Lessons from the Pros

Real Estate

300th, 30th, Mission and Market Indicators

As I sit here in the early morning writing this article I am approaching two milestones, one personally and one professionally:  Today is my 30th wedding anniversary and my 300th article for OTA.  While different, both are an opportunity to reflect back and be grateful for the experiences.  The one thing they do have in common is that the time goes by a lot faster than I’m often prepared for.

Free Trading WorkshopI’m very fortunate to work for a fabulous organization such as OTA.  The whole culture is about student success and being the best we can be.  Our mission statement is something that each member of the organization embodies:  Transforming lives worldwide through exceptional trading and investing education.

So, there are a lot of topics I could explore but I think the most inclusive is Market Indicators for Real Estate.  No matter how you invest in real estate, through the public or private sector, you need to understand where the market has been, where it is currently and where it is going.

Here are the key indicators we use to understand the residential Real Estate market:

  • Days on the Market
  • Inventory
  • Housing Starts
  • Housing Affordability Index
  • Vacancy Rates and Homeownership
  • Interest Rates
  • Existing Home Sales
  • Pending Home Sales Index
  • Jobs Report

One of the first things we have to define is what kind of indicators these are:

Leading – Indicates expectations for future events.

Lagging – Indicates things that have already occurred.

Concurrent – Indicates occurrences that happen at approximately the same time.

In this article, we look at the Leading Indicators which include:

Days on the Market:

How long the active inventory of properties for sale are on the market before they are sold.

Compare Average Days-on-Market with Median Days-on-Market.  This will tell you if the new listings are selling faster than the existing inventory.

Housing Starts:

The number of homes that started construction within a designated period of time.  Housing starts are used as a leading indicator.

Interest Rates:

10 year notes. The Federal Reserve watches the 10 year Treasury Rate before making its decision to change the Fed funds. That’s because the 10-year Treasury note (like all other Treasuries) is sold at an auction.  The rate indicates the confidence investors have in economic growth.

Currently – Interest rates moved sharply higher at the start of May, however most buyers who are currently under contract were looking at rates in April when they were lower.  Still, the average interest rate on a 30 year fixed rate mortgage is hovering at right around 4.0 percent, which is still exceptionally low.

interest rates

Pending Home Sales Index:

Measures current contracts in place on existing single family homes, condo’s, townhomes and co-ops.

Currently, we are seeing U.S. home buyers signing more contracts.  The National Association of Realtors measures this and saw it that it rose 3.4 percent from March to the highest level in nine years.  Pending Sales are now up 14 percent from a year ago.  “Realtors are saying foot traffic remains elevated this spring, despite limited-and, in some cases, severe-inventory shortages in many metro areas,” Said Lawrence Yun, chief economist for the National Association of Realtors.

pending home sales

Well I look forward to writing many more articles for you and helping to make our mission statement come to fruition in your lives.

Great Fortune,

Diana Hill


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.