We all know the law right? When it comes to real estate the 3 most important things to focus on are; 
What about the second law? Everyone knows that;
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)
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
Lagging Indicators (signals to STOP buying and prepare to sell)
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>
Specializing in relocation to the Denver metro area, including Littleton, Englewood, Greenwood Village, Highlands Ranch, Parker, Castle Rock, Douglas County, Arapahoe County, Denver County and more.
Lessons we learn from the roadside of life ~ updated with link to pottery
Denver ~ We don't need no stinkin' mountain!
Archaeologists Needed ASAP~ Report to Denver! ~ Update!
SunBelters...The Time to GLOAT is Now!....UPDATED...Updated again
Drive by BPOs ~ to do or not to do?
Home Inspectors ~ Do you have to justify your existence?
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Now here is a beauty of a post (there's a surprise). Well written, JAMMED full of great info and cool graphics to boot. A veritable primer for how to write a blog post!
The Phoenix market also seems to have both leading and coincidental indicators, much like Denver. Or maybe I'm just optimistic.
A world record for blog commenting!
http://www.ThompsonsRealty.com
http://www.PhoenixRealEstateGuy.com
Jay ~ I hope you are right in your optimism. Go for the gold (posting award)
kk
KK - I would say the same for Southern California. Terrifi post BTW. Couldn't have paid a higher compliment than Jay. Well deserved!
KK - I bet when you dream you dream real estate! Great Blog
WOW, what great info! I think our market is still mostly in the Leading list. We may have a few on the Coincidental list. We'll see how it shakes out after the holidays. Our inventories have declined somewhat the past month, but I suspect it's due to sellers taking the homes off the market for the holidays. If those homes go back on and new listings are added as well, our inventories may go up once again. Our units vs last year are close but slightly below.
Jam packed is right! Excellent points. We really do have to spend time with people on listing appointments and encourage those who can to wait so the current listings can get absorped and they can get better investment results. See I use the absorption word now after your posts!
Great post. I'm also with Jay - maybe we're both optimists??
I can't even think of what to add other than this is dead-on. San diego is moving from the leading indicators to "coincident" indicators. Thanks for posting to The Economics of Real Estate group. This is EXACTLY the post for such a group.
KK - Great post. I like the approach; it's much more than our opinion and gives the reader/buyer/seller lots of views of the overall decision to buy, sell or push the pause button..............
Kristal I like your leading indicators. The Blood in the streets is very true. When builders go crazy with incentives, you know the market isn't that great.
Yet another bookmarked post by the notorious KK...=) Thanks for the info! This is a great piece of writing to share with those 'C' personality clients who needs lists and economic information to feel good about buying and selling.
Kristal - what a TERRIFIC post!!!! Your post has so many important points in it. Timing is critical, but most of us don't recognize the signs as you laid them out, or we try to ignore them hoping it's just a blip on the radar.
Great post!
Ann
Kristal -- BRAVO!!! Yet another wonderful post! Marco Island is definately leading indicators! There are so many wonderful opportunities right now....
The Austin market is extremely hot in many areas. People who see a house and love it get killed if they wait. It just doesn't pay to sit on the sidelines.
Great post, I really feel positive about my market place(Dutchess County NY) There are more people looking; I am extremely busy and other realtors I have spoken to feel the same way. I think 2007 will be a great year.
Kristal , you speak the truth !! Its a buyers market and here in the los angeles metro area buyers are taking advantage of the lowered real estate prices. Nice touch on the blog with those little images of your notes ;)
Jeff ~ Good to hear you feel Southern California is at the Leading Indicators. At least it's on it's way somewhere...
Dena ~ Who sleeps? I blog. :)
Elaine ~ Sounds like you (or your market) are in good shape.
Carole ~ Good, it's nice to know someone reads and applies something! Absorption rates do resonate with the consumer.
Kaushik ~ Optimists are good!
Brian ~ You are welcome. Just wish I knew more about more...
Dave ~ nice turn of a phrase "push the pause button"...must remember that one!
Jennifer ~ blood on the streets is happening. The quicker we get it over, the better I say.
