How to predict the real estate market

I have a trick that can help you predict the peak of the real estate market. 

Notice when I am personally purchasing real estate.

Hear me out on this one. 

I tend to always buy at the peak of the market. I don’t know how I do it—it must be a special gift of mine. 

For instance, I bought a heritage property in January, 2008. If you recall, the summer of 2008 was when things began to unravel in real estate, and Lehman Brothers went under in September of that year. 

I also bought a small acreage in March, 2022. Yeah, right before things started to shift again. 

When the market zigs, I pretty much zag. 

Thankfully, I have had more success in business ventures, which has helped to offset my missteps in real estate.  

One superpower that would be really helpful would be the ability to predict the future. 

While that doesn’t exist, the next best way to be able to predict the future is to pay attention to leading indicators. 

A leading indicator is a measurable set of data that can help forecast future activity. 

It can’t predict the future, but it can give you some clue as to what might happen. 

Another brokerage owner told me that he watched his monthly Equifax pulls as a way to predict future volume in one to two months. 

If he noticed the number of credit pulls going up, he could safely predict that his company volume would start to follow within 60 days. 

The same was true in the opposite direction. 

I decided to make this a metric that we would monitor on a monthly basis, to help us predict future files funded. 

I analyzed 10,870 credit pulls over the past 13 months. The average has changed over time and is currently 5.27 credit pulls for one file funded within 60 days. 

This is leading me to make the following prediction for January of 2024, based on 794 credit pulls in November, 2023. 

794 credit pulls / 5.27 average = 151 estimated files funded. *  

Two quick things on this. 

First, if you want to check out the entire breakdown, you can read my blog post below.

Second, I would be interested to hear what your number is. I suspect that experienced brokers will have a number that is much lower than our company-wide average of 5.27.

→ How to Predict The Future, Sort Of

Finally, I am not planning to buy any real estate any time soon, so you are probably good on that front. 

Think of me as your leading indicator. 😄 

PS - For the record, I am still a big believer in real estate. My property from 2008 has more than doubled in value from the peak price I paid. 🎊