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These home sale numbers are STRONG
Plus, the price report we’re watching closely
Rinku Mathew
January 26, 2024
Our mission
When we started this newsletter, we wanted to give you more than just information, we wanted to give you motivation.
We all know this business can be tough, and if you’re going at it alone, it can sometimes feel overwhelming. That’s why we feel it’s so vital to share good news when we have it, and today’s newsletter is loaded with it.
As you’ll see below, we’re getting more good signs that the real estate market and our economy as a whole is heading in the right direction. We encourage you to take advantage of this moment. Get out there and hustle, because buyers and sellers are more and more primed to get in the game.
We hope that’s some good motivation for you… and now here’s all that good information!
- James and David
Economy blowing past all expectations
The U.S. economy grew at a surprisingly strong pace in the fourth quarter while inflation continued to fall. The numbers surpassed estimates by a significant margin. Here are the important stats from the Bureau of Economic Analysis report:
Real GDP grew by 3.3% in Q4 (Estimate was +2.0%)
Real GDP grew by 2.5% in 2023 overall (Estimate was +2.4%)
Core PCE price index grew by 2.0% in Q4 (Estimate was +2.0%)
Our take
This was an outstanding report. Solid GDP growth. Unemployment down. Inflation down. On top of that, Core PCE, the Fed’s preferred measure of inflation, has held steady at 2.0% for the past six months. This is exactly what we want to see. All of this makes it likely that the Fed will cut interest rates. Combined with falling mortgage rates, this will provide even more of a boost for us agents. But don’t expect the Fed to cut rates in its January meeting though. We still need to see how things are shaping up in 2024. At the earliest, expect the Fed to cut rates in March.
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New single-family home sales spiked by 8%
Even after adjusting for seasonal trends and factors, sales of newly built, single-family homes increased 8% to 664,000 in December. That’s the main data point from the latest report released by the Department of Housing and the Census Bureau. Here are the other key takeaways from last month:
The amount of new home sales went up 4.4% YOY
The median sales price of new houses sold was $413,200
The supply of new homes climbed to 453,000, the most in more than a year
3 of 4 regions saw new home sales rise, with the Midwest advancing to the highest level since July
Our take
Given the low supply of existing homes coming on the for-sale market, new construction helped fill in the gap. As a result, sales of newly built homes have increased in the past year while existing-home sales fell. This shouldn’t be surprising since builders are offering mortgage rates far below the going rate. For example, DR Horton, the nation’s largest home builder, is offering mortgages at 4.9% in Atlanta. Currently, market mortgage rates are at 6.90%. We believe this trend will continue for the rest of the year. We encourage all agents to build on this moment. Now is the time to fire on all cylinders and get as many listings and buyers as you can.
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Rental prices fell for the 8th consecutive month
In December, the U.S. median rent continued to see a year-over-year decline for the eighth month in a row. There was a -0.4% drop for 0-2 bedroom properties across the top 50 metros, according to Realtor.com. The company joins other commercial firms that report either a drop or marginal increase in rental prices. The only outlier is Zillow.
YOY apartment rent change through December 2023
Apartment List: -1.0%
CoStar: -0.9%
Realtor.com: -0.4%
RealPage: +0.3%
Yardi: +0.3%
Zillow: +2.7%
Our take
We don’t sell or lease apartments, but we’re still watching rental prices like a hawk because the CPI depends so much on it. If you want to get a sense of which direction CPI is likely heading, look to see if market rental rates are spiking or not. So far, with the exception of Zillow, the market shows rental rates either falling or rising only very slowly. This is good news. The more rental prices go down, the faster our inflation measurements go down. And the faster they go down, the faster mortgage rates will fall, and the faster home sales will rise.
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Schematics
The news that just missed the cut
Blackstone is gearing up for a real-estate buying spree
Mauricio Umansky’s alternative to NAR is set to launch
Major MLSs reach a settlement in lawsuit over NAR policy
What $10M gets you in Massachusetts, Illinois, and Virginia
How to build lasting wealth especially as an agent
Foundation Plans
Advice from James and David to win the day
At the start of every year, many new agents join the ranks of our profession. Maybe you’re one of them. After getting a license, the next big decision is joining a brokerage. Today we’d like to go over some key questions you need to answer before joining a firm.
Does the brokerage provide buyer or seller leads? – This one is huge because it's how you get clients and close deals. Brokerages that provide leads are a major asset to new agents, so take the time to learn more about how each brokerage provides leads for you.
What is the company culture? – Whether you're working out of the brokerage's office or working remotely, you definitely want a good fit. You’re going to be spending countless hours each day with these people. Make sure the company fits your values and their expectations match yours, especially when it comes to the day-to-day and week-to-week workload.
What are the financial details? – Make sure you know EXACTLY how you get paid and how the split structure works. Also know EXACTLY what your financial obligations are to the firm. Don’t get caught off-guard. You’ve got to negotiate for yourself just like you would for a client. Each brokerage will have different policies on commissions, referral fees, and covered expenses, so ask about these. Write down the specifics for each brokerage so you can compare notes later and choose the best one for your goals.
What we have given you is just a start. Here is an excellent comprehensive guide to use when making your decision.
The 1% Blueprint
An on-demand course created by James & David
Discover our strategies and techniques to attract a stream of high-quality leads, propelling your real estate business to new heights of success.
For Blueprint subscribers, the course is 30% for a limited time. If you’d like to take our course to learn how to become the top 1% of your market click here!
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Mortgage News Daily
We hope we’ve moved you to take action today. Time is of the essence, truly.
Remember: each day is a gift and a new opportunity to lead the life you want and to become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. You can do it!
Thanks for reading, and we’ll see you back here on Tuesday!
- James and David
