What we think about rising interest rates

Plus, where to find the cheapest rent

Grace Townsley
April 12, 2022

When one door closes...

In 2012, our lives completely changed when “Million Dollar Listing” called out of the blue. Over the years that followed, we climbed from $1,000,000 in sales to over $5,000,000,000 in sales— a number we never even dreamt of when we were just a couple of kids running around London.

But after nearly a decade of sharing our lives and our work on the show, we feel the time has come to move on. 

This decision wasn’t quick or easy. “Million Dollar Listing” is a huge part of our lives and we absolutely wouldn’t be where we are without it. But our business is evolving and we have to keep moving forward. We’re incredibly grateful to all our fans and supporters who have followed our journeys through the seven seasons of the show, and we just can’t thank Bravo and NBC and our cast and crew enough! 

While it’s bittersweet to see this chapter of our lives come to a close, we’re excited we have The Blueprint here to keep all of you updated on our endeavors. And believe us, there are some exciting things coming up in the future! This is just the beginning. A new beginning. Having a direct relationship with you here in our network, as part of our growing community, that’s the kind of real relationship we look forward to focusing on in the months and years to come.  

- James and David

The Fed is kicking it up a notch… or fifty

Source: Unsplash

Last week, the Federal Reserve announced it would get more aggressive in the fight against inflation, tripling interest rates by next summer. Here’s what to expect from the Fed in 2022 and 2023, according to BofA Securities: 

  • The Fed will raise rates by 50 basis points at their meetings in May, June, and July
  • They’ll bump rates up by 25 basis points in every meeting from August to May 2023
  • Those rates will push monthly mortgage costs up every month, from now until November 2023

Our take

We expect there’s going to be a period of time in which interest rates are rising, but sellers will refuse to acknowledge that it’s happening. They’ll still expect their property to sell for a 20% or 30% premium. Here’s what you can do: tell your sellers exactly what’s happening. Make sure every party at the negotiating table has reasonable expectations. Right now, there’s a window of opportunity, but your sellers have got to be ready to adjust their prices soon, and it’s your responsibility to communicate that to them.

Is this a coastal cooldown?

Source: Unsplash

According to recent data by Redfin, in pricey coastal markets like Boston, San Francisco, and Los Angeles, demand is showing early signs of a slowdown on the horizon. Check out these stats:

  • “Homes for sale” searches are down YoY in Baltimore (-16%), Boston (-15%), San Francisco (-14%), and Los Angeles (-13%), compared to a drop of only 7.9% nationwide
  • So far this year, home tours in California are down 21%. Nationwide, home tours are actually up 23%.
  • The number of new mortgage applications is down in San Francisco and San Diego (-13%), Boston (-7%), Seattle (-5%), and Washington D.C (-3%)

Despite these early signs of an upcoming slowdown, demand and prices are still strong in these markets. Homes in LA are still selling for 5% over asking, time on market remains incredibly low, and bidding wars are common. 

Our Take

This is very interesting to us. Due to the rising interest rates, the housing market will have to adjust soon. It simply can’t maintain this pace with out-of-control bidding wars and some sellers having unrealistic expectations. But although a cooldown could be coming, it isn’t something to fear. When you set reasonable expectations with your clients, everyone will be prepared for what’s to come. 

Top 10 cheapest cities for rent

Source: Unsplash

We all know rental prices have been exploding in many of the big coastal cities, but that doesn’t mean good ol’-fashioned affordable rent doesn’t exist. You just might have to go off the beaten path to find it. Apartment List surveyed the country and found the cheapest rents in cities with at least 50,000 residents. Here’s the Top 10:

  1. Odessa, TX - $676
  2. Lake Charles, LA - $749
  3. Davenport, IA - $773
  4. Cleveland, OH - $815
  5. St. Cloud, MN - $844
  6. South Bend, IN - $845
  7. Grand Forks, ND - $865
  8. Wichita, KS - $928
  9. Little Rock, AR - $943
  10. Greenville, NC - $949

Our take

You’ll notice a few of these cities are college towns. If you’re looking to purchase rental properties, college towns are usually a safe bet, since new renters are always entering the market. Although this info might not serve you today, it’s always important to keep an eye on lists like these. They help give you a macro look at the housing market in general.

Schematics 

The news that just missed the cut

Source: Enes Yilmazer YouTube

Foundation Plans

Advice from James and David to win the day

So much of our success as agents comes from using the right tools to effectively manage our time, money, and leads. We believe these are two of the most important tools:

  • An all-in-one CRM. You need a Customer Relationship Manager (CRM) that tracks your leads, clients-in-progress and past clients. It should, at minimum, automate your follow-up reminders and to-do lists. Some CRMs even handle lead generation and basic marketing. 
  • A transaction management system. A system that automates everything possible in the contract-to-close process is essential. For your clients, this 30+ day window is often the most confusing, complicated, and stressful part of the whole process. So the more you communicate and streamline every step for your clients, the better your deals will go. 

For specific tool and software recommendations, check out Real Trends’ list of helpful CRM and transaction management tools here

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Rocket Mortgage

Don't let rising interest rates or potential uncertainty get you down. REMEMBER, you’re in the BEST career at the absolute BEST time. Why? Because you get to build your own opportunities. Stay informed, but run your own local trends— don’t let them run you! You’ve got this. Now get after it!

- James and David

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