Good morning!

As the holidays are quickly approaching, we wanted to take a quick moment to thank you for being a part of The Blueprint community. It has been one of our greatest gifts to be able to connect with you in this new way. We hope you’re enjoying what we have to share.

We’ll be back after Christmas with a riveting year-end roundup. In the meantime, have a happy and healthy holiday! 

– James and David

Today's Blueprint:

• Why this is a housing boom, not a bubble 

• Housing records didn’t stand a chance this year

• Say "Aloha" to this exploding housing market  

• How to stand out at your new agency

No bubble to see here folks

You can breathe a sigh of relief because today’s housing market is much different than the pre-crash bubble of the early 2000s. While home prices have been hotter than ever, posting double-digit YoY growth for 10 months in a row, there are at least three reasons why this demand surge isn’t likely to be slowing down: 

1. Millennials and baby boomers want the same thing. Tens of millions of millennials are ready to purchase their starter homes at the same time boomers are downsizing and moving closer to their grandkids. This double-demand for affordable single-family homes won’t be reversing anytime soon.

2. We can’t build fast enough. Thanks to the recession and sluggish building that followed, we’re short millions of homes. This low supply could last another decade, especially if supply chain kinks keep delaying progress.

3. Lenders have changed. Back in 2004 and 2005, interest rates averaged 6%. With low lending standards, nearly anyone could get a big mortgage (or two or three). But when the economy stumbled, people could no longer afford their payments. Now, foreclosures are unlikely because interest rates are historically low and lending standards are much higher.

Our take

Right now, our local market of L.A. is facing a major housing shortage. That shows there’s no bubble here because supply is still far from meeting demand. Plus, we’ve already seen major corrections in cities like New York where prices spiked then leveled off. These high costs aren’t the product of a bubble, they’re the result of inflation coupled with demand. 

This year came in like a wrecking ball

Countless records were smashed this year as low interest rates, remote work, rising wages, and other factors converged to create the weirdest year in housing history. Here are just a few of the record-breaking highlights: 

• The average days-on-market dropped to just 15. That’s down from what now feels like a lazy 39 days back in 2020 and a downright slothful 100 days in 2012. 

• A staggering 56.5% of homes sold above asking. Partially because offer competition became the new norm. In April, a record-breaking 72% of home sales sparked bidding wars.

• Investors snapped up over 18% of homes sold in Q3. To talk dollars and cents, in Q3 of 2020, investors bought $35.7B worth of real estate. In Q3 of this year, that number nearly doubled to $63.6B. 

• Luxury home prices shot up nearly 26% YoY. And that’s the biggest price jump of any home category. Mid-priced homes jumped 16% and affordable-level homes increased only 13.2%. Experts believe the raging stock market and home equity boost fueled the luxury home price boom. 

This is just a sample of the major records broken in 2021. To see the rest, check out Redfin’s full report here.

Our take

This year we sold close to $1B in real estate, making this a record-breaking cycle for us too. In all our years of experience in this business, we’ve never seen anything like this market before. And we’ve never been happier to be in this industry!

Luxury homes are here today, gone to-Maui 

The biggest boom in Hawaii isn't coming from Mauna Loa, it's coming from the housing market. Wealthy buyers definitely know it too. As of September, there were 634 luxury home sales across the Hawaiian islands. That doubled the annual sales record from 2017. When the Q4 numbers are counted, it will blow the old record out of the crystal blue water.

The ultra-luxury market (homes priced at $10M or more) has grown even faster. In this extravagant market sector, sales volume is up 603% YoY. That added up to slightly more than $1 billion in home sales. Oh, and these ultra-fancy deals? The majority are all cash.

Our take

Even if you aren’t lucky enough to be an agent in Hawaii, you can capitalize on the trend. Connect with agents across the state to continue building your referral network. They might even send a buyer or two your way. And if you see a boom in a market you want to enter, you can always get a license in that state too. As we like to say, “If you don’t try, you don’t achieve.” 

Schematics 

The news that just missed the cut

• Why the Treasury Department may start asking more questions about all-cash deals

• Watch this video to become an armchair expert on rising rent

• This is what appraisers actually look for

• 41% of Americans would do this to move somewhere more affordable

• It’s about time for a little metaverse real estate humor

Foundation Plans

Advice from James and David to win the day

It’s tough to be the new agent on a team, but how you carry yourself over your first few months will set the tone of your career for years to come. Here are a few ways you can stand out when you’re new to the agency:

• Be communicative. Connect with your team members on Zoom, slack, text, and in meetings. Be present in every moment to show your commitment to your profession. 

• Seek on-the-job training. Ask your team members if you can join their listing appointments, negotiations, and open houses. Shadow as many agents as you can. This will help you develop your own approach. 

• Ask for support when you need it. If you’re stuck, don’t be afraid to ask for guidance. Your agency wants you to succeed too, so don’t hesitate to get the help you need. 

By the way, these tips don’t just apply to new agents. If you want to get noticed in a large pond, show up and show out as often as you can.

Just in Case

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

We’ll see you back here next week with a special real estate year-in-review. And if you’re enjoying what you read, don’t forget to share The Blueprint with a friend! 

– James and David

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