Leigh ~ C types fodder for sure. It certainly helps put things into perspective.
Ann ~ Radar blipping should not be ignored. I like that phrase too.
Colleen ~ Narco is paradise as we all know. the buyers will be there in droves soon.
Sam ~ Austin must have a wild and crazy market, sounds like you are in the lagging stage.
Jennifer Fivelsdal ~ hope your instincts are right. Ignore the 'horribalizing' and go forth...sell!
Eddy ~ Buyer's market in LA! Wow...the buyers have been waiting for that!
Kristal - you are truly a master. Your post is informative and educational and your I love your perspective. Awesome, Awesome! Miami has all the leading indicators and a lot of coincidental ones. We are definitely keeping busy and trying to convince our sellers of the importance of pricing right from the get go. One to bookmark for sure, and I will be on the lookout for the Ninja Classes.
Ines
Is your evaluation of leading indicators the same thing as looking into your Krystal Ball?
Wow, if she doesn't rename the blog The Kristal Ball it would be a shame. Nice one!
I always thought investing was like a card game. You have got to know when to holdem and when to foldem.
Ines ~ glad to hear you can place Miami on the Indicator board. Yes, by all means seek out a Ninja class...you won't be disappointed.
Suzanne ~ OK so now you know my secret...please don't tell! :)
Joey ~ Not a bad Idea! Why didn't I think of that?
Vicky ~ I love the song...I agree. The sad thing is, most "investors" don't take the time to study. They just jump blindly in...that's why they call it a "market!".
Thanks all for stopping by.
kk
Great post and artisticly done. On your weekend posts - can you use the other half of your face?
OK. I can't buy until I sell. catch 22... what do I do?
Will you sell my Broomfield property for me?
San Ramon ~ What makes you think there IS another half?
Jessica ~ Usually when you have to do both in the same town, you end up saving what you lost from selling to buying. Sell Broomfield...of course! Will you stage it?
kk
It's being rented right now, but the very sweet couple who are renting just closed on their Durango house and are looking to buy now. They like our house, but it just isn't right for them. They signed a 6 month lease (till April), but I'm sure they'd be happy if they found a place sooner and I found a buyer sooner.
When they signed the lease they said they were open to having showings. They are my top priority though, and I want to make sure I'm not 'putting them out'.
I also was thinking that when you stop by to look at the place you could win their business as well. They are a super lovely couple with a baby about the same age as Eloise. I mentioned you the other day when I was there, but Jessica said something about a 'crazy lady' realtor who was trying to get them to sign a buyers agreement. She seemed put off by the idea of a buyer's agent and thought it best to just look for themselves. I'm sure if you met with them you'd win them over and make them see the light :)
I didn't want to be too pushy trying to 'sell' you to them, but your post make me realize that you could come in under the auspicious of selling our listing and hook em' that way. Oooh, goodie, I'm so excited!
I'm going to call them tomorrow morning to see what they think of the idea!
I have always felt timing is more important than location. You can make money in almost any location with the right timing.
Kristal, Thanks for the post. New Jersey has more characteristics of the Leading Indicators. Put on your seat belts, its going to be a bumpy ride!
Jessica ~ I would be happy to help get your home sold. Your tenant sounds very normal to me. Demonstrating my value is what has to happen before getting a buyer agency agreement signed. Maybe she will maybe she won't, we'll see.
Randy ~ I have to agree with you, with a few exceptions. Timing is very important.
William ~ at least you know what might be in store for you. I think as agents its important to know when to focus on buyers vs. sellers.
KK great post. Most "investors" buy when everyone else is and think that makes them an investor. The real investors sold or just held while everyone else was buying. Now they are out there buying homes at big discounts.
Ken ~ you are absolutely right. They buy at the wrong time then blame it on the area or the market...
kk
These are great points. Every would-be investor should read this blog.
Kristall, Thanks for the long list of leading indicators. It sure describes our market in Denver and its excellent investment potential. Steve
Don ~ I agree! Thanks!
Steve ~ Denver's real estate potential is very good. Thanks for stopping by!
kk
Great post...Inspired to take the Ninja Leadership class
Thank you very much for sharing, this was good information!