Seeing the big picture

Today, we have two reports that show what’s going on in two different sides of the market.

In our second story, we have an interesting report that details how much buyers need to afford a luxury home. In our third story, we look at the counties where home affordability is best for buyers.

We think all this information is valuable. Agents can truly impress clients when they show both a full understanding of the market as a whole, and a deep understanding of the information directly related to their clients’ needs, whether they are a multi-million dollar lux buyer or a buyer looking to buy their first home for their family.

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

– James and David

Pending home sales hit their lowest level in 5 years

Pending home sales in January fell to the lowest level on record since April 2020. Sales were down 6.3% YOY in January and fell 4.2% month-over-month, the steepest seasonally adjusted decline since August 2023. That’s according to Redfin’s January market update. Here are the other key takeaways:

• Active home listings reached their highest level since early 2020, rising 0.3% month over month and 12.9% year over year.

• New listings hit their highest level since July 2022, rising 1.9% month over month and 4.7% year over year.

• Existing home sales dropped 1.7% in January to a seasonally adjusted annual rate of 4.3 million, marking the steepest monthly decline since October 2023.

• Homes are staying on the market longer, with the typical January sale taking 56 days—seven days more than a year ago and the longest for any January since 2020.

• Home purchase cancellations hit a record high for January since 2017, with about 41,000 deals falling through—14.3% of contracts, up from 13.4% a year ago.

• Home price growth has returned to pre-pandemic levels rising 4.1% YOY.

Our take

This data shows demand has slowed, homes are sitting on the market longer, and deal cancellations are high. Sellers are seemingly getting tired of waiting for mortgage rates to drop, while buyers are remaining cautious due to economic uncertainty and rising home prices. However, market conditions vary widely by region. Pending sales are up YOY in pricey coastal cities like San Jose and Seattle, but down sharply in former boomtowns like Miami and Austin. Meanwhile, active listings are near record lows in Newark, but close to record highs in San Antonio. This is why it’s so key to focus on data in specific markets.

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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!

What it costs to buy luxury in each state

Realtor.com’s latest report reveals exactly how much you need to pay in every state to afford a luxury home. To ascertain the cost of a luxury home in each state, researchers analyzed the top 5% of listings by price and calculated the average cost within that group. They then determined the minimum salary needed to afford a mortgage at a 6.89% interest rate with a 20% down payment, using the 30% income rule.

We can’t list all fifty states, but for the top 10 luxe markets, here’s the typical price of a luxury home and the income needed to buy such a home.

Our take

Realtor.com has done us luxury agents a solid here. First, this report gives a clear definition of “luxury” that allows us to compare properties across divergent markets. They define a luxury home as any property in the top 5% of the market by price. Second, this report offers insights into home prices nationwide and the income needed to afford them. Third, it captures the dramatic regional differences in the real estate market. For example, luxury homes in New York average $5.49 million, requiring a $1.15 million annual salary, while in West Virginia, a luxury home costs around $750,000 with an income requirement of $158,000. This is truly the kind of expert info that can help you dazzle potential clients and show your know-how.

The best counties for home affordability

In nearly 60% of the 341 counties analyzed by ATTOM, major homeownership expenses for a typical single-family home still take up a smaller share of average wages than renting a three-bedroom residence. That striking fact comes from their latest report on rental and housing affordability. 

These are the top 5 counties with the largest affordability advantages for homeownership:

1. Suffolk County, NY

2. Atlantic County, NJ

3. Colliers County, FL

4. Indian River County, FL

5. Charlotte County, FL

Our take

This report is one of the most insightful we’ve seen, revealing surprising trends in wages, rents, and home prices. Wages are growing faster than rents in nearly 72% of local markets, with average wages rising more—or falling less—than three-bedroom rents in 245 of 341 analyzed counties. These include major areas like Los Angeles, Chicago, Houston, Phoenix, and San Diego. Meanwhile, home prices are rising faster than wages in 52% of the country, with median prices increasing more—or declining less—than wages in 177 counties, including Los Angeles, Chicago, San Diego, Orange County, and Miami-Dade. These trends are critical for real estate agents to understand and share. It’s truly valuable info.

The news that just missed the cut

• What the privatization of Freddie and Fannie means for homebuyers and investors 

• How to use email marketing as an agent

• Fire-ravaged property sells for $100K above ask – here’s why

• Zillow and Redefin join forces

• Why we’re headed toward a landlord-friendly era

Foundation Plans

Advice from James and David to win the day

Spring housing season has begun! Although we think the outlook for the market isn’t as bright as last year’s, in today’s edition, we’d like to offer you some tips on how you can make the season as easy and regret-free as possible for your clients, whether they are buyers or sellers. 

Use an appraisal contingency to protect your buyer – In most markets, when you make an offer, you should also make sure to include an appraisal contingency clause. It protects your buyer and indicates that the purchase contract is "contingent upon the appraisal meeting or exceeding the agreed upon contract price.” In previous years, buyers weren’t including these clauses to make their offers more attractive. If you choose to do that, make sure your buyers know that they will have to cover the difference if the appraisal comes back lower than the contract price. 

Don’t skimp on repairs –  It’s tempting to avoid doing this because the upfront costs are high. Encourage your sellers to repair and spruce up their homes IF they want to attract high-quality bids. Help your clients maximize their renovations and repairs by sharing which upgrades garner the best return on investment, and by reviewing neighborhood comps for insight into what buyers want.

Hire professionals to improve the quality of your listings – Nearly 40% of sellers told Zillow thought better photos would have fetched a higher price for their home. Be sure that your listing photos and virtual tour videos present your client's property in the best possible light. Don’t do these yourself! Hire a professional. Similarly, we can’t emphasize enough: hire professional stagers! It makes a huge difference. Staging helps potential buyers imagine how the space can be used to its full advantage. Trust us: buyers need the help. 

To learn what else you can do to help your client this spring, start here and here. 

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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 long weekend, friends! Use the extra time to rest, regroup, and refocus. Spring season has already begun and Q1 is almost over! Now isn’t the time to dither. We’ll see you back here on Tuesday!

– James and David