We all know the law right?  When it comes to real estate the 3 most important things to focus on are;

1. location
2. location
3. location

What about the second law?  Everyone knows that;

1. timing
2. timing
3. timing 

Actually everyone doesn't know the second law.  In fact I have investors tell me all the time how they have the bad habit of buying high and selling low.  Sad but true, sometimes we make mistakes that can be avoided. 

The market actually does present us with clues.  Of course clues aren't hard set rules, but they are indicators that have been tested over time and found to have a certain amount of truth to them. 

Leading indicators (12-18 months prior - signal market is at bottom)

• Blood in the streets i.e. discounts available, dump & run builders
• Discounting & foreclosures
• Press "horribalizes" data
• Rising employment
• Declining supply
• Low interest rates
• Investigation & indictments  

 As a market moves out of a slump and things begin to look more "normal" or "neutral" there are indicators that will signal this happening.

Coincident Indicators

• Rising demand
• Declining Supply
• Declining vacancy
• Rising rents
• Appreciation comes back
• Multiple contracts common
• Jail Terms

 Lagging Indicators (signals to STOP buying and prepare to sell)

• Scarcity of supply
• Double digit appreciation (not sustainable)
• Multiple contracts normal
• Media euphoria
• Greed - investors flood market
• Builders start to oversupply
• "Amateur Hour" - the Greater Fool Theory  

Know when to hold 'em, know when to fold 'em!

 When it comes right down to it, timing is everything, particularly in real estate.  Serious investors study the market trends and know when to get in and know when to stay put or get out.  Amateurs have a way of over inflating a market to an extent that takes a long time to come back.  Reviewing the appreciation rates over the years, one can see the ups and downs as recorded by the Office of Federal Housing Enterprise Oversight .

What do you see happening in your market?

The Denver metro market is experiencing parts of both Leading and Coincidental Indicators.  There's been a lot of "blood on the streets".  Builders have pulled back on inventory.  Existing inventory has incentives for buyers and some offer additional incentives for agents to sell.  Foreclosures are up, the press loves to bar-be-que real estate daily. Interest rates were increasing for awhile, but are now trending down...ever so slightly.  Hearing news about investigations and indictments is the best part.  The bad guys need to get put away.

The housing supply is not going down, but sales are consistent.  We continue to sell the same (or nearly) amount of units as this time last year.  Wise investors are in our market now, they will be picking up the slack.

Coincidental Indicators in the Denver Metro market are declining vacancies and rising rents.  We are seeing appreciation in some markets.  Many markets have not declined, they have held their own.  The lovely jail terms for some are occurring, with more, many more to follow.

Denver and Colorado tend to run counter-cyclical to the rest of the country.  We will be putting out of this flat mode soon.

What's a Homeowner/buyer to do?

Buying right now is a good thing to do.  If you are a seller and don't have to sell, you may want to consider waiting awhile.  If you must sell, the good news is, you may make out well enough on the "other end" to compensate for any loses on the sale.  The most important thing for a seller to do right now is to be absolutely certain the home is priced right for this market and it shows like a model.  Homesellers are getting lost in the crowd. 

<Note: My notes and inspiration for this blog are from the NINJA Leadership Class by Larry Kendall of The Group, Fort Collins.  I highly recommend this class as any of the NINJA classes now being taught by the Residential Sales Council>