ChitownLiving | Chicago Real Estate + Life

Saw this article by Lew Sichelman in the Sunday Trib.  From the article, Robert Campbell’s 5 housing market signs are below…

*Existing-home sales. This is perhaps Campbell’s “most predictive” indicator. But it takes some legwork, because the number of homes sold in a given month is just a number. What you really want is a moving average, from month to month, for your area, county, ZIP code and even street. “You need to slow everything down by creating a 12-month moving average. This takes the seasonality out of the equation,” he explains. You can create a moving average by adding up the last 12 months’ sales — not nationally or regionally, but locally — and dividing by 12. Do the same thing month by month and you’ll get an accurate reading of whether sales are slowing or increasing. When the pace begins to quicken, it means sellers are likely to start holding firm on their asking prices — or won’t be willing to budge as much. *Building permits. This is “an excellent leading indicator,” says Campbell, who claims to have housing in his blood, if only because his parents were developers and he was born in a trailer on a job site.  “No one reads a local market more accurately than builders,” he explains. *Mortgage defaults. This is public information that can be gathered from your local recorder’s office. If defaults are rising, it means lenders are still being loaded up with real-estate owned (REO) properties — the real-estate term for foreclosures — which compete with other sellers. And when there’s too much supply, prices tend to fall. *Foreclosure sales. This is the actual number of foreclosures; that is, the number of filings less the number of owners who have been able to bring their loans current. Campbell calls it “a confirming number.” *Mortgage rates. This last indicator isn’t so much a predictor as it is an “accelerator,” said Campbell. This signal doesn’t hold up very well right now because of the mortgage-market meltdown. But rising rates usually serve as a brake on the housing market, while falling rates act as a propellant. The housing market will turn around.

Are we at the bottom of the housing market?  Who knows, leading economists don’t even have a clue, but thought the article provided some concrete market signs to contemplate.