Bigger luxury market

It is certainly an interesting time to be in real estate. Not only are we going through historic changes, but we can honestly say that the opportunities to jump into the luxury space have never been greater. As we report in our third story today, the share of U.S. homes worth $1 million or more is at a record high. In fact, ALL of the top 50 metros across the country increased in the number of million-dollar homes in their markets. 

Speaking of changes, today’s Foundation Plans will look a little different. We wanted to offer you a resource guide that you can use to navigate all the changes taking place in our industry. One of the main motivations when we started this newsletter was to be a resource to our fellow agents. We think that goal is especially relevant now. 

With that, let’s jump in into today's Blueprint!

– James and David

Existing home sales fall

In July, sales of existing homes fell 2% year-over-year to a seasonally adjusted annual rate of 4,094,991, marking the lowest July level on record dating back to 2012, according to Redfin’s latest update. However, sales did rise 0.6% month-over-month. Here’s what else the firm reports from July:

• Pending sales were down 3% month-over-month and 6% year-over-year, both the biggest drops in nearly a year

• Median sale prices reached $439,170, just 0.7% below the all-time high of $442,389 set in June

• Nearly 60,000 home-purchase agreements were canceled, equal to 16% of homes that went under contract, marking the highest percentage of any July on record

• The supply of homes for sale rose a record 14%

Our take

Listings have started to pile up and grow stale, giving buyers more options and room to negotiate. Falling mortgage rates are also helping buyers. However, they have been slow to react. In part, that’s likely due to home prices staying near their record highs. Although the Fed is expected to start cutting interest rates in September and through 2025, markets have already priced in a fairly fast pace of rate cuts, which means homebuyers are unlikely to see a large drop in mortgage rates in the near term.

Realtor.com updates housing forecast

Realtor.com has just published its mid-year national housing and economic forecast update. Here are the key takeaways:

• Mortgage rates will average 6.7% through the year and hit 6.3% by year’s end

• Existing-home median sales price appreciation will jump +4.6%

• Existing-home sales will edge up +0.8% to reach 4.1 million sales

• Existing-home sale inventory will jump +14.5%

• Single-family home housing starts will increase +10.5% to reach 1 million homes

• Homeownership rate will hit 65.5%

• Rent change will be -0.5%

Our take

Our biggest takeaway here–even in this slow year, home sale prices are expected to increase by +4.6%. Use that stat when presenting your listing pitches to owners. Explain that they are sitting on a valuable commodity. Also, we should mention that election years typically bring volatility to markets, including the housing market. However, we don’t anticipate this year’s election to bring major surprises that would interrupt the trends forecast above for the rest of 2024.

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A record number of homes are worth $1M+

8.5% of U.S. homes are worth $1 million or more, the highest share of all time. That’s up from 7.6% a year ago and more than double the 4% share before the pandemic, according to Redfin’s analysis of past home values using public records and MLS data. 

In raw numbers, 8,022,439 U.S. homes were worth at least $1 million in June 2024, compared to 7,155,393 in June 2023 and 3,427,869 in June 2019 (before the pandemic began).

Here are the metros that saw the biggest year-over-year jumps in the share of homes worth at least $1 million, as of June 2024:

1. Anaheim, CA: +7.8%

2. San Diego, CA: +6.1%

3. Los Angeles, CA: +4.3%

4. San Francisco, CA: +4.2%

5. Seattle, WA: +4.2%

6. San Jose, CA: +3.8%

7. New York, NY: +3.5%

8. Boston, MA: +3.2%

9. New Brunswick, NJ: +2.8%

10. Newark, NJ: +2.8%

Our take

The share of homes worth $1 million or more is at a record high because home prices in general are at a record high. Nationwide, the median sale price was up 4% year-over-year in June. But we’re seeing even bigger jumps in the luxury market. The median sale price of luxury homes rose 9% year-over-year to a record $1.18 million in the second quarter. But we’re not seeing these trends everywhere. The percentage of homes worth a million plus isn’t increasing in important markets such as Austin or Houston. This is because widespread new construction in Texas has pushed up supply, putting a cap on price growth. There’s not as much construction going on in the markets where the share of million-dollar homes has increased. As we have said before, the best way any area can address rising home price growth is to build more. Tackle affordability by addressing supply.

The news that just missed the cut

• New trend to watch: SINK (Single Income No Kids) buyers are purchasing homes in droves

• $22 million for Ryan Seacrest’s 40-acre estate

• A cost-effective marketing strategy for agents

• Why this OC city is the hottest residential market in the country

• Ryan Reynolds and Blake Lively’s real estate portfolio

Foundation Plans

Advice from James and David to win the day

Today’s Foundation Plans is going to look a little different. To help you thrive under the new rule changes that kicked in over the weekend, we have been prepping you with various pieces of advice and resources to use. But they are strewn across many editions. Today we’d like to gather many of them for you in one place as a resource guide. We will be adding to this guide, but keep it handy for future reference and use. 

Summary of Major Rule Changes: 

1. Offers of buyer agent compensation can no longer be included in the MLS (but sellers are still allowed to make such offers when discussing terms)

2. Real estate agents must have a signed Buyer Representation Agreement before giving tours to a buyer, which should outline the agent’s services as well as the negotiated compensation.

Resources for Buyer Representation: 

1.  The National Association of REALTORS® recently launched a collection of consumer-focused resources, including fact sheets for Homebuyers and Sellers, a Broker’s Guide to Upcoming Practice Changes, and a Template Compensation Disclosure  (for active listing or buyer agreements).

2. Real Brokerage announced the launch of Real Buyer Playbook—a website loaded with educational resources and done-for-you content to help agents across the U.S. adapt to the NAR settlement changes.

3. eXp’s buyer toolkit. This is a phenomenal resource. 

Resources for Seller Representation and Objection Handling: 

1. eXp’s seller’s toolkit. Along with various forms and clear guidance on how to use each one, eXp provides scripts you can use in conversations with sellers, a Seller Net Sheet, and a Multiple Offers Review Sheet. 

2. Mastering NAR Settlement Questions: Realtor Script Secrets from Jimmy Burgess

3. NAR settlement scripts with Tom Ferry and Jimmy Burgess

As we said up top, we’ll be adding to this guide as well as sharing further thoughts on the rule changes and how both agents and consumers have been reacting since their implementation. Keep an eye on this space over the next few editions.

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:

That’s a wrap on this edition of The Blueprint!

If you’re new to the Blueprint community, we want to hear what you think! What’s your take on today’s stories and tips? Send us a note with your comments, questions, or suggestions.

In the meantime, keep closing deals and picking up leads. We’ll see you on Friday.

– James and David