Article Title:		How Five Key ‘Vital Sign' Indicators Detect Real Estate Trends Early - When the market speaks, it pays to listen.
	Author:		Robert Campbell
	Website:		none
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Real estate trends don't change direction without giving you "WARNING SIGNS" in advance. Identifying a trend change early is what allows you to sell when the market is peaking . . . and buy when the market is hitting bottom.

The five "Vital Sign" indicators in the San Diego Real Estate Report read the market's warning signs . . . and give you "advance notice" when the current trend in San Diego real estate is going to change direction.

How accurate are these "Vital Sign" indicators? Very accurate . . . as you'll see in a moment. When the "Vital Sign" indicators are positive, rising prices are almost guaranteed for San Diego real estate. When they turn negative, a death sentence for price appreciation is near certain.

The Five Key "Vital Sign" Indicators

Vital Sign Indicator #1 : Interest rates.

Interest rates act on property values the same way gravity acts on physical objects. The higher the rate, the greater the downward pull. In other words, rising interest rates have a depressing effect on real estate prices . . . while falling rates tend to raise prices.

Vital Sign Indicator #2 : Home sales.

Home buyers are a dominant force that drive real estate prices higher . . . and lower. It's simple supply and demand. When the number of buyers are increasing, more homes sell . . . and prices go up. When buyers are more scarce, less homes sell . . . and prices tend to go lower. 

Vital Sign Indicator #3 : New home building permits .

New home builders respond to the market place according to demand. When demand is strong, they "pull" more building permits so they can build ~ and sell ~ more homes. When demand is weak, they pull fewer building permits so they won't be stuck with a lot of unsold homes in a softening real estate market.

Vital Sign Indicator #4 : Loan Defaults

Homeowners who default on their mortgage loans are generally having money troubles. This is a sign of a weakening economy . . . which soon translates into a weakening real estate market.

Vital Sign Indicator #5 : Foreclosure Sales

Property owners who default on their mortgage loans – allowing their homes to be sold at a foreclosure sale – are generally having severe money troubles. Like loan defaults, therefore, the number of foreclosure sales is a clear measure of the health of the economy. This determines whether real estate prices are likely to rise ~ or fall. 

The "Buy Low, Sell High" Index

Individually, each of the five "Vital Sign" indicators sends out it's own "warning signs." The "Buy Low, Sell High" Index is a composite of these five indicators . . . making it a very powerful tool that is easy to follow. This index gives you about 3-6 months of "advance warning" before major trend changes occur in the San Diego real estate market. 

This "advance warning" is what enables you to sell at market peaks . . . and buy at market bottoms. Looking at the chart below, when the "Buy Low, Sell High" reading is above "0", the San Diego real estate trend is positive, and real estate owners can expect capital appreciation. When the reading is below the "0" line, capital depreciation is likely. 

Most importantly , be clear about this: Trend changes in the San Diego real estate market are signaled only when the "0" line is crossed in the "Buy Low, Sell High" index.

The "Early Warning Alert" Indicator

The "Early Warning Alert" Indicator is also a composite of the five "Vital Sign" indicators. It is designed to identify short-term trends . . . as opposed to the 3-5 year, long-term trends of the "Buy Low, Sell High" Index. 

The "Early Warning Alert" indicator only puts you on "alert." The "Buy Low, Sell High" Index is what triggers your buying and selling decisions.

Track Record of "Buy Low, Sell High" Index

Looking back, and testing the "Buy Low, Sell High" Index against actual San Diego real estate cycles, you have to be impressed. By examining the chart below, it accurately signaled every major San Diego real estate trend from 1982 to 1999.

Signal #1. The "Buy Low, Sell High" Index told you to "buy" San Diego real estate in April 1982 . . . after mortgage rates started plunging from the previous high of 17% . . . and prices were cheap. Home prices increased between 100% and 200% during the next eight years. (Remember, even when the graph line was falling, home prices continued to rise until the "0" line was crossed.)

Signal #2: In February 1990, when prices were sky-high and ready to fall . . . the "Buy Low, Sell High" Index flashed a "sell" signal. Home prices fell by 20-40% during the next four years. (See "What I Learned from the 1990 San Diego Real Estate Crash ") 

Signal #3 & Signal #4: After keeping you safely out of the worst real estate crash since the Great Depression, the "Buy Low, Sell High" Index gave a "buy" signal in January 1994 . . . and a "sell" signal in September 1995. These signals were good although not spectacular. Home prices went up a little and then down a little.

Signal #5: In February 1997, the "Buy Low, Sell High" index told you to "buy" . . . and within a few months, San Diego real estate prices started rocketing higher. By the start of the year 2000, home prices had increased by 25-40% . . . and were still climbing.

The "Buy Low, Sell High" Index

San Diego County: 1982 - 1999

Final Words

While no market indicator is ever 100% accurate, the "Buy Low, Sell High" indicator comes close. 

This unique indicator helps you buy at market bottoms . . . and sell at market peaks. Because "timing" and "market trends" are more important than "location, location, location" for making maximum profits in San Diego real estate, serious real estate owners would be wise to pay close attention to these "Vital Sign" indicators.

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