It’s about as dumb an indicator as you can imagine… But it works.
This indicator is straight out of “Economics 101.”
It’s the basic idea that when there’s a shortage of something, prices go up. And when there’s a surplus of something, prices go down.
Right now, in the housing market, there’s a shortage of new homes. (I will explain what I mean by shortage in a minute.)
History shows that, if you buy when there’s a shortage, you make the most money in housing. And if you buy when there’s a surplus of new homes, you actually lose money (when you take inflation into account).
Let me explain.