In my last post I talked about the importance of the real estate indicator population growth when it comes to real estate timing. Today I want to look at the market indicator existing home sales.
This is a very important indicator when we are trying to gauge the overall health of a real estate market. Existing home sales shows us the demand for housing in a real estate market. Existing home sales is the actual number of existing homes (in other words, not new construction) that have sold in a particular market. It isn’t homes pending or homes available for sale, it’s the actual number of homes that sold.
When you perform market analysis in real estate investing you need to measure the current demand against the past performance to see how a market measures up. When we calculate market momentum we do just that. The market momentum of existing home sales shows us the current level of buyer demand as a measure against the past. If the momentum is up it means that buyer demand is stronger than it was, if the momentum is down it means demand is weaker.
We have to keep in mind that it takes more than one indicator to prod us into action. We want to see multiple indicators pointing towards similar action before we jump in and buy or put our real estate investment on the market to sell. But, gauging this level of buyer demand by using existing home sales is a very important indicator to watch as part of your real estate market analysis.
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