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Keep your eye on the data
Chuck Shinn's tips on how to detect that the turnaround is coming.
You don't have to wait for a news report that declares we've hit the bottom. Rather, tracking the right data in your area can tip you off to home building's turnaround. Chuck Shinn presented a list of key predictors at this year's International Builders' Show and broke down what you should watch into three categories:
General local housing market data:
- Mortgage rates
- Builder permits
- Retail sales tax revenue
Existing home market data:
- Homes listed
- Average days on the market
- Average sales price
- Sale price to asking price ratio
Your Internal data
- Weekly buyer traffic
- Traffic capture rate
- Percentage of contingent contracts
- Contract fallout rate
- Voluntary cancellation rate
You've got the internal data, but where do you go for the rest? Make friends with your local car dealer and try to arrange an agreement where you can see what they gather, he says. Dealers watch local housing market data like hawks — and getting into conversations about their sales rates can tip you off to your market's economy, too.