The Great Stay, Why Homeowners Are Staying Put
For our recruiting and attracting clients, the future is bright for agent growth.
As my business partner Ben Hess – a sailor, says – “fair winds and following seas:” A well-known phrase in the maritime world that means the wind and sea will likely be going in your direction.
October 2024 Commentary
Jobs and real estate work together… has that changed? My business acquaintance Mike Simonsen from Altos Research coined the term “the Great Stay.” In summary, Mike states:
- Conventional wisdom has been that the job market must weaken and unemployment must rise… yet unemployment has stayed low for several years.
- Normally, when unemployment is low, many of us have confidence we can find a new or better job. Maybe more likely to change jobs.
- What we are seeing post-pandemic is layoff rates are very low, and the rate at which companies are hiring is low. So, no one wants to upset “a good thing.”
- Housing? Homeowners have a good thing with low rates and a very good run-up in equity.
- The incentive to move to “lower cost” states has equalized with higher rates. So, no one wants to upset “a good thing!”
The great stay for jobs and real estate.
- While inventory is more than the prior year (34% more), it is compressing as recently at 40% more than last year.
- The story that real estate is local is becoming more pronounced; for example, while Denver has more inventory than at any time in the last decade, Orange County, CA is still much tighter.
The outlook? On a National basis, Ralph McLaughlin, Senior Economist, Realtor.com, said, “We expect the economy to land softly and housing inventory to continue to recover. This should put downward pressure on mortgage rates this fall and winter and set the stage for a much better season for homebuyers in 2025.”
Bankrate did a survey that indicated “More Than Half of Homeowners Would Be Motivated to Buy With Rates Under 6% while 33% Of Sellers Would Be Motivated Below 6%.” Some are projecting that this rate scenario could occur in the first quarter of 2025.
Some additional highlights?
- Conditions are better now than in prior quarters.
- The third week in a row with more sales – this week, 16% more than a year ago
- Very different market-by-market
- Mortgage rates are now 6.18%, and a four-firm prediction says 5.68% by Q4 of next year.
- National average price appreciation is expected to slow to 2.6%
- Wide variation depending on geography and new home builder activity
- A 14% increase in home sales (low-range 10% and high-range 21%)
- 2024 is projected to end at 4.7 million homes sold
- 2025 is projected at 5.4 million (average of 3 sources with a range from 5.2 to 5.7)
- Waiting until next spring or summer would give you more inventory to choose from, but you will be up against greater competition during peak buying season.
- “Nothing Good Happens When You Wait,” ~ Mark Johnson.
My takeaway?
- No one can give perfect advice… yet you can provide informed advice.
- Follow the data.
- The trends leave clues.
- It’s never been more important to understand the Macro (State and National) and Micro (Regional and Local) markets. My friends at Altos and KCM have some pretty great tools to do both. Hit me up for more insight.
- Altos US Nationwide Real Estate Trends
- Altos – Texas Real Estate Trends
- Altos – Florida Real Estate Trends
- Altos – California Real Estate Trends
Happy business development!
