The metro market
Your fortune is tied to the health of your city's economy. To begin to understand the city's health, check quarterly to see if your town has made the National Association of Home Builders' Improving Markets Index, which assesses six months' worth of housing permits, jobs and house prices.

Here are several key indicators of your city's health:

1. Employment
"The first thing I would look for is employment," Crowe says. Look for unemployment to drop and jobs to grow. Check:

  • The Bureau of Labor Statistics. See monthly updates of unemployment rates for larger cities in each state (Look at Table 1 and Table 3). See trends by comparing current numbers with previous ones.
  • Local newspaper business section. Calabria advises reading the paper for monthly reports on unemployment, companies hiring, plant openings, job losses, business closures and large layoffs.
  • Job listings. Get a sense of local hiring by scanning Craigslist, Monster.com or other job websites. Compare your city with others of similar size where you know the economy to be prospering or flailing.

2. Home prices
Look for:

  • Stability. Watch for prices to stop falling and stay level or grow slowly, signs that "the market is curing and people will be back," Dienhart says. "But you don't want to see prices roaring off" and making homes unaffordable.
  • Losses. Home values peaked in 2006 or 2007, depending on your area. Big price declines — 30% or more from the peak — are a warning to buyers: You may see a huge discount, but the underwater factor is huge for neighbors who bought during the boom. If their foreclosures keep flooding the market, the value of your purchase could fall or stay flat.

Home-price resources:

  • Hanley Wood Housing Intelligence Pro. Get one free monthly report (coupon code HIP2012) showing changes in local home sales, prices, mortgage financing and other data. (Subscription: $100.)
  • Federal Housing Finance Agency's Monthly House Price Index includes nearly every U.S. sale and refinance. Click "City HPI Summary" to see price changes by quarter, year and five years, plus rankings for each of 306 U.S. cities. Reports (see schedule) lag by two months.
  • S&P/Case-Shiller Home Price Index. Released the last Tuesday of each month, this report has price changes in 20 major U.S. cities, with a two-month lag. Scroll down to "Index Announcements" to read the most recent news release, with a table showing price changes by city.

3. New homes
Developer activity is a clue to your city's economic health:

  • Ads. See new-home communities in your paper's Sunday real-estate section or try sites such as NewHomeListings.com and NewHomeGuide.com.
  • Developments. A dirt lot with no sales office is a bad sign. A crowded open house with interested buyers is good. Chat with salespeople. Do they seem optimistic or merely desperate?
  • Construction data. The Census Bureau offers monthly updates of building-permit data by metro area. You can also track new residential construction. The NAHB issues reports on employment, home sales and building permits by metro area.
  • Look around. "Do you see trucks with lumber on them? Construction crews going to work in the morning?" Crowe says.

Article continues below

4. Vacancies, foreclosures, rental demand
Vacancy rates reveal market demand. Foreclosure trends give a peek at the supply of homes down the road. High rental demand may indicate a strong local economy.

  • Census.gov posts quarterly homeowner vacancy rates in the 75 largest cities about a month after the quarter ends. Compare your city to others in Table 5 (Excel spreadsheet). 
  • RealtyTrac tools. See if your state uses judicial or administrative foreclosure procedures. If your state has an administrative process, "it's likely the worst is behind you," Calabria says. "Many judicial foreclosure states (where courts review foreclosures) still have some way to go." See foreclosures and bank-owned properties for sale, recently sold and auctioned and sort by home size, price and stage in the foreclosure process at the ZIP code level at RealtyTrac.com (free registration required). Details on individual homes — foreclosure status, amount owed, scheduled auction, lender and owner information — are free for seven days; membership is $50 a month. Foreclosure activity in your neighborhood helps tell you whether to stay or sell, Blomquist says.
  • Rental demand. At Census.gov, select Table 4 (Excel spreadsheet), which includes vacancy rates for the 75 largest metro areas. New reports are posted about a month after each quarter's end.

Subscribe to MSN Real Estate on Facebook and Twitter.