Happy (Early) Thanksgiving

We will be taking off this Friday, so we wanted to go ahead and wish you all a very Happy Thanksgiving. We want to take this opportunity to say how thankful we are for all of you, and we hope you have an enjoyable holiday. We will be back in your inbox on Tuesday, December 3rd.

In today’s newsletter, we continue looking ahead to 2025 and gathering data on the forecasts for the new year. We also look at the latest on investor activity, which appears to be headed in two directions, depending on how you look at it. 

Plus, we give you our brief overview of geo-farming and why we feel it’s so essential for a successful business.

Now let’s feast… on a new edition of The Blueprint!

– James and David

Mortgage forecast for 2025

The 30-year fixed rate mortgage is expected to range between 5.75% – 7.25% in 2025, according to Housingwire’s mortgage forecast. Here are the other key takeaways:

• While the 1.5% (or 150 basis point range) between the lowest (5.75%) and highest mortgage rate (7.25%) is large, it does fall in line with recent history. 

  • 2022: 4% (or 400bp) spread

  • 2023: 2% (or 200bp) spread

  • 2024: 1.4% (or 140bp) spread

• The 10-year Treasury yield is forecast to range between 3.4% – 4.5%

• Housingwire expects “the spread” between mortgage rates and bond yields to ease in 2025. Currently, the spread is 2.67% (or 267bp) and could fall as low as 2.25% (or 225bp) in 2025. 

• For reference, a wider spread typically indicates that investors perceive more risk in mortgage-backed securities compared to treasuries, while a narrower spread can suggest the opposite.

Our take

We must give you a big caveat here. Mortgage rates are notoriously difficult to forecast because they depend on the movement of bond markets, and bond markets are driven by many unpredictable factors that even the best forecasters can’t see coming. That said, use this report to set your baseline expectations for 2025 and then adjust accordingly when real-time data comes in. Unfortunately, for most homebuyers, if this forecast is right, mortgage rates may not drop significantly enough to ease the affordability challenges that have weighed on homebuyers over the past three years.

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Investor activity is down, but total investment is up

While real estate investors are purchasing fewer homes, they are investing more money in homes, and continuing to make a relatively solid profit. That’s according to Redfin’s latest analysis of investor activity in 39 of the most populous U.S. metros.

Here’s how total investor purchases have dropped:

• Investors purchased 2.3% fewer homes in Q3 2024 than they did a year ago.

• Investors bought 49,380 homes in Q3, down slightly from 50,535 last year, in line with pre-pandemic levels of around 50k per quarter. For reference, investors purchased 100,000 homes per quarter in 2021 at the height of the pandemic boom. 

• 8.3% of listings nationwide in September were from investors, down 0.4% YOY

While purchases are down, total investment and profits are still relatively strong:

• Investors purchased $38.8 billion worth of homes in Q3, up 3.4% YOY

• In October, the typical home flipped by an investor sold for 55% more ($181,567) than the purchase price, down from 64% last year, but up from pre-pandemic levels of 45% 

• Only 7% of investor-sold homes resulted in a loss in October, up from the pre-pandemic average of about 10%.

Our take

We’re not surprised to see investor activity returning to pre-pandemic levels. With high home prices and increased loan costs, it's become more challenging for investors to purchase properties and resell them for significant profits. But they are still making profits. It is important to note that 55% gain on purchase price, while down year-over-over, is up from the pre-pandemic average of 45%.

Metros now considered buyer’s markets

13 major metros are becoming buyer’s markets as increasing housing inventories have reduced competition, home prices, and days on market, according to Zillow’s October market update, While most of these markets are in the South, markets in the North have started leaning in that direction too.

Here are the 13 metros Zillow indicates as buyer markets, in alphabetical order:

1. Atlanta, GA

2. Austin, TX

3. Indianapolis, IN

4. Jacksonville, FL

5. Louisville, KY 

6. Memphis, TN

7. Miami, FL

8. Nashville, TN

9. New Orleans, LA

10. Orlando, FL

11. Pittsburgh, PA 

12. San Antonio, TX

13. Tampa, FL

Our take

Southern metros – particularly in Texas, Florida, and New Orleans – are leading the nation in supply recovery, creating more favorable conditions for buyers. According to Zillow, new listings have increased by 2% year-over-year nationwide, and while housing inventory remains 28% below pre-pandemic levels for this time of year, this marks the smallest gap since September 2020. The shrinking deficit indicates significant progress from the 36% shortfall record in March 2024.

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The news that just missed the cut

• What is an escalation clause and when should you use one

• Inside Jersey Mike’s founder’s multimillion-dollar property portfolio

• Floyd Mayweather is on a real estate spending spree

• Big homebuilders are gaining in market share

• New trend to watch: Couples are buying a home first then marrying

Foundation Plans

Advice from James and David to win the day

As we have mentioned before, we are firm believers in door-knocking and farming a particular geographic area. Today we’d like to offer you some tips and actionable insights to help you choose the right area and grow your brand and name recognition effectively.

1. Understanding geo-farming – The goal of farming an area is to become the go-to agent in a particular area by consistently staying top of mind. According to the National Association of Realtors (NAR), 71% of buyers and 81% of sellers work with the first agent they interview. To be that first choice, you need to establish a recognizable presence. Farming achieves this by ensuring your name and expertise are frequently visible to homeowners. Think of it like planting an orchard–results take time, but the investment is worth it.

2. Set clear goals for your farming area –  Before selecting a farm, determine your objectives. Do you want to focus on higher-priced homes to boost your Gross Commission Income (GCI)? If so, research areas where properties align with your target price point using tools like Zillow or public records. Alternatively, consider areas where you already have a foothold. By uploading past client addresses to Google My Maps, you can identify clusters of transactions and capitalize on your existing presence in those neighborhoods.

3. Evaluate Turnover Rates – The turnover rate of a neighborhood—the percentage of homes sold within a specific time frame—is a critical factor. Ideally, look for areas with a turnover rate of at least 6%. To calculate this, divide the number of homes sold by the total number of homes in the area and multiply by 100. Analyzing turnover rates over the past five years can provide a clearer picture of market activity and help you make an informed decision.

4. Assess the Competition – Understanding your competition is essential. Use MLS data, observe signage in the area, or consult brokers to identify the leading agents in your desired farm. If the market is oversaturated, consider alternative options such as demographic farming—targeting groups like first-time buyers or seniors—or predictive farming, which uses AI to identify homeowners likely to buy or sell soon. These specialized approaches can help you stand out and connect with underserved audiences.

Geo-farming is a long-term strategy that requires consistency, patience, and the right approach. Whether you choose geographic farming or not, the key is to nurture relationships over time and remain visible to potential clients. We genuinely believe that you’ll build a pipeline of leads and position yourself as the local market expert with this approach. For more on farming an area, start here.

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:

It’s been a tough and eventful year, but you know what, our hearts are genuinely filled with gratitude. We work in an industry that enables so many of us to lead the life of our dreams. Have a wonderful Thanksgiving friends. We’ll see you next Tuesday!

– James and David