Is the housing market going back in time?

Mamba Mentality

Last night, the NBA Finals kicked off and, well, because both Los Angeles teams flamed out early, we’re thinking about a legend who used to dominate this time of year. Of course, we’re talking about Laker legend Kobe Bryant. 

As many of you know, Kobe Bryant was famous for his incredible work ethic, which has become known as the “Mamba Mentality.” We think we could all take his relentless approach to basketball and apply it to real estate.

In today’s Foundation Plans below, we give you our tips on how agents can be just as relentless in our business as Kobe was on and off the court. Hopefully, it’ll help you lead your clients to a title… on their new home!

- James and David

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Existing home sales nearing 1978 levels

Existing home sales will total around 4.1 million in 2024 and will rise to around 4.5 million in 2027. That’s according to the latest housing forecast from Goldman Sachs. For perspective, existing home sales totaled 6.1 million in 2021 (during the pandemic housing boom) and 5.3 million in 2019. For even more perspective, existing home sales totaled 4.09 million in the year 1978, when the U.S. population was roughly two-thirds of what it is now. 

Here’s what else Goldman projects.

• The average 30-year fixed mortgage rate will fall to 6.5% by the end of 2024, and to 6.3% by the end of 2025.

• U.S. home prices will rise +3.8% in 2024, followed by +4.4% in 2025.

Our take

Frankly, we’d rather bring back bell bottoms and pet rocks before we brought back these existing home sales numbers. If Goldman is right about these existing home sale numbers, it’s going to be a long slog. It’s not hard to see why this is happening. The lock-in effect may have subsided, but it hasn’t ended. Housing affordability has deteriorated to the point that many buyers and sellers alike have pulled back from the market. Many homeowners are staying put, rather than trading in their 3% mortgage rate for a 7% rate. We hope the Fed is watching because the economy is softening and it’s time to cut.

Housing markets in the top 5 fastest-growing cities

The U.S. Census Bureau released new data showing which areas gained the most new residents between July 2022 and July 2023. The four cities with the biggest population growth are in states that saw a large number of housing units added last year. Unsurprisingly, with 12.4 and 10.5 million homes, Texas and Florida, respectively, became the second and third states with the largest number of housing units in the nation. 

Here are the housing markets of the five fastest-growing cities:

1. Port St. Lucie, Florida

   • Population Growth (July 2022 to July 2023): 5.7%

   • Typical Home Value: $399,038

   • Annual Home Value Growth: 3.6%

2. Atlanta, Georgia

   • Population Growth (July 2022 to July 2023): 2.4%

   • Typical Home Value: $400,820

   • Annual Home Value Growth: 2.3%

3. Fort Worth, Texas

   • Population Growth (July 2022 to July 2023): 2.2%

   • Typical Home Value: $308,360

   • Annual Home Value Growth: 0.5%

4. Raleigh, North Carolina

   • Population Growth (July 2022 to July 2023): 1.9%

   • Typical Home Value: $444,809

   • Annual Home Value Growth: 3.9%

5. Henderson, Nevada

   • Population Growth (July 2022 to July 2023): 1.8%

   • Typical Home Value: $483,870

   • Annual Home Value Growth: 5.9%

Our take

The cities with the biggest population growth had two factors in common: affordability and availability of inventory. Since the start of the pandemic, cities with affordable homes continue to attract the most new residents. Markets with more supply, whether from new construction or existing home sellers, generally offer a friendlier experience for buyers. They provide more options, milder competition, and more time to make an offer.

Top 5 states with the highest home price growth

U.S. home prices rose 6.3% between Q1 2023 and Q1 2024. That’s according to the Federal Housing Finance Agency's (FHFA) latest report of its House Price Index. For comparison, home prices rose 47.7% between Q1 2020 and Q4 2024.

In those four years, here are the states that saw the highest home price rise:

1. Florida –  67.0%

2. Maine – 63.6%

3. Tennessee – 61.7%

4. North Carolina – 61.0%

5. Montana – 60.0%

Our take

The FHFA HPI not only reports home prices at the national and state levels, but it provides insights about home price changes at the metro level too. We’ve found that both sellers and buyers want all that info. We suggest consistently relaying this kind of insight to establish your value with your clients. So much of client relations is about helping them gain perspective about what’s going on at all three levels.

Schematics

The news that just missed the cut

• How to use off-market properties to attract more clients

• Investor home purchases jump for the first time in two years

• HUD launches manufactured home loan program

• This sharp agent is taking the art of marketing luxury homes quite literally 

• J. Lo and Ben’s $60M Beverly Hills mansion might be coming back on the market

Foundation Plans

Advice from James and David to win the day

As the NBA Finals kick off, we’re thinking about one of the greatest basketball legends ever, Kobe Bryant. We loved his relentless drive to succeed. No matter what level of success he achieved, he never stopped honing his skills. We believe that agents should apply that same mentality. Today we will begin our “Mamba Mentality” series, a periodic series on skills we think every agent should be honing throughout their career. 

Know your market cold –  The more you know, the more confidence you’ll have to speak about real estate. 87% of buyers and sellers transact with the first agent they meet, so it’s important to make a killer impression. Make sure you have answers to questions about these three key subjects:

• Inventory: Is inventory increasing or decreasing in your market? What’s hot and what’s not? Where are all the price reductions happening? What’s the average sale price in the areas you work in? List to sell price ratio? Competing offers or price reductions?

• Sales: What’s driving sales in your market? Are companies hiring or firing? Are the schools improving or declining? Who are the developers, and what are they developing?

• New development: Is there new construction in your market? Where? What price ranges? Do the builders have special financing?

Practice pricing a property – This is a skill that definitely takes practice. But it must be mastered. We suggest testing yourself with the help of a fellow agent or broker. Take a subject property and see how your CMA, competitive market analysis, compares to your broker’s. Tour new construction models and get a feel for pricing on each product for each builder. Consider taking an appraisal class when your Qualifying Education is due. This type of knowledge is very important. 

Be relentlessly proactive in generating new leads – Talk with both people who already know you, as well as people you don’t already know. Get in touch with at least five contacts from your database. Speak to at least two people every day from the most likely to transact categories, such as Expireds, For Sale By Owners, For Rent by Owners, and Probate. Ask for buyer referrals (and pay a referral fee) from busier agents who aren’t pursuing their sign calls or open house leads. Hold open houses until you have at least 3 pre-approved buyers at all times. Have coffee with lenders at least once per month and ask who they’ve just prequalified and who needs an agent. Always keep your pipeline full.

We will be sharing more and adding to this series throughout this year. In the meantime, we encourage you to check out the excellent work of fellow agents Tim and Julie Harris. Our post today is inspired by them. 

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:

“Wake up every morning driven to be the best version of [yourself].”  – Kobe Bryant 

Keep moving forward. 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!

We’ll see you back here on Tuesday!

- James and David