Things are heating up

We love to include stories in this newsletter that will light a fire under you, and today, we’ve got two of them–a report on the huge number of listings coming on the market and some staggering numbers about homeowner equity.

Now that we’re in this post-rate-cut reality, the market is heating up, and with more cuts coming down the line, it’s very likely that this momentum is only going to keep building into next year. 

We want to make sure you’re prepared, so scroll down to our Foundation Plans where we give you some quick tips on how to make sure your business is set up for success in 2025.

Now, on with today’s Blueprint!

– James and David

Huge number of homes hit the market

In September, 11.6% more new homes hit the market compared to a year earlier, marking a three-year high in listing activity. That’s according to a new report from Realtor.com. Here are other highlights from the report:

• There were 34% more homes for sale on a typical September day this year compared with last year, the highest number of active listings since April 2020.

• The surge in listings is happening in the most expensive markets

  • Seattle, WA: +41% YOY

  • Washington, DC: +30.4%

  • San Jose, CA: +27.1%

• The South saw the greatest increase in listings

  • South: +42% YOY

  • West: +36.5%

  • Midwest: +22.3%

  • Northeast: +14.8%

Our take

After years of a "locked-in" market, where elevated interest rates kept buyers on the sidelines and discouraged homeowners from selling, we're finally seeing some momentum. As further rate cuts are anticipated this year, both buyers and sellers are re-entering the market. Unsurprisingly, the priciest real estate markets are leading the way in new listings, as these areas benefit the most from the nominal savings brought by lower mortgage rates.

Homeowner equity hit a new high

The total value of all homes owned nationwide reached $48.2 trillion, marking the highest total home values ever recorded, according to a Realtor.com analysis of data from the Federal Reserve. The number is up $1.8 trillion from Q1 and up $3.5 trillion YOY. Here are more Q2 numbers:

• Equity, when measured as a proportion of real estate value, is at 72.7%, the highest level since 1960. For reference, in 2012, during the aftermath of the Great Financial Crisis, this number was around 46%. During the late 1990s and early 2000s, it hovered around 60%-65%.

• The total equity among homeowners reached $35.1 trillion in Q2, an increase of $1.7 trillion from Q1 and a $3.1 trillion jump year-over-year.

Our take

These are some amazing stats. As this report notes, even if home prices fall, which they rarely do, there’s enough equity to cushion that dip. The average equity for homeowners is roughly $267,000, so if home values dropped 10% overnight, equity would still be at almost 70%, while a 20% decline would put equity at almost 66%. That’s higher than in the mid-2000s in either scenario. This just shows that buying a home is a great way to generate wealth. Without a doubt, agents should include these stats in their pitches.

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Top 10 states with underwater mortgages

The portion of seriously underwater mortgaged homes nationwide declined during Q2 to 1-in-42, according to ATTOM. In Q1, that number was 1-in-37; in Q2 2023, it was 1-in-36. The rate decreased in 47 states quarter-to-quarter and 37 states YOY. 

For reference, homes with mortgage loan balances at least 25% more than the home's value are considered “seriously underwater mortgages.” 

Here are the top 10 states with underwater mortgages by totals and by percentage as of Q2:

Our take

Although these numbers are improving nationwide, states in the South and Midwest are struggling due to dips in population and employment rates. For example, U.S. policy has dampened fossil fuel production, which has reduced economic activity in fossil fuel energy-producing states like Louisiana, Kentucky, and Oklahoma. If people don’t earn enough to buy homes, home prices drop and more homeowners go underwater on their mortgages. Also, if the population in these states drops, that leads to lower real estate prices and more underwater mortgages. With depressed real estate values, many of these markets are ripe for real estate investors. Agents should share this report with investors looking for out-of-state properties.

The news that just missed the cut

• Disney launches first-ever luxe residential community near Palm Springs

• Insurance costs for luxury homes are surging

• Buying a starter home is now cheaper than it was a year ago

• The counties most vulnerable to home insurance shocks 

• Becs and Posh are buying a Miami Beach spec estate asking $80M

Foundation Plans

Advice from James and David to win the day

It’s hard to believe but there are only three months left in 2024. As we always say, the new year doesn’t begin in January, it begins now. We encourage all agents to start planning for next year. Here are three keys to building an effective business plan.

Create SMART goals – This stands for goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. Every one of the goals included in your business plan, from your big annual goals to your daily targets.

Put it in writing and keep it visible – We recommend you keep your business plan to one page and post it where you can see it every day. Out of sight can easily become out of mind. Review your plan on a daily or weekly basis, and say no to anything that doesn’t gel with it. Focus and ruthlessly manage your time accordingly. It will help you stay on target.

Build in accountability – We firmly believe that you must tell other people about the plan. When other people know about it, it’ll make it easier for you to stick to the plan, deal with setbacks, and eventually reach your goals. We practice what we preach. As we’ve mentioned before, every Monday, everyone on our team meets to keep each other accountable. Trust us, it works! 

This is just the beginning. For the next few editions, we will be giving you some concrete advice on how to prep for next year. Message us with any questions or concerns you might have. We want to hear from you and help in whatever way we can!

To learn more about Estate Media, visit their website.

Just in Case

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

“Your time is limited, so don’t waste it living someone else’s life.” – Steve Jobs

Remember: each day is a gift and a new opportunity to live your life and 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. 

Have a fantastic weekend, and we’ll see you back on Tuesday!

– James and David