Our take on Fannie Mae’s surprising report
Plus, eye-popping numbers from the LA market
Turning the tables
In this week’s episode of Rise Above the Ranks, the tables get turned on us! We are interviewed by Grier Allen of “Inside Real Estate”. Grier asks us how we built the number 2 team in the whole nation and we reveal a lot of details that we’ve never disclosed before about how we operate as a team and carry on our day-to-day business. It’s a great interview (...if we may say so ourselves)!
Give it a listen, and let us know what you think. Drop a comment or feel free to leave us a review. We love hearing from you.
Now, let’s jump into today’s Blueprint!
- James and David
Home prices on the rise
Home prices have increased by 3% year-over-year on a seasonally adjusted basis according to Fannie Mae, which just released its latest Home Price Index reading for Q2 2023. As Fannie Mae’s chief economist, Doug Duncan points out, home prices have once again pleasantly surprised housing economists, thanks to a combination of historically-low housing inventory and resilient buyer demand.
Here are some key numbers:
Home prices rose 3.6% in Q2 2023 on a non-seasonally adjusted basis
Home prices rose 1.9% on a seasonally-adjusted basis from Q1 to Q2 2023
Home prices rose 1.3% on a seasonally-adjusted basis from Q4 2022 to Q1 2023
The fact that prices are going up clearly stems from the lack of inventory out there on the market. It seems that buyers are starting to see higher mortgage rates as the new normal, and they’re willing to just accept that they’re going to have to bite the bullet if they want to get their hands on a home. The experts say we could see rates climb up above 7% after the next Fed meeting, but we don’t see that dampening demand.
June home sales drop to slowest pace in 14 years
June home sales were down -18.9% compared to last year, marking the slowest sales pace for June since 2009. That’s according to the latest report from the National Association of Realtors. Here are other key takeaways:
Sales of pre-owned homes dropped -3.3% in June compared with May, which translates to 4.16 million units on a seasonally-adjusted annualized rate.
The number of homes for sale is down -13.6% compared to 2022, with the total number now down to 1.08 million
At the current sales pace, that represents a 3.1-month supply (a six-month supply is considered balanced between buyer and seller).
This is one of the craziest markets we have seen. Prices are up, but sales are down. Mortgage rates are up, but homebuyer demand is also still high. Even real estate economists are puzzled. This is way out of line with the usual models and patterns. That’s why it’s all the more important to follow the current news and keep an eye on what’s happening in your local area. As the market changes, so should the guidance you’re offering your clients.
Cities with the highest share of luxury homes for sale
San Diego: https://bit.ly/43KyDya
Using $1M as a benchmark for what “luxury” entails, Point2 wanted to find the cities with the highest percentage of luxury listings in that area.
Here’s their list of the top large markets with the highest share of listings $1M and above:
Los Angeles, CA – 63.6%
San Francisco, CA – 62.1%
San Jose, CA – 60.6%
San Diego, CA – 58.6%
Boston, MA – 53.1%
New York, NY– 40.9%
Seattle, WA – 34.3%
Denver, CO – 27.3%
Washington, D.C. – 26.0%
Austin, TX – 24.7%
We know so many people who want to break into the luxury market. It’s an excellent and admirable goal, but you need to make sure you’re directing your energies in the right markets. We encourage you to study this report carefully. Use it to determine which markets you want to enter, or whether a market is worth getting into at all.
The news that just missed the cut
Advice from James and David to win the day
As we said up top, in this week’s episode of our podcast, Rise Above the Ranks, we tell Grier Allen of “Inside Real Estate” how we built our real estate team. We share the details on the podcast, but here are the main bullet points:
Specialize in what you do best - It’s extremely tempting to try to do everything yourself, but that’s a recipe for stress and burnout! Instead of trying to do everything, specialize in the areas where you have the most expertise. Leave the rest to the people you trust on your team. Let them do their thing as you do yours.
Keep it simple - We’ve seen it happen so many times. People try to simplify their business by creating some overly bureaucratic “system,” but it winds up complicating everything! It’s so important to keep your operations simple and easy. That makes your business and your life easier, and you become more effective and productive in the process.
Keep yourself and team accountable – At 8am every Monday, every member of our team meets and reports on their showings, properties in escrow, active listings, recent sales and potential sales, etc. It’s not a long session. We use this time to share what’s going on in our business, motivate each other, and keep us all accountable to each other.
When you surround yourself with dedicated, hard-working people, it motivates you to do better too. Trust us, the effects of this are magical and powerful.
We say a whole lot more in the interview. Watch, listen, like, and share it.
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Rocket Mortgage
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