Taking a step away from the drama, speculation, and panic caused by the NAR Commission Lawsuit Settlement, let’s reset everyone’s mindset. Today, we’re talking about 8 reasons to be optimistic.
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We’ll return to upgrading your buyer skills this week; don’t worry! The fact is that even after upgrading your best buyer practices, embracing, learning, and using your Buyer Presentation if you don’t have a powerful mindset, you’ll be unlikely to use your new skills at the level necessary to thrive in the new real estate world.
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Let’s dive into 8 reasons to look forward to a fantastic year ahead.
1. Inventory is back and rising steadily! This is the most exciting news this month—it’s what we’ve all been waiting for. NAR head economist Lawrence Yun said, “Additional housing supply is helping to satisfy market demand. Housing demand has steadily risen due to population and job growth, though prevailing mortgage rates and wider inventory choices will determine the actual timing of purchases.”
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*Rising demand and lower rates should fuel a better year for sales!
For the week ending March 15th, there were 507,000 single-family homes on the market. That’s up 1.3% from the previous week, 24% year over year, and an amazing 105% from two years ago. That’s from Altos Research, which tracks every sale in the country every week.
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Inventory is growing nationwide and has been consistently increasing each week. These numbers don’t even include all the new construction! That’s our next point…
2. Builders are officially bullish. The National Association of Homebuilders has published its “builder’s confidence” index for 35 years. In March 2024, the index rose 3 points to 51. Anything greater than 50 is considered bullish.
What goes into the index? It has three components: current conditions, future conditions, and buyer traffic. They report that all three components are coming in high. For comparison, their builder confidence index was 44 this time last year.
In January, housing starts rebounded 11% Month over Month to 1.5 million units. February was up 6% year over year. Completions jumped to 1.7 million units, up 20% Month over Month and 10% Year over Year. That’s the fastest pace of completion seen since January 2007! While some of those starts are multifamily, the majority are single-family homes.
Homework: Take a tour of all the available new construction in the zip codes you typically work in, plus a 10-mile radius. Refer to our podcasts about new construction. More than 30% of the available inventory is new construction.
3. Rates WILL come down this year. Rates are currently just under 7%, which is already an improvement from the beginning of the year. We see that in mortgage applications being up.
The Federal Reserve kept its short-term interest rates steady for the 5th straight meeting; it is still forecasted to reduce rates by about 75 basis points starting this Summer.
Even though rates are higher than we’d like for now, there are still many ways to secure a mortgage with a below-market-rate interest rate. We discuss this in Premier Coaching and have done several podcasts about different methods for your buyers to achieve this.
4. The new rules from the NAR Settlement are good for your business. Now that a signed buyer representation agreement is required, it will be much easier to determine which buyers in your pipeline are the most serious, qualified, and motivated. Of course, this assumes you are following the buyer system, prequalifying with scripts, presenting your value, and closing for the signature.
5. Demographics are on your side. Between the demand for homes from Millennials and Generation Z (24% of sales are first-time buyers, despite higher rates) and new immigrants, there is a steady supply of buyers ready to achieve the American Dream.
Take, for example, these stats about Hispanic Buyers:
The National Hispanic homeownership rate reached 49.5% in 2023, a net gain of 377,000 over the previous year. According to the National Association of Hispanic Real Estate Professionals (NAHREP), 9.5 million Hispanic households own their own home.
In 2023 alone, Latinos saw a net gain of 450,000 new households and were responsible for 25.5% of overall U.S. household formation growth. And the 49.5% homeownership rate was close to a record high in census data going back to 2000.
Texas, Pennsylvania, and Georgia lead the way with the highest net migration to those states. That’s from Freddie Mac data.
NAHREP predicts that homeownership among Latino households will continue to grow. About 30% of Latinos are still under 18, 2.2 million will turn 18 in the next two years, and many will pursue co-borrower loans for their first or second purchases.
ITIN, or Individual Taxpayer Identification Number loans, are becoming more accessible, plus new loan products and lower down payment programs are more prevalent.
6. Sales are UP! According to a NAR report last week, existing home sales rose 9.5% in February, raising the yearly prediction from 4 million in January to 4.38 million. These numbers should continue to grow, hand in hand with increased resale inventory and increased new construction. Add a dash of lower interest rates, and we should have a hotter market soon!
7. AI! You have a new, free (or super cheap), highly professional assistant to revolutionize your business. AI will continue to assist you in everything from scheduling to analyzing multiple offers to writing ad copy, finding inventory, searching for the best loan products, being your video avatar, and many more advantages.
8. There will be no precipitous decline in home prices. Supply is still at least a million homes shy of demand, and demand is increasing. Appreciation / Inflation is slowing but not stopping. According to NAR, the median price for all types of existing homes rose 5.7% yearly to just under $400,000. All regions had gains, with double-digit % growth in the Northeast of 11.5%.
According to Redfin, the average home in the US has increased by an amazing 45% since 2019! Remember this when you’re worried about a seller covering a buyer’s agent’s commission. If the seller nets what they need to make a move, paying for two commissions shouldn’t cause much duress.
So keep your mindset strong, revisit your goals, know if you’re on track, ahead or behind for the year, and get back to work! Sign up for Premier Coaching today for free so we can help you achieve your goals even faster.
