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– James and David

Rates and demand rise in tandem

We’re in the middle of a true market rarity— interest rates and mortgage demand climbing at the same time. This small increase in demand is a bit of good news for sellers, but we’re still seeing far lower demand than this time last year. According to mid-September data from the Mortgage Bankers Association:

• Mortgage applications jumped 3.8%, marking the first increase in six weeks

• The average interest rate on a 30-year mortgage jumped 0.24% to reach 6.25%, hitting its highest peak in almost 14 years

Our take

This report proves that when interest rates rise quickly, it temporarily shocks the market. However, once buyers get used to the new rates, demand comes right back. There’s no question we’re seeing slower market activity than last year, but demand is still healthy and people are still looking to move. Take every opportunity you can to help your buyers find a place now before rates rise even further!

Fannie Mae adjusts its market outlook

Fannie Mae just released its latest 2022 and 2023 housing projections. The company predicts further market cooling, higher interest rates, and strong demand for rentals. Here are the biggest takeaways from that report:

• Fannie Mae expects significant interest rate hikes through early 2023, topping out at a federal funds rate of between 3.5% and 3.75%

• Annual single-family home sales are expected to fall to 5.71M in 2022 and 4.98M in 2023, a decline of 17.2% and 12.8%, respectively.

• Fannie Mae also lowered its forecast for multi-family starts to 542,000 in 2022, but expects high home prices to keep the rental market strong through 2023

Our take

We agree with everything in this report, especially the fact that interest rates have more room to grow. Inflation isn’t under control yet, and we expect the Fed to continue aggressively raising rates until it is. What does that mean for agents? Continue looking for areas of opportunity– target sellers, look for clients who buy with cash, focus on strong sectors of the market like luxury and starter homes, and make sure you’re the go-to agent in your farm area.

Where buyers are moving this summer

Homeowners are increasingly leaving expensive major cities and pandemic hotspots in favor of more affordable markets. According to July and August data from Redfin, a record-setting 33.9% of users searched for homes in another metro. Higher mortgage rates, rising inflation, and diminishing affordability are to blame for the increasing relocation rates in cities like LA and New York.

Check out the top 5 cities with the highest outflow of residents:

1. San Francisco

2. Los Angeles

3. New York City

4. Washington, DC

5. Boston

Here are the top 5 cities with the highest inflow:

1. Miami

2. Sacramento

3. San Diego

4. Las Vegas

5. Tampa

Our take

We believe relocation activity is great news for the market because it creates opportunity for agents in both cities. This data doesn’t mean these big cities are losing popularity. Remember, every local market goes through its cycles— people move in and prices rise, so people move out and prices fall. Then as the city becomes affordable again, new people move in and the cycle repeats. That’s what we’re seeing play out here.

Schematics

The news that just missed the cut

• This $20.56M Chicago condo is the city’s priciest sale of the year

• Zillow rolls out ShowingTime+ to better support agents

• Unleash the power of inbox to generate new customers

• What to expect when the waitlist for Section 8 housing in LA reopens

• 4 reasons your clients’ deal may fall through

• What it’s like to live in a state with no income tax

• Why prices are soaring in Colorado Springs

🎧 Rise Above the Ranks

In this week’s Rise Above the Ranks podcast, James & David share their best tips for earning the trust of your clients… and their repeat business. Here’s a sneak peek:

• Always act ethically. Being dishonest or cutting corners is the fastest way to lose your clients’ trust. But if you put your client first and you’re willing to be up front with them, you’ll build long-term trust.

• Follow up! Find reasons to keep in touch, like sharing the latest market update, asking about their family, or sharing an interesting listing they may be interested in.

• Be yourself. People connect with genuine people. Don’t be afraid to be authentic with your clients. 

For the full episode, check out latest episode → Apple | Spotify | YouTube

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

See you on Friday!

-James and David

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