by T.J. Wolfe

Created on: April 13, 2009

When to buy real estate can be as tricky as when to invest in a stock. How do you time your purchase? Today, the markets are precarious. There are a few things you can use to determine when you've rented long enough. These things can help you time your buying decision and determine a price.

When buying a home is also a financial decision, there are three aspects of the financial markets that can help you better time your purchase and determine a price.

1. The economic indicators are a good tool to use for timing.
2. Inflation is something to keep in mind because inflation is going to make timing the market more difficult.
3. Comparing the financial benefit of owning a home to renting can help you determine what you are willing to pay a month.

Usually, we are trying to buy before the market turns around or just after the market turns around. How can we identify when housing prices have stop declining? The financial economic indicators can be a great tool to time the markets. There are three types of financial economic indicators: leading, coincident, and lagging economic indicators. You'll be concerned with the leading and lagging economic indicators.

Leading indicators will change direction first. These indicators can indicate that the economy is changing direction. The LEI (leading economic indicators) need to start slowing down on their current direction and then reverse. Some of the critical items to watch include: Monetary Policy (interest rates) and Money Supply Growth (M2). Other indicators which usually lead to an economic recovery are the ISM report (manufacturing and non-manufacturing).

In the LEI, Monetary Policy and Money Supply are key FED indicators that can foreshadow a change in the economy. When the FED begins to encourage spending through interest rate cuts and increase money supply, they are trying to stimulate the economy.

The FED is encouraging spending and increasing money supply right now. These two indicators have turned around. Start watching the rest of the Leading Economic Indicators to see if they follow. When most of the indicators start to show a recovery, we may be in a recovery.

The lagging indicators are: housing prices, consumer spending and the unemployment rate (overall number of unemployed individuals). These indicators are usually last to turn around. After the economy starts to recover, housing prices can take as long as six months to a year to stop falling. Unemployment rates can take as long as a year to two years to start declining.

Because

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