Change is coming

Welcome back! We hope you enjoyed the long weekend and holiday. We probably could’ve all used a break. Between the fires and now the presidential changeover, we’ve already seen so much happen this year.

We’ve even seen so much in the last few days. The czar to oversee the rebuilding and recovery of L.A. has been announced, and the newly inaugurated President signed a flurry of executive orders related to the housing market. We will cover these below, and discuss some long-term generational changes that agents need to be preparing for. 

So, without any further ado, let’s jump in!

– James and David

Mortgage rate forecasts for 2025

The 30-year fixed mortgage rate is expected to finish 2025 at 6.33%. That’s according to ResiClub’s analysis of seventeen mortgage forecasters. Here are the details of each forecast

• Redfin: 6.80%

• Capital Economics: 6.75%

• Hunter Housing Economics: 6.60%

• NAHB: 6.53%

• CoreLogic: 6.50%

• Wells Fargo: 6.40%

• MBA: 6.40%

• FHFA: 6.40%

• PNC Bank: 6.36%

• Moody’s: 6.30%

• Morgan Stanley: 6.25%

• BrightMLS: 6.25%

• Fannie Mae: 6.20%

• Realtor.com: 6.20%

• Goldman Sachs: 6.10%

• TD Bank: 5.80%

• NAR: 5.80%

Our take

With the exception of TD Bank and NAR, none of the forecasters see the mortgage rate falling below 6%. We’re actually surprised that, on average, the forecasters think the 30-year will fall below 6.5%. Our bottom line recommendation is that you prepare your clients to expect elevated mortgage rates throughout all of 2025. Even if the Fed cuts interest rates twice this year, mortgage rates not going to fall below 6%. To get your buyers into a home, then, you’ll need to get creative in your financing strategies.

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Metros with the lowest barrier to homeownership

In a new report, RealtyHop analyzed where it takes the least amount of time to save for a 20% down payment. They looked at the 100 largest U.S. metros and used data from over 1.5 million residential listings and U.S. Census Bureau median household income figures. For reference, in New York City, the average buyer would need about 10.85 years to save 20% of the median home price of $865,000. Meanwhile, in Detroit, which ranked first on the list, it only takes 2.53 years.

Here are the top 5 metros where buyers need less than 4 years to save a 20% down payment:

1. Detroit – 2.53 years

2. Cleveland – 3.55 years

3. Baltimore – 3.77 years

4. Buffalo – 3.79 years

5. Pittsburg – 3.82 years

Our take

Obviously, in many cases, a 20% down payment is not required to buy a home. In Q3 2024, for example, the average down payment was 14.5% and the median amount was $30,300, according to Realtor.com. Having the above numbers as a baseline, agents can help buyers understand how to avoid the constraints that come with using the standard 20% down payment rule.

Markets with the potential for inventory spikes

In its latest update, Zillow has identified the markets with particularly high concentrations of empty-nest homes, which are expected to come onto the market as their owners downsize or pass away. 

This is important to note because an $84 trillion generational wealth transfer is expected to happen in the next decade as older Americans pass on their assets. Since homeownership is heavily skewed by age, with Boomers owning 36% of all homes as of 2024, this could radically transform the housing market.  

Here are the markets with the highest concentration of boomer owners and, therefore, the highest potential for an inventory spike due to this generational change:

1. Pittsburgh – 22%

2. Buffalo – 20% 

3. Cleveland – 19%

4. Detroit – 19%

5. New Orleans – 18%

Our take

We’re at the cusp of a pivotal time. As agents, we have to pay attention to these dynamics and act accordingly. Right now, the boomers aren’t actually moving. They’re staying put since most of their homes have been paid off. Soon, though, we will reach a tipping point. When we do, we need to be ready to capitalize. Keep an eye on this trend. It’s a long-term game, but it can pay off big.

The news that just missed the cut

• Meet the developer tasked with rebuilding L.A.

• How agents are using ChatGpt

• What it will cost to rebuild SoCal

• How Presidential executive orders will affect real estate

• How the construction industry is trying to tackle climate change

Foundation Plans

Advice from James and David to win the day

At the start of every year, many new agents join the ranks of our profession. If you’re one of them, the next big decision is determining what brokerage to join. Today we’d like to go over some key questions you need to answer before choosing a firm.

Does the brokerage provide buyer or seller leads? –  This one is huge because it's how you get clients and close deals. Brokerages that provide leads are a major asset to new agents, so take the time to learn more about how each brokerage provides leads for you. 

What is the company culture? –  Whether you're working out of the brokerage's office or working remotely, you definitely want a good fit. You’re going to be spending countless hours each day with these people. Make sure the company fits your values and their expectations match yours, especially when it comes to the day-to-day and week-to-week workload.

What are the financial details? – Make sure you know EXACTLY how you get paid and how the split structure works. Also know EXACTLY what your financial obligations are to the firm. Don’t get caught off-guard. You’ve got to negotiate for yourself just like you would for a client. Each brokerage will have different policies on commissions, referral fees, and covered expenses, so ask about these. Write down the specifics for each brokerage so you can compare notes later and choose the best one for your goals. 

What we have given you is just a start. Here is an excellent comprehensive guide to use when making your decision. Likewise, use this guide.

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Just in Case

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

As we said up top, time is relentless. It’s not waiting for anyone. To be an effective agent, you have to manage your time. That means learning how to say no to anything that distracts you from performing the core functions that advance your goals. This includes even “good” things. If they take time away from achieving your goals, either delegate them to others or say no.

That’s a wrap for now, but we’ll see you back here on Friday!

– James and David