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- James & David

Zillow’s latest market forecast is a little less bullish

Zillow admits its 2022 market predictions were a little overzealous. To compensate for rising mortgage rates and improving inventory, the company has downwardly adjusted both its home value growth and sales volume expectations for this year. Zillow now predicts:

• This year’s sales volume will reach 6.09M. That’s the second-highest volume since 2006, but still a drop from last month’s prediction of 6.4M home sales this year. 

• Home values will rise 5.5% over the next three months, down from Zillow’s original forecast of 5.9%

• Over the next year, home values will rise 14.9%. That’s down from 16.5% predicted growth, but still a huge number.

Our take

It makes total sense that Zillow lowered its expectations. Clearly, rising interest rates are going to make buyers a little hesitant. However, rates are still historically low. Remind your clients that they can still buy a great property right now with rates that are most likely to rise later in the year.

It’s a small home after all

To compensate for rising prices, homeowners are starting to settle for smaller homes. Demand for condos is soaring, and buyers are returning to walkable metropolitan areas where they value location over spaciousness. Redfin’s latest home buying data for March shows:

• The median square footage of homes going under contract last month was only 1,720 square feet, down from 1,791 sq. ft. two years ago.

• The median price per square foot increased 20.1% to a record $230

Our take

In our experience, one home size doesn’t necessarily sell quicker than another. Once you really learn the art of selling, you can use that skill set to sell a $1,000,000 home the same way you sell a $50,000,000 home. The higher the price point, the smaller the pool of potential buyers, so of course we’ll see some adjustments on the upper end of the market. You will have to work harder to find those buyers, but ultimately, the market is strong and opportunity awaits.

Foreclosure filings jumped in Q1

Foreclosures are on the rise, but they’re still well below pre-pandemic levels. According to Realtor.com, over 78,000 properties were under foreclosure in Q1. That’s a jump of 39% since last quarter, when many foreclosure moratoriums expired.  

While foreclosures are expected to continue climbing, there’s no need to hit the panic button. Between low unemployment and rising wages, it’s unlikely we’ll face a widespread foreclosure crisis. Plus, today’s at-risk homeowners can often sell their property for more than their outstanding mortgage, avoiding foreclosure altogether. 

Our take

Unfortunately, foreclosures were an inevitable consequence of the pandemic. It’s really quite terrible and we feel for the people who are unable to make their payments because of job loss or any other crisis they’re going through. However, this statistic isn’t ringing any alarms for us just yet. We expected this to happen, and we believe it’s a natural result of what has happened to the economy in the past couple years.

Schematics 

The news that just missed the cut

• From The Weeknd to Madonna, and now back on the market for $26M

• Now Airbnbs are often millennials' first home purchase

• Check out this list of new products that compliment the latest design trends

• Investors now face another challenge: HOAs

• This 27-acre parcel in Paradise Valley went on sale for $55M

• This is a great story about someone who bought a house sight unseen

• The story behind Zillow Gone Wild on social media

Foundation Plans

Advice from James and David to win the day

An agent’s first five years in this industry are critical. To learn several tips and tactics that can help you build a sustainable new business, check out this expert panel. Here are a few great takeaways from that conversation that can help you level up your career:

• Scour the MLS for withdrawn and expired listings. That's great source of leads who are likely ready for a new agent. They're already educated, motivated, and prepared to sell.

• Tap into your sphere of influence. Not just for potential clients, but referral partners and networking connection. Ask your connection if you can do a real estate presentation at their office or pass out your Coming Soon flyers. You never know who your friends will know.

• Always ask for reviews. The more testimonials you can add to your social media, website, listings presentations, and mailers, the stronger your positive reputation. People trust good reviews, so start gathering them.

Just in Case

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

Don’t let this talk of the market cooling and foreclosures rattle you. What do we say about fear? It’s False Evidence Appearing Real. You can let it get to you, or you can stay focused. People will always need homes, and there’s always opportunity out there– if you know where to look. 

- James and David

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