6 signs your home will increase in value

1. The unemployment rate It's quite simple: Without a job, you can't buy a home.
And as the unemployment rate rises, fewer individuals are capable of purchasing a home. That decreases the demand for homes, which drives prices down. (Currently, to get approved for a mortgage, you'll need to show proof of income, says DeVol.)
Video: Has housing hit a bottom?
To find a city's unemployment rate, and see whether it's rising or falling, visit the Bureau of Labor Statistics' Web site. The most recent report, from Oct. 28, breaks down the unemployment rates in each state's major metropolitan areas and compares those numbers to the previous year's.
Also, see if local businesses are hiring and if large corporations are moving into the area. More jobs leads to more employees buying homes in the area.

2. Rising incomes House hunters who want to dig a little deeper can look at the average or median change in income among households in a neighborhood.
At a minimum, confirm that incomes are being adjusted for inflation (or, ideally, rising.) Homeowners who have stagnant or declining salaries may not have much cash left over after they pay their mortgage; as a result, they might not maintain their homes or stay on top of repairs, which could lower a home's value and even the value of neighboring homes, says Zandi.
The Bureau of Economic Analysis (BEA) offers some insight on personal income. Click here and choose tabs labeled "per capita personal income" and "all metropolitan areas" to see how an area's personal income compares to others and to previous years.
A big drawback is that the data released this year ends with 2007 figures. (The BEA will release 2008 data in April 2010.)

3. Fewer foreclosure filings and sales On average, foreclosed houses sell for 30% less than similar homes in the same area, although the figure varies by market, says Rick Sharga, a senior vice president at RealtyTrac.com, which tracks foreclosures. In areas hit hardest, especially cities in Sunbelt states, foreclosed homes often sell at half the price.

4. Inventories are declining In most areas where "for sale" signs are common, home prices are far from recovery.
In general, when more than 2% of homes in a neighborhood are selling at the same time, inventory is high, says Dean Baker, a co-director at the Center for Economic Policy and Research. As the number of homes for sale decrease, sellers have more leverage and a better shot at getting an offer close to their asking price.
Look at the month's supply of inventory, or how many months it will take at the current sales pace for inventory to be depleted. Five to six months is the normal range, but the current average is just under 10 months.

5. The list-to-sales price ratio is shrinking On a national level, homes are selling at around 5% to 10% below their asking price, says Baker.
Look at list-to-sales price ratios, which is the difference between the listing price of a home and the price at which it sold. If the price difference is shrinking for an area that suggests the real estate market is improving, says Michael Evans, the president of the American Society of Appraisers and owner of Evans Appraisal Service, which appraises residential properties.
Appraisers also can provide average list-to-sales price ratios and historical comparisons.

6. Home prices are falling On the other hand, decreasing sales prices could mean that the housing market has hit its bottom, says Baker. They also guarantee that the buyer is getting into a market at a fraction of the price that buyers paid during the bubble.