We know it’s a big day

As we await the results of the election, we know there is a lot of uncertainty in the air. Like many of you, we will be paying close attention to those results, and trying to predict how they will affect our industry both in the short and long term.

On that note, our second story is a good reminder that there are always ways to get creative with buying and financing despite what’s happening in the market. We provide the results of a Zillow survey which shows how buyers managed to secure mortgage rates below the norm.

And if you are looking for election-related news, check out today’s Schematics, where we link to an article about all the real estate ballot measures nationwide.

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

– James and David

Share of newly-built homes hits 3-year low

In September, the share of newly-built homes among single-family homes for sale nationwide hit 28%, according to Redfin. That’s the lowest level in three years, down from 30.5% a year ago and the record-high 34.4% at the start of 2022. Here’s other key data from September:

• Sales of newly-built single-family homes are up 6.3% YOY

• The total supply of existing single-family inventory is up 22% year-over-year

• Permits to build single-family homes were down 2% YOY in September, showing the builders are slowing construction.

Our take

While the share of newly-built homes may dip even further as building permits continue to decline, it is expected to stay above pre-pandemic levels. Higher mortgage rates are likely to limit a significant increase in existing home listings. As a result, newly-built homes will remain a key driver of home sales in the coming year.

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Creative ways homebuyers are getting lower mortgage rates

45% of recent buyers — half of whom bought a home in the past year and the other half in the past two years — secured rates below 5%. That’s from a Zillow survey conducted between March and September. This comes despite rising mortgage rates and a 115% increase in the typical mortgage payment compared to pre-pandemic levels.

Here’s how borrowers achieved these lower rates:

• 63% of buyers use down payment assistance programs

• 60% of buyers used projected rental income to receive lower mortgage rates

• 57% of buyers used non-traditional loan types such as adjustable-rate mortgages

• 35% received special financing from either the seller or builder

• 28% benefited from assistance from friends or family

• 26% made their purchase offer contingent upon a lower rate 

• 25% refinanced into a lower rate after purchasing

• 23% of buyers bought points to lower their rates

Our take

This is an excellent report from Zillow. We recommend agents share it with their clients. Although mortgage rates will drop in 2025, the pace is likely going to slow down. Mortgage rates probably won’t fall below 6% until Q4 of next year. That means agents will need to help buyers get creative, and this report provides several ways to do that.

States where inventory is above pre-pandemic levels

While active listings are up 29% YOY, they are still 21% below 2019 levels, according to October data from ResiClub. However, certain states have now equaled or surpassed pre-pandemic 2019 inventory levels. 

Here are the 8 states where housing inventory has surpassed pre-pandemic norms:

1. Arizona

2. Colorado

3. Florida

4. Idaho

5. Oklahoma

6. Tennessee

7. Texas

8. Utah

Our take

Alongside these eight states, Alabama, Oregon, and Washington are close to surpassing pre-pandemic inventory levels by the end of the year. This trend is significant because there’s a strong correlation between inventory levels and housing prices. In particular, housing markets where active inventory has returned to pre-pandemic levels have generally seen slower home price growth—or even declines—over the past two years. By contrast, markets where inventory remains well below pre-pandemic levels have typically experienced stronger home price growth during this period. 

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The news that just missed the cut

• Homeowner’s election guide to nationwide real estate related ballot measures

• The cities Gen Z are flocking to

• Implications the election has for the housing market

• How the industry changed one year after Sitzer/Burnett

• Columned homes are making a comeback

Foundation Plans

Advice from James and David to win the day

Next year, agents should focus their business on listings, which means it’s important to know how to prevent listings from going stale. Today, we’d like to offer you a few tips to make your listings sell as quickly as possible.

Prepare your clients first – Your seller clients will likely still be living in the home, and that could cause some issues. You want the home to look like a model home, so you need them on the same page as you. Make sure they understand that they simply can’t have all the same lived-in touches (and messes) as a normal home. Your job is to put the home in its best light, and they should support you in that goal.

Get the home pre-inspected – This is an important step to fix any items that could wreck the deal. HVAC, plumbing, electric, and safety items are the most important. Change all furnace filters, knock the dust off the hot water tank, and check for mold in the basement and crawl spaces. Offer a copy of the inspection along with receipts of any recent repairs when you start showing the home. Mention it in the agent-to-agent comments in the MLS.

Make sure the first sights are all right – Buyers make their decision on a home in two places: from the street and in the home’s entrance. Make sure both places shine. Upgrade landscaping, enhance the front door's appeal with a wreath or paint, and create a welcoming entry with a doormat and plants. In the foyer, aim for a bright, spacious feel—no clutter, coat trees, or excessive furniture. It should welcome all new buyers. This can net your seller thousands, or even tens of thousands, more when you do this right! 

Preview the competition –  The day before you launch your new listing, check out your competition one more time. Make sure your pricing is still accurate, and what the potential buyer is considering. Your price has to make sense. In some cases, you may want to take your seller client along for these showings so you’re on the same page regarding pricing. Are other listings (especially new construction homes) offering seller incentives? You may need to meet or beat them depending on what you’re up against.

For more advice on how to prevent and revive a stale listing, see 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:

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