Real estate expert and author Robert Campbell has been in or around the industry his entire life. Over the years, he’s been through good markets, bad markets, and everything in between.
Thanks to his experience and a highly analytical approach to real estate’s cyclical nature, Campbell has a huge edge when it comes to timing market shifts. In the podcast below, Campbell explains how his approach to market timing works and why he believes the next major downturn is right around the corner.
Listen and learn what you can do to predict where your market is in the cycle and where it’s headed. Or, for a quick overview of the five key indicators to follow for timing any real estate market, read on.
1. Existing home sales
If more homes are selling in a given period, that’s a sign that the market is following an upward trend. Conversely, when home sales slow, it’s a warning that the market could be in a cycle of decline.
One of the simplest ways to analyze home-sale stats is to gather this data from your MLS. Then, compare your current period with prior periods to get an indication of current and future trends.
2. New home building permits
Are less home-building permits being issued in your market this year than last? If so, that’s an indicator that builders are less confident that their homes will sell.
Why should you care?
The corporations building new homes heavily research market conditions and make their own predictions on whether or not their new builds will generate profit. While they’re not always right about where the market will be one or two years down the line (no one is), they do their due diligence.
3. and 4. Notice of defaults and foreclosure sales
Notice of defaults and foreclosure sales are two more indicators that will help you predict where the market’s headed. When defaults and foreclosure sales are high, it’s a sign of economic instability that indicates property values and homes sales could continue to drop.
5. Interest rates
With interest rates, you want to focus on 30-year fixed mortgage rates. These rates are what people typically look at when trying to predict market trends. And while falling interest rates are often a sign of a market in decline, it’s not always the case.
Campbell views interest rates as the least-predictive indicator of market trends in his model. This data is important to analyze, but it isn’t the only data you need to make accurate market predictions. Instead, consider it along with market information on the other four indicators.
Focus on the five, forget the rest
According to Campbell, these five indicators are the only indicators you need to follow in order to predict market trends with a success rate of 80-90 percent – forget everything else. That’s based on his personal experience following this model for more than 20 years.
While it’s not perfect, Campbell suggests that those who use it will be far ahead of most when it comes to timing real estate markets in the United States.
For more information on predicting market trends, listen to Robert Campbell’s podcast interview. You’ll also hear why current indicators suggest that a nationwide downturn could be right around the corner.