An unfortunate record

Our second story today is, frankly, something nobody likes to see. Last month, 15% of homes that went under contract were canceled, the highest percentage of cancellations ever recorded in June. 

We know there are many reasons why buyers back out, but many times, it’s because the buyers didn’t fully understand ALL the costs that come with buying a home… and right now, those costs are going up, up, up.

This shows why us agents are so crucial. We can get ahead of this problem and educate buyers about all areas of costs and financing so they don’t feel like they’re getting in over their heads. 

That’s why we truly believe in the power of information. The more info we can share with our clients, the better it is for EVERYONE in the market.

On that note, let’s get into today’s Blueprint!

– James and David

New home sales fell again

Newly-built home sales dropped for the second straight month, according to the U.S. Census Bureau. Considering seasonal adjustments, there were 617,000 new single-family-home sales in June, down 0.6% from the revised May rate of 621,000 and down 7.4% from the June 2023 estimate. Other data points to note from June:

• The seasonally-adjusted count of new houses for sale at the end of the month was 476,000, a supply of 9.3 months at the current sales rate, up from 9.1 months in May and up from 7.7 months in June 2023

• The median price of new houses sold was $417,300, down 0.1% from a year ago

Our take

This mainly stems from the surge in mortgage rates earlier this spring. It softened housing demand and slowed sales, while also causing an increase in both resale and new home inventory levels. Despite the slowdown, we continue to believe that newly-built homes offer the best deals for cost-conscious buyers. The latest stats show 29% of builders are cutting their asking prices and 61% are offering incentives such as rate buydowns. In sum, it can be a very good deal.

Home purchase cancellations set record

As we told you up top, 15% of homes (around 56,000) that went under contract were canceled in June, the highest percentage of cancellations in any June on record, according to Redfin. Here’s what else the firm reports from June:

• 20% of homes for sale had a price cut, the highest June share on record

• Home sales fell roughly 1% month-over-month, the biggest drop since October

• Many sellers are dropping prices because their homes are sitting on the market

• The median home sale price rose 4% year-over-year to a record $442,525

• Three Florida metros led the nation in home purchase cancellations: Orlando (20.8%), Jacksonville (20.5%) and Tampa (20.5%)

Our take

Yes, the level of cancellations is certainly problematic, but it doesn’t entirely surprise us. Given the high monthly costs associated with buying a home today, we can see why buyers might be afraid they bit off more than they could chew. On top of that, buyers are getting more selective. If they don’t get nearly everything on their must-have lists, they’re willing to walk away. That said, we do believe that this trend will reverse itself once the Fed cuts interest rates and mortgage rates fall. 

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Nashville ranked nation’s top luxury market

Every quarter, Realtor.com and the Wall Street Journal identify the highest-performing and most attractive metros for luxury home purchases. Based on factors such as supply and demand strength, economic health, and quality of life, the two publications rank 60 different luxury housing markets across the country. 

Nashville ranks in the top half of luxury markets in terms of commute times, the prices of daily essentials, the proliferation of small businesses, and environmental risks. 

Here’s the full top 10 list of best markets for luxury home purchases:

1. Nashville, TN

2. St. Louis, MO

3. Salt Lake City, UT

4. Portland, ME

5. Pittsfield, MA

6. Boulder, CO

7. Detroit, MI

8. Asheville, NC

9. Coeur D’Alene, ID

10. San Diego, CA

Our take

Except for San Diego, all these cities tend to be smaller, relatively-affordable inland markets with strong local economies. That’s certainly the case with the number one city on the list. There’s an interesting stat about Nashville in this report. About 33% of the demand for Nashville’s real estate comes from within the metropolitan area itself. In other words, when local residents start making more money, they don’t look to move out, they look to move up within the metro. That says a lot about the city’s desirability.

The news that just missed the cut

• How to use down payment assistance programs effectively

• Fort Lauderdale real estate is booming

• Freddie Mac predicts slower apartment rent growth for the rest of 2024

• How this family bought their dream home with a 2.5% mortgage.

• Use these phrases to overcome objections in real estate conversations

Foundation Plans

Advice from James and David to win the day

As we mentioned in our last edition, housing inventory is up almost 40% nationwide over last year. However, for many agents, this rise in inventory hasn’t translated into more listings. We believe this is due, in part, to the low number of follow-ups most agents do. On average, while calls convert to listings or buyer exclusives after six attempts, the typical agent only follows up 2.7 times! Today, we’d like to offer you some strategies you can use to get more listings when you follow-up.

Leverage local market insights – One of the worst approaches an agent can take is to simply check in with a generic message. To truly engage, leverage local market insights. Leveraging local market information is a great way to do it. We suggest using your local MLS to determine what’s happening in your market, and then sharing that information with potential buyers and sellers.

Showcase pertinent home sales trends – Another effective tactic is to highlight relevant trends in home sales, such as average days on market or list-to-sales price ratios. Ask yourself these questions: What are the trends in home sales right now? What’s the average amount of homes buyers are looking to spend? All this data is on the MLS, and you should share this valuable information.

Determine your potential client’s timeframe – It's important to recognize that if a prospect isn’t motivated to buy or sell, excessive follow-ups may be counterproductive. Understanding their timeline will help you to follow up appropriately and avoid turning them off by being too aggressive.

Understand your client’s financing options – To a surprising extent, so many homebuyers think that they need to put 20% down. Many real estate agents have said the same thing. This is not true. Make sure you know all the financing programs in your area and be ready to share this information. You could be the agent who finally makes it possible for them to buy a home.

We obviously can’t emphasize enough the value of following up in real estate. To be inspired and to learn how to do it well, watch this.

To learn more about Estate Media, visit their website. And if you haven’t done so already, fill out this brief survey designed by EM. One lucky entrant will win a $500 Whole Foods gift card!

Just in Case

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

“Dare to live the life you have dreamed for yourself. Go forward and make your dreams come true.” – Ralph Waldo Emerson

We can’t improve on Emerson. Dare to live the life you want friends. Work to make it happen. Nobody else is going to do it for you.

Have a fantastic weekend, and we’ll see you back in your inbox on Tuesday!

– James and David