RealTrending Ep. 101: The best barometer of housing market health

Are we getting into the danger zone of a market that is overheated? Steve Murray, senior advisor for RealTrends goes through the data and tells brokerage leaders what to watch for to determine housing market health and focus on to stay on the right side of the market.

Here is a small preview of today’s interview. The transcript below has been lightly edited for length and clarity:

Brokerage fundamentals: I was thinking about the analogies to the real estate brokerage industry and that we are so distracted by all the things going on in our business and personal lives. My experience watching the strike indicator [a fly-fishing term], that the most successful people are those who can stay focused on it. You might have four or five objectives during a day. The key is that the most successful people are going to be those who can focus on that issue at that time. 

Overheated market data: We’ve said in the past that one of the best barometers of housing market health is the percent of all households, both renter and owners, who bought a home in a particular given period. We know, for instance, that over the last 40 years, the national average is 4.8% of all households on average will buy a home each year. And to the extent the market is above or below that number is an indication of whether the market is running hot or cold. Here’s how to figure out housing market health.

Explaining market share gains: There’s never been the kind of one-year market share shift in the 30 years we’ve been tracking the Real Trends 500. It’s significant. In fact, in the past, when markets were strong, large companies tended to lose share because of the ease of which people could start their own brokerage companies. That did not happen last year. While there’s still people forming small companies, the larger firms picked up 10% share.

Another early sign of market share consolidation is the America’s Best Real Estate Professionals rankings, which will be out in about a month. A first glimpse at some of the data shows the top agents and top teams in the country gained significant share as well.