Big change in Zillow’s home forecast

Check the source

In our business, information is everything. But that’s not the whole story. It’s also important to know who is providing that information.

Every week, we study forecasts from various companies and outlets across the real estate industry, and we’ve noticed that some firms tend to be more sunshine and rainbows, while others tend to be Debbie Downers.

That’s why our first story today truly got our attention. Zillow tends to be on the more positive, sunshiney end of the spectrum, so we definitely took note when they lowered their home value projections. See below!

That data might have a little something to do with our second story, which shows the current state of mortgage rates, care of Realtor.com.

This is all valuable information, and we think it can really help us all get a good sense of what’s going on in the market now, and what could be happening soon

- James and David

Zillow makes big change to home value forecast

Zillow made a significant revision to its home value projection. Last month, the company projected home values to grow 0.6% in 2024; now Zillow is projecting a drop of -0.2%. That is from its latest report. Here are other key takeaways:

• Home values will fall by 1.4% over the next 12 months

• Existing home sales will grow 0.9% YOY, reaching 4.12 million total in 2024

• New for-sale listings saw a 12.6% annual increase in May compared to 8.7% in April

Our take

Zillow has a reputation for being one of the most bullish forecasting shops in the business, so when it issues a downward revision, we pay attention. It’s not hard to see why Zillow revised its projection. For-sale listings have been spiking, but buyers haven’t been making enough purchases due to affordability issues. As a result, many of these listings are staying on the market for longer, causing inventories to build and home price growth to slow. The quickest way out of this vicious cycle is interest rate cuts, but we don’t see those coming anytime soon.

Overview of the state of mortgage rates

In Q4 2023, 87% of mortgages have rates below 6%. Meanwhile, 22.2% of outstanding mortgages have an interest rate below 3%. That’s according to Realtor.com’s analysis of recently released data from the Federal Housing Finance Agency. Here’s a breakdown by share of outstanding mortgages, and cumulative share:

Our take

This chart perfectly encapsulates what we’re seeing in the market. Just look at those numbers and you can see why homeowners would rather sit tight than sell. 77% of mortgage holders have a rate of 5% or lower, while today’s rates are hovering around 7%. Even though the lock-in effect is slowing, this data shows it is still a real factor.

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Top markets with the least risk of housing decline

ATTOM analyzed the top 50 housing markets (by county) to determine which are most and least at risk for a housing decline. This was based on factors such as gaps in home affordability, underwater mortgages, foreclosures, and unemployment.

• 34 of the 50 U.S. counties most exposed to potential declines were in California, New Jersey, and Illinois.

• 22 of the 50 markets considered least likely to decline were located in Virginia, Wisconsin, and Tennessee.

Here are the top markets least likely to see housing declines:

1. Chittenden County, VT

2. Shelby County, AL

3. Davidson County, TN

4. Albemarle County, VA

5. Henrico County, VA

6. Brown County, WI

7. Sullivan County, TN

8. Knox County, TN

9. Sedgwick County, KS

10. Blount County, TN

Our take

ATTOM has done us a huge service here. It answers one of the most important questions buyers will ask. They want to know if that local market is booming or shrinking. Obviously, this is just one slice of data, but it could help inform purchasing decisions, especially for real estate investors. This is the kind of important information we encourage you to share with clients.

Schematics

The news that just missed the cut

• Wells Fargo is extending its $5K closing cost credit 

• Never use these hooks in your marketing

• How Vanilla Ice built his real estate empire

• The sale of this exclusive Miami Beach enclave just became the area record for the year

• Why Tom Ferry thinks the NAR settlement is a once-in-a-lifetime opportunity

Foundation Plans

Advice from James and David to win the day

In today’s edition, we conclude our two-part series highlighting certain skills we think every agent needs to confidently walk into any listing appointment. In addition to the skills we’ve mentioned already, make sure you hone these skills as well. 

Know the most recent comps – Agents worth their salt MUST know and understand the most recent comparable sales. They should know this material cold before an appointment. This is a surefire way to build confidence with clients and demonstrate that you have your finger on the pulse of your local market.

Communicate what sets you apart – Agents should be prepared to communicate their unique approach to the business. Do you market properties in a unique way? Do you do video content? Do you host more open houses than other agents? Do you have an extensive database of buyers or agents? The more specifically you can list these approaches, the more you will sway clients in their decision-making.

Know your worth and your non-negotiables – Obviously, commission rates are negotiable, but you need to set your limits in advance. Determine your no-go zone before the appointment so you know exactly where you’ll want to draw the line. Think how you want to present yourself and handle objections you might get from clients. The more you prepare, the easier it will be to answer these questions. You want to make sure you are entering an arrangement that is worth your time and energy.

We’ve given you the basics, but there is a lot more to know to master your listing pitches. Start here and here to learn more.

To learn more about Estate Media, visit their website.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

That’s a wrap on this edition of The Blueprint!

If you’re new to the Blueprint community, we want to hear what you think! What’s your take on today’s stories and tips? Send us a note with your comments, questions, or suggestions.

In the meantime, keep closing deals and picking up leads. We’ll see you on Friday.

- James and David