Rebuilding together

We want to let you know, especially if you live in Los Angeles or California, that we just released a special episode of our podcast Rise Above the Ranks in which we discuss the impact of the devastating wildfires. 

In today’s Foundation Plans, we have a brief outline of the subjects we talk about. We feel that agents can truly play a vital role in the recovery process, so if you live in the area or if you’re simply interested in ways you might be able to help, please listen to the podcast or watch the episode on YouTube. Thank you.

– James and David

Biggest spike in listings so far this year

New U.S. home listings rose 7.9% year-over-year in the four weeks ending February 2, marking the largest increase since the end of 2024. That’s according to Redfin’s latest market update. Here’s what else they report:

• Pending sales are down 8.1% YOY

• Redfin Homebuyer Demand Index, a measure of tours and other homebuying services from Redfin agents, is down 4%, the lowest level since July

• There are 5 months of supply on the market, up from 4.4 months a year ago. This is the largest supply in six years.

• The typical home is selling for 2% less than list price, the biggest discount in two years

• Median monthly housing payment is $2,784, up 8.3% YOY

• Median days on market is 55, just 6 days shy of the longest span in five years

Our take

Buyers have more options now. An increase in new listings, coupled with slow sales, is boosting housing inventory and causing homes to typically sell below their list prices. However, affordability still remains a challenge, with monthly housing payments up 8.3%, just $21 below April’s record high. But all in all, with the spike in for-sale listings, and homes sitting on the market longer, we’re seeing favorable conditions for buyers.

We’re giving away an Amazon gift card valued at $250 USD and a 1-year membership to our new luxury real estate program, Estate Elite (valued at $1500), to both new and existing subscribers to the Blueprint Newsletter. Here’s how to enter:

1. Subscribe to the Blueprint Newsletter (if you haven't already!)

2. Follow us on Instagram: @estateeliteagents & @readtheblueprint

3. Tag TWO friends on our Instagram post

4. Fill out the survey included in the newsletter (it’s quick and easy!)

Entry closes at 6 PM (PST) on February 28, 2025, and two winners will be announced on Instagram on March 4, 2025. Click here to enter!

Mortgage demand drops

Mortgage applications to purchase a home last week fell 4%, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index via CNBC. Here are the key takeaways from their report:

• The Freddie Mac rate for a 30-year loan fell 6 basis points to 6.89%.

• The average loan size for a purchase loan increased to $447,300, the highest level since October 2024

• Refinance applications rose 12% from the previous week and 17% from the same week a year ago.

• Mortgage applications to buy a home are now 39% lower than they were in February 2019, about a year before the onset of the pandemic. 

• The yield on the 10-year Treasury is 4.438%.

• 15.6% of home sellers cut their asking price in January, compared to 14.7% in January of last year.

Our take

Mortgage rates have dipped below 7%, but have remained largely unchanged in recent weeks. Meanwhile, even though more home sellers are willing to cut their asking prices, median home sale prices continue to rise. This has caused many buyers to stay on the sidelines. Between high borrowing costs, stubborn prices, and economic uncertainty, the outlook for the spring housing market isn’t looking too bright.

There was no “commission apocalypse”

Five months have passed since the implementation of the NAR-settlement rules regarding commissions. Despite the fears that many people had, the commission apocalypse has not materialized. According to new reports from AccountTECH and Redfin, buyer and seller commission rates have barely budged according to Q4 and early January numbers:

• Buyer’s agent commission was at 2.37% in Q4 2024 (Redfin), basically flat since the NAR rules took effect.

• Seller’s agent commission was at 2.73% in January (AccountTECH), up slightly from its low of 2.69% in the months after the settlement.

• While overall percentages remain steady, commission trends vary by price point according to Q4 2024 numbers:

  • Luxury home commission ($1M+): 2.17%, down from 2.33% YOY

  • Mid-priced home commission ($500K–$999K): Holding around 2.26% 

  • Affordable homes (<$500K): 2.46%, up from 2.42% in Q3 2024.

Our take

The shift in luxury commissions isn’t surprising. High-end sellers negotiate lower percentages, knowing 2% on a million-dollar home remains lucrative. Meanwhile, buyers of lower-priced homes push sellers to cover more, often requesting 2.5% to 2.7%. When the new rules took effect, some sellers hoped to skip paying buyer’s agents, but most buyers made seller-paid commissions a condition of their offer. Still, agents expect commissions to decline over the next year. But here’s the key: rates were already dropping before the NAR settlement. The best approach? Sharpen negotiation skills, set clear client expectations, and adapt. This model benefits both agents and consumers. As we said months ago, the negotiation dynamics of commercial real estate are now taking root in residential.

The news that just missed the cut

• Boomers are spending tons on renovations to avoid moving

• Agent’s favorability rating is just above lawyers, according to Gallup

• 1 in 5 homeowners are thinking of selling in the next three years

• Hooks every agent should have in their repertoire 

• Billionaire William Lauder to sell oceanfront land for close to $200 Million

Foundation Plans

Advice from James and David to win the day

We just released a special episode of our podcast, Rise Above the Ranks, in which we discuss the devastating impact of the wildfires in Los Angeles and across California. We explore the crucial role real estate agents can play in helping communities recover, how agents can rebuild community spirit, and how the industry can better prepare for future challenges. Here’s a brief overview.

Realtors’ Role in Recovery Efforts – Real estate professionals play a crucial role in assisting communities affected by the wildfires. Beyond selling homes, they can help displaced families secure temporary housing, advocate for fire-resistant rebuilding practices, and connect residents with essential resources like insurance agents and legal advisors.

Challenges in Rebuilding – Many homeowners face significant obstacles in rebuilding, including underinsurance, complex permitting processes, environmental cleanup requirements, and the high costs of construction. Some, especially older homeowners, may choose to sell their land rather than go through the rebuilding process.

Advocacy for Policy Changes – The real estate community is pushing for policy changes to facilitate rebuilding, such as removing unnecessary red tape, expediting permits, and allowing more fire-resistant materials in new construction. They are also advocating for measures like pausing real estate transfer taxes (ULA) for wildfire victims and improving city infrastructure, including better water access for firefighting.

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Just in Case

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

“You’ve gotta keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” — Warren Buffett

Have a wonderful weekend, friends. We’ll see you back here on Tuesday!

– James and David