Thank you

As yesterday was Veteran’s Day, we want to take a moment to send a message to all our veterans and military families who read this newsletter. We are truly grateful to live here in the United States, and have so much respect and honor for all those who have fought and sacrificed for this country.

While we’ve got several good stories for you today, we’re sure one will surely grab your attention, as it certainly got ours–the bullish home sales forecast from NAR chief economist Lawrence Yun. While we love his optimism, we’ll tell you why we aren’t fully buying in just yet.

With that, let’s get into today’s Blueprint!

– James and David

The Fed cut interest rates again

Last week, the Federal Reserve reduced the Federal Funds rate by 0.25%, bringing it to a range of 4.5% to 4.75%, its first cut since it lowered rates 0.5% in September. This newest adjustment is in line with market expectations and the Fed’s stated intentions. The decision was unanimous among all 12 FOMC members. 

Two key factors influenced the Fed’s move. First, inflation is nearing the Fed’s 2% target, with the Consumer Price Index at 2.4% and the Personal Consumption Expenditures Index at 2.1%. Second, the labor market is slowing, with rising unemployment, below-average hiring, and cooling payroll growth. Private payroll additions averaged just 78,000 from June to August, the lowest growth outside of the pandemic since 2010.

Our take

While this is great news, unfortunately, Fed cuts aren’t enough to stabilize the market. Bond market reactions, which deeply affect mortgage rates, are shaped not only by the Fed’s decisions, but also by macro-political factors. As bond markets react to election results and assess potential policy shifts under a Republican-led White House and Congress, mortgage rates are likely to stay elevated and continue to fluctuate.

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Bullish forecast for home sales in 2025

At NAR's NXT conference on Friday, its chief economist Lawrence Yun projected a 9% rise in existing home sales next year, followed by a 13% increase in 2026. Yun also expects new home sales to climb by 11% in 2025 and 8% in 2026.

Yun's forecast considers several key factors, including an anticipated stabilization of mortgage rates around 6% and ongoing job market growth. Additionally, he noted that homebuyers will likely have more inventory available than they've seen over the past five years.

Our take

Although we hope this forecast comes true, we remain skeptical. When Yun took the stage at this event in 2023, he predicted even more optimistic figures: a 13% increase in existing home sales and a 19% jump in new home sales for 2024. However, those projections relied in part on easing inflation, which would’ve brought mortgage rates down to around 6% by spring. Instead, inflation surged higher than anticipated, driving rates up through March and April, reaching a peak of 7.22% in early May. This is why we often say forecasts are a guide, not a guarantee. Use them to establish baseline expectations, but be prepared to adjust to real-world data.

Top opportunity zones increasing in home values

Median home prices rose by 10% year-over-year in nearly half of the Opportunity Zones nationwide, according to ATTOM Data's new report. Analyzing 3,857 zones with a minimum of five home sales in Q3 2024, ATTOM found that single-family home and condo prices increased in 53% of these zones compared to the previous quarter, and in 61% compared to the same period last year. 

Opportunity Zones were established under the 2017 Tax Cuts and Jobs Act to stimulate economic growth and job creation in designated low-income census tracts. Investors and developers who put money into these zones are eligible for capital gains tax incentives.

Here are the states that saw the largest and smallest percentage increases in Opportunity Zone home prices in Q3 2024:

Our take

This is terrific data to share with investors in your network. Investments in opportunity zones can have appealing payoffs. Properties in these areas are often more affordable, allowing investors to purchase at lower entry costs while potentially benefiting from rapid equity growth, as many Opportunity Zone home values appreciate at rates above national trends. That’s what this report confirms. 

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Foundation Plans

Advice from James and David to win the day

As a rule of thumb, at least 10% of your database should buy or sell with you every year. These kinds of results only happen IF your communication with your clients is regular and systematic. Today, as part of our prep for 2025 series, we’d like to offer you some advice on how to set up your database for success:

Put ALL your contacts in your database – Purchase a good CRM, and take the time to gather phone numbers, email addresses, and social media information for each entry. Enter your past clients, people from your sphere of influence, and buyers who bought your listings. Many times, they worked with another agent, but you are adopting them. You may also add your professional sphere of influence, like home inspectors and mortgage lenders. Add details to each person to help you remember them. 

Commit to adding at least five new people per week – Get into the habit of exchanging information on the spot when you make new connections. You don’t need to be pushy or salesy, but don’t be shy to share who you are and what you do. Genuinely believe in what you do because we agents actually add value to people’s lives. 

Update your database weekly as part of your daily minimum standards – Commit to never letting it get out of date, become neglected, out of control, or unwieldy. Simply put, if it’s hard to use, then you won’t be able to use it!

Change your mindset about your database – Don’t think of updating your database as a chore. When done right, not only will it pay dividends in deals, you’ll actually build an asset you can sell later in your career. A well-kept book of business is a valuable thing. Never forget that.

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:

Success in life comes from first taking ownership of your life and choices. Take action to become who you want to be. Nobody else can do it for you. 

Have a great week friends and we’ll see you here on Friday!

– James and David