The Vital Sign indicators anticipate and identify real estate market bottoms the same way they do for market peaks - except in reverse.
Be advised the Vital Sign indicators measure imbalances between supply and demand in the marketplace. Once these imbalances occur - either to the upside or the downside - only the market will eventually tell you how far prices will rise or fall.
The most important thing you can do is to respect the trend of the market. The downtrend in California real estate may be mild or may make past downcycles look like a tea party. To get this information in advance, you have to consult your local fortune teller.
San Diego Eludes Recession - Robert Campbell?? - Posted by J.P. Vaughan
Posted by J.P. Vaughan on February 04, 2002 at 08:12:31:
Robert Campbell, if you see this, I’d be intersted in hearing your opinions.
The S.D. Union-Tribune reports that San Diego has eluded the recession. Housing prices rose 14.5% last year,and local employment hit an all time high in December.
One ecomonist quoted in the article says we’re not as effected in this recession because we don’t have a large manufacturing base.
Here’s the article:
Are we really eluding this recession, or are we just “lagging the market” (so to speak) like we did in the last recession?
As you know, there are five real estate indicators - which I call Vital Signs - that historically have given accurate signals telling you what’s ahead for property values.
For San Diego, four out of five of these Vital Sign indicators are now pointing to lower prices in the future.
In other words, these forward looking market indicators are saying the market has peaked.
The only Vital Sign that is positive is interest rates. The trend has turned negative on three others - and the downward market momentum on the fifth indicator (foreclosure sales) is slowing.
While no one knows what tomorrows newspaper is going to say, you do know what yesterday’s paper said. And comparing this against what is happening today tells you change that is already starting in the market.
Will the downturn be mild or severe? This is information that requires a crystal ball. What you do know, however, is this is a high risk time to be buying.
My book - Timing the Real Estate Market - will be available soon. It will explain the Vital Sign indicators and how you can use them to stay ahead of real estate trends.
Posted by Bryan in Cali on February 04, 2002 at 22:22:48:
how do you tell when a market has bottomed? Here up north (Bay Area mostly) rents have plummeted but SFH prices have only gone down slightly. I live further out in Sacramento and am afraid that we may be nearing a price crash here as well as in the bay area. What do you think?
Since I developed this trend tracking method in 1993, I haven’t changed the market-timing formula in the slightest.
In California, I haven’t needed to do much “fitting” because real estate trends - both up and down - tend to develop slowly and then move for years and years in one direction. My “Real Estate Crash Index” - which is a combination of all five Vital Sign indicators has only given a total of six (6) signals in 20 years.
In “real time”, the Crash Index correctly flashed a “buy signal” for San Diego (and therefore most of Southern California) in early 1997. This signal lasted for 5 years before the Crash Index flashed a “sell signal” in late 2001.
These real estate indicators are as much common sense as they are scientific. Supply and demand rules the direction of all markets, including real estate. And this is what is being measured by the Vital Sign indicators.
The trick, I suppose, is knowing how to analyze the market data correctly. Clearly, two or three months of market data do not make a market trend.
However you chose to analyze the real estate market, anything you can do to improve your timing in is like money in the bank.