Key Indicators of a turnaround in the Housing Market

Watch this CNN video where Gerri Willis interviews Amanda Gengler of "Money" magazine, about some of the key indicators of a turnaround occurring within the housing market, especially for local markets here in Port Orange and rest of Florida.

Real Estate markets are local. National figures can be misleading and should not be relied on for a particular area. Some key factors to successfully gage the turnaround:

Inventories – Is the housing Stock shrinking? A healthy level is the historical average of 6-month supply. Is your local area there yet?

Prices – Rate of price drops begin to slow? Look for long term trends, not the month to month noise but for year to year averages.

Rents – Is it cheaper to rent than to buy? The Price/Rent ratio should be around 15 but consider at the historical average ratios for your area, not the national figures. When the ratio falls to the historical averages, then it’s a buy signal.

Here is a national view of the Buy/Rent ratio around the country.

Source:
As Home Prices Drop Low Enough, a Committed Renter Decides to Buy
DAVID LEONHARDT
NYT, May 28, 2008