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6 signs of a housing recovery

The housing market these days can best be described as a moving target. Some metros have gone from white-hot to ice-cold in just a couple of years, while other cities are just now hitting their stride.

"There's so much going on and so many different trends across the country that when you net them all out at the national level, it really doesn't capture the wide variety of experiences going on in local markets," says Rachel Drew, research analyst for Harvard University's Joint Center for Housing Studies in Cambridge, Mass.

Indeed, the yo-yo performance of residential real estate makes it tough to take the pulse of the nation's housing market, let alone determine where your own neighborhood falls on the recovery curve.

There's no crystal ball. But for those looking to buy, sell or renovate, there are a handful of signs that may indicate whether a recovery is just around the corner in your neck of the woods.

Signs of recovery
How will you know when the real estate slump is over in your neighborhood? Here are a half-dozen signs of a possible turnaround.
6 clues to real estate health
1. Fewer 'for sale' signs
2. Job growth
3. Increased affordability
4. End of price reductions, concessions
5. More new construction
6. Positive changes in your neighborhood

Fewer 'for sale' signs
Perhaps the biggest indicator of housing market health is the inventory of available homes.

"Your No. 1 compass is inventory," says Denny Grimes, a longtime real estate agent in Ft. Myers, Fla. "Drive around your neighborhood to get a sense of whether there are more signs going up for sale or fewer, and that'll give you the best indication of where your market is turning."

Sign of recovery No. 1:
'For sale' signs begin to disappear from your neighborhood.

If inventory is growing, Grimes says your neighborhood is becoming a buyer's market, which is broadly defined as an area with inventory of six months or more.

If inventory is shrinking, it's leaning toward a seller's market.

Drew agrees that inventory provides the best insight into the state of your local market.

"If there are a lot of comparable homes for sale and they've been on the market for a long time, that tells you there's not a lot of activity in your area and there's a strong wait-and-see attitude (among potential buyers)," Drew says.

A local real estate agent can also provide valuable insight on inventory trends, especially if you're new to an area. Once inventory begins to shrink, it's a sign that things are moving back in favor of sellers -- and the overall real estate market.


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