise the total of 54 Median prices.
    • See my blog entry about Momentum for a brief explanation.