6 months down, forever to go
We’ve now officially been writing this newsletter for six months! Building this community from scratch has been so rewarding, and we appreciate having you become a part of it.
We have over 10,000 readers and we can’t wait to double it. If you know someone that might enjoy this newsletter, please share, because we think we are onto something special. So strap in, because next month we have a crazy announcement that we can’t wait to share with all of you ;)
- James and David
The NAR’s biggest market predictions
Nadia Evangelou, the NAR’s Director of Forecasting, knows a thing or two about market trends. According to her research and analysis, here’s what the rest of 2022 holds:
- Higher mortgage rates. Evangelou expects rates to climb further this year, but not as fast as they have in the past few months.
- Inventory will rise. With about 20,000 more homes on the market for buyers in the $200,000 household income range, they’ll have more options. But we’re still facing a major shortage of affordable housing for entry-level earners.
- Watch out for institutional buyers. Rent is rising significantly as priced-out buyers hold onto their leases. That demand is drawing even more institutional buyers to the rental market, putting price pressure on first-time and low-income buyers.
We agree with all of these predictions, especially #2. Inventory is clearly on the rise in our market, and homes are staying on the market longer than they did last month. We’re seeing a shift to a buyer’s market, so remind your sellers to reduce their prices if they want to move on their houses.
Affordability dropped again in Q2
As prices rose steadily over the past three months, affordability (defined as a mortgage payment that’s less than 28% of your income) dropped to a new low. Here’s what happened:
- In Q2, the median single-family home price hit an all-time high of $349,000 (according to ATTOM)
- Mortgage rates spiked to their highest level since 2008
- In 97% of counties across the U.S., affordability is now lower than it has ever been
- On average, mortgage payments are 40-50% higher than last year and require 31.5% of household income, making this the biggest affordability drop this century
If affordability is an issue for your buyer, have them make a list of the non-negotiables. Go find a property that is closer in their price range, and remind them that their first home is not necessarily their last. We all have seen objections around the things a home is missing. Sometimes the “perfect” home is what’s perfect right now.
Opendoor’s most popular (underrated!) cities
According to Opendoor, a handful of under-the-radar cities, particularly affordable Sun Belt cities and suburban Texas neighborhoods, are becoming increasingly popular with buyers who want good weather and access to outdoor activities.
These are Opendoor’s most popular cities for buyers in the first half of 2022:
- Clarksville, TN
- Celebration, FL
- Yukon, OK
- New Braunfels, TX
- Loganville, GA
It’s interesting to see companies like Opendoor share data on where homebuyers are looking. During the pandemic, we’ve seen a shift in what buyers prefer, and we’ve seen many buyers who list good weather and the opportunity for outdoor activities as some of their top preferences.
The news that just missed the cut
- This incredible 6.3 acre oceanside estate is now listed for $28.5M
- What $2.2M gets you in California
- How New Yorkers find apartments in today’s ultra-competitive market
- These property types appreciate even faster than single-family homes
- Can’t buy a whole property? Try fractional shares
- This shows the housing market in Phoenix is slowing down
Advice from James and David to win the day
One of the most effective lead-building strategies you can implement is focusing on one specific geographical area, like a neighborhood or small community. When you hit that area again and again with door-knocking, mailers, posters, and word-of-mouth, you’ll start to build up a really powerful local reputation.
But before you pick your new focus area, consider these three factors:
- Is there already a go-to agent there? You don’t want to choose an area where another agent is already focusing all their attention. If 20% or more of the homes in that area have been sold by one agent, consider looking for a less competitive area.
- Is there real opportunity there? Look at the recent sales volume of that area. If several homes have moved quickly in that area, there could be huge opportunity for you. But if it’s a stagnant neighborhood with little activity, it won’t be worth your time and marketing dollars.
- Is this price point profitable for you? Consider the average sale price of your potential geographical area. If you start selling homes in that area, will you make enough commission to compensate for your time and marketing expenses?
You ask, James and David answer!
We’ll be back next week with another answer to a real reader question. Submit yours here!
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Right now everybody’s talking about affordability and high prices and high interest rates. It can seem like homeownership is impossible for everyday people. Now, it’s more important than ever to encourage your clients that homeownership is absolutely possible with the right agent on their side— you! Remind your buyers that there’s always an option. It might take some creativity and flexibility, but together, they can achieve their goal.
Now get out there and get to work!
- James and David
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