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Inflation update we needed to hear
Plus, highlights from Zillow’s terrific seller survey
Rinku Mathew
November 17, 2023
Some positive news
We know that there has been a lot of tough news in our industry lately, so it’s important to highlight when we do actually get some good news.
The latest inflation report certainly fits that bill. We detail the key takeaways in the first article below. You’ll see that while we’re not nearly out of the woods yet, this is certainly a positive step in the right direction.
We also have some stats about seller concessions that might help get some hesitant buyers to get off the fence and get in the market.
With all the uncertainty hanging over the future of our business, it’s a little bit of positivity that we could all surely use right now.
- James and David
Inflation report brings some good news
San Francisco, CA
The BLS reports that CPI inflation declined to 3.2% year-over-year, with 0% change month-to-month. Here are some of the other key data points from October:
Core CPI inflation grew 0.2% month-over-month, but declined to 4.0% year-over-year, the lowest level since September 2021.
Annual growth in consumer prices fell from 3.7% to 3.2%
The prices of used cars, hotels, gas, and airline fares all fell in October.
The yield on the 10-year Treasury — which mortgage rates follow — fell sharply on the news that inflation is slowing.
Our take
This was an excellent inflation report. It gave the mortgage market a much-needed shot in the arm. It’s not a coincidence that this data caused bond yields and mortgage rates to fall dramatically. It is very unlikely the Fed will raise rates any further this year. Although we think it's far too early to bet that the Fed will actually cut rates next year, we can see a brighter future on the horizon. As long as we keep making progress on inflation and the Fed doesn’t raise rates any more, the housing market will be in much better shape in 2024… better than anyone was expecting even just a few weeks ago.
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What the typical seller is like
92% of U.S. sellers use a real estate agent to guide them through the home selling process, according to Zillow’s recently released consumer housing trends report. Here are more insights into the typical seller:
Their median age is 45, older than the median age of renters (39) and buyers (40), but younger than the median age for tenured homeowners (57).
The largest share of U.S. sellers live in the South (40%), followed by the Midwest (23%), the West (22%), and the Northeast (15%).
Their median annual income is $95,000 to $99,999, higher than the national median of $70,784 (according to 2022 data).
Nearly half of all U.S. sellers (49%) have at least a four-year degree, which is higher than the 35% share of the overall adult population with 4+ years of college.
Most sellers are married or in a committed relationship (70%), while 15% were married in the past and another 15% never married.
The median U.S. seller sold a 3-bedroom, 2.5-bathroom, single-family detached house with 2,000 to 2,999 square feet.
Our take
We’ve merely given you the highlights of this terrific survey. It is jam-packed full of information. We encourage you to read the whole report. When making your listing pitches, creating your marketing materials, and searching for potential clients, it’s so helpful to have this info at your disposal.
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Top metros where sellers are giving concessions to buyers
Source: Redfin
35% of home sellers are giving concessions to buyers. That’s according to Redfin’s latest home seller’s report on August through October. In fact, some sellers are lowering their prices in addition to offering concessions. Here’s a quick breakdown:
14.4% of homes had a final sale price below the asking price in addition to a concession.
11.5% of homes that sold during the same period had a price cut and a concession.
6.4% had all three—a concession, a price drop, and a final sale price below the original list price.
Top 10 markets that had the most seller concessions:
Salt Lake City, UT
San Diego, CA
Denver, CO
Las Vegas, NV
Raleigh, NC
Phoenix, AZ
Charlotte, NC
Portland, OR
Los Angeles, CA
Atlanta, CA
Our take
Those are some major markets on that list. In fact, they are some of the prime locales where people want to live. This info is great to show potential buyers who are on the sidelines, especially those who have the capacity to bypass the financing route altogether. More people are equity-rich than you might think, and, as we’ve seen from recent reports, a significant portion of them are willing to pay in cash.
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Schematics
The news that just missed the cut
St. Louis, MO
How to rank in the top 3 local listings on Google Maps
Planet Money explains China’s real estate crisis
McKinsey’s report on how AI will affect real estate
There’s still money to be made in the real estate say the Property Brothers
NAR chief economist expects existing home sales to rise in 2024
Foundation Plans
Advice from James and David to win the day
While we think the bulk of your business should come from listings, we’d like to offer you some tips on being a buyer agent. We believe every agent should strive to provide such overwhelming value that buyer clients will refer you to friends and won't object to paying your commission fee.
Be ready with your buyer presentation – Present to your buyer clients just like you would in a listing presentation. Outline all steps of the process–your role, the homebuyer’s role, and how you’ll work together. We’ve seen it work. You’ll start competing for buyer business just like you do for listings.
Come with financing options – We’re not telling you to pretend to be a mortgage lender — in fact, we’re telling NOT to do that – but you should be able to competently discuss options such as rate buy-downs, adjustable-rate mortgages and how to pay points to lock in a lower rate on a 30-year fixed mortgage. Make sure to include your buyer’s lender into the mix, along with the loan officer. Overwhelmingly, buyers don’t have a clue about the homebuying process, especially about the financials. Score some real brownie points here by adding value in this regard.
Stay ahead of the process – You must be more proactive than your buyer in the property search. If they’re dying to be in just one specific neighborhood, door-knock that neighborhood for them to discover the next motivated seller. Manage the inspection process so they don’t freak out over small items. Help set up their utilities, recommend movers, homeowner’s insurance companies, and anything else to alleviate stress. Show your value by doing the thinking and planning for them.
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Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Mortgage News Daily
That’s a wrap on this edition of The Blueprint!
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
