A heartfelt message

We want to send our thoughts and well wishes to all of our readers affected by the recent hurricanes. We know how important it is for everyone to have a safe place they can call their own, and it just breaks our hearts to see the devastation across all the areas hit hard by the storm. 

In today’s Schematics, we link to a helpful guide that breaks down what homeowners need to do to file an insurance claim after a natural disaster. We encourage you to share it with anyone who might need it.

Our thoughts are with all of you, and we hope for a swift recovery.

– James and David

Pending home sales see biggest jump since 2021

Over the previous four weeks ending October 6th, pending home sales nationwide rose 2% compared to last year. According to Redfin, that’s the biggest increase in three years. Here’s what else it reports:

• Pending home sales are rising in most major metros, but falling in Florida’s coastal markets

  • Palm Beach: -17.6%

  • Tampa: -15.5%

  • Miami: -14.8%

• Mortgage-purchase applications are up 8% month-over-month.

• The typical homebuyer’s monthly housing payment is now $2,526, down 5.8% YOY and near its lowest level since January

• New listings are up 5.7% year-over-year

Our take

This is further evidence that the Fed's interest rate cut in September spurred buyers back into the market. That surge in mortgage purchase applications clearly reflects renewed buyer activity. However, this boost in sales may be short-lived. Last Friday’s stronger-than-expected jobs report caused mortgage rates to rise, with the average daily rate climbing from 6.26% on Thursday to 6.62% this week. While this might deter some potential buyers, it’s not expected to halt demand entirely. Mortgage rates remain considerably lower compared to last year and earlier this year. Also, the Fed is on course to continue cutting interest rates, albeit at a slower rate than we’d like.

5.5% is the magic mortgage rate

There’s a magic mortgage rate for homeowners who’d like to sell and then buy another home. That number is 5.5%, according to a recent survey by John Burns Research and Consulting (JBREC). Here’s what else the firm found in its study:

• 71% of homeowner who plan to purchase their next home with a mortgage say they are not willing to accept a mortgage rate above 5.5%

• 62% of consumers believe a historically normal mortgage rate is below 5.5%

• 13% of homeowners would accept a mortgage rate between 6.5% and 6.99% on their next mortgage

Our take

JBREC has done us all a huge service here. While the lock-in effect—where homeowners hesitate to sell due to low existing mortgage rates—remains strong, its influence is gradually waning. This explains the steady increase in listings we’ve seen throughout the year. However, until now, there hasn’t been definitive data on when homeowners might start selling and buying in larger numbers. Now, we have a clearer idea! That said, 5.5% shouldn’t be seen as an infallible threshold but rather a useful benchmark for market predictions. If forecasts about mortgage rates dropping below 6% are accurate, the broader housing market shift may not occur until after 2025.

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Top 10 markets to be impacted by mortgage rate drops

Although mortgage rates are currently rising, we expect a gradual decline over the next year. The impact will vary by market. Areas with higher mortgage usage will see more change than markets with a greater share of outright homeowners.

States like West Virginia, Louisiana, and New Mexico—where a significant percentage of homeowners own their properties outright—are less likely to be affected by lower rates. On the other hand, cities like Denver and Baltimore, where more homeowners carry active mortgages, will likely see a more noticeable impact.

According to Realtor.com, these are the markets where falling mortgage rates will have the biggest impact based on the percentage of homes with active mortgages:

1. Washington, DC – 74.7% 

2. Denver, CO – 72.4%

3. Raleigh, NC – 72%

4. Virginia Beach, VA – 71%

5. Portland, OR – 69.8%

6. Baltimore, MD – 69.5%

7. Seattle, WA – 69.4%

8. Atlanta, GA – 69.4%

9. Indianapolis, IN – 69% 

10. San Diego, CA – 68.1%

Our take

This report is packed with valuable insights for agents. For example, 84% of existing mortgages carry rates of 6% or lower. Older homeowners (aged 65 and up) tend to have outright ownership, as they have had more time to pay off their mortgages. In markets with high homeownership rates, people often buy homes at a younger age, allowing them to build equity over time. As property values rise, homeowners can tap into that equity—either by refinancing or selling and downsizing—avoiding the need for new mortgage debt. This trend is especially advantageous for older homeowners, who have seen both their home values and equity grow over the years.

The news that just missed the cut

• Top US cities with the lowest risk of climate disasters

• Here’s how to file a homeowner’s insurance claim after a natural disaster 

• Use these questions to close more deals

• Handle seller objections about financing using this script

• This is the new go-to luxe amenity in high-altitude homes

Foundation Plans

Advice from James and David to win the day

We are always on the lookout for publications and resources which could help our fellow agents, especially those just starting out. Agents Tim and Julie Harris have recently produced an outstanding resource. For the next two editions, we will be covering some of their practical advice, and giving you our take on it too. Here are some of their tips:

1. Get highly specific on what success looks like to you – When we ask agents what they need to do to become more successful, their responses are often vague, such as, "I just need to sell more" or "Do more deals." That approach isn’t enough. You need to define your goals clearly—make them actionable, measurable, realistic, and tied to a timeline.

Tim and Julie provide this example. If your goal is to earn $100K per year, break it down into specific steps like this: “I will achieve this by listing and selling one additional home per month, with an average net commission of at least $10,000. If I don’t yet have the skills to do this, I’ll seek guidance from a mentor or hire a coach and follow their plan. I need six more closings, and I’ll meet this target by [insert deadline].”

The key is to set clear and measurable steps toward your goal.

2. Take ownership of generating your leads – 

It’s a hard lesson to learn but you’re in the sales industry when you become an agent. As such, you need to take ownership of generating your leads and book of business. It’s on you. Don’t run from that fact; embrace it.

Leads come from two main sources: people you know and people you don’t. It’s essential to target both groups. The people you know include friends, past clients, and those within your personal and professional network. The people you don’t know—everyone outside your immediate sphere—often present faster opportunities, as they tend to be easier to identify, more motivated, and ready to transact sooner. 

To connect with this broader audience, you'll need to actively market yourself. This includes strategies like door-knocking, distributing flyers, running email campaigns, farming specific neighborhoods, using social media, and calling expired listings. Use whatever strategy that works for you. As we always say, never let your pipeline run dry!

3. Embody being the knowledge broker of your market – The more you understand the key factors driving your market, the more confidently you'll engage in conversations about real estate without any uncertainty or hesitation. The more informed you are, the more business you'll attract, because you'll be better equipped to meet people’s real estate needs. It really is that simple!

These are critical market details you should be familiar with:

• Current 30-year fixed and adjustable-rate mortgage rates

• Whether inventory in your market is rising, falling, or stable

• Year-over-year and month-over-month sales trends

• The average time it takes to sell a home in your market

• Whether average days on market are increasing, decreasing, or staying consistent

• The list-to-sell price ratio in your area, and whether this varies by zip code or is consistent city-wide

Mastering this information will strengthen your market expertise and set you up for success.

As you can see, we have a lot to say – which we’ll pick up in our next edition. In the meantime, we can’t encourage you enough to start reading the guide Tim and Julie have produced. It’ll help you on your path to becoming an excellent and successful agent.

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:

“We have two lives, and the second begins when we realize we have only one.” — Confucius

You only have one life to live, friends, so take ownership of it. Take action to become who you want to be. Nobody else can do it for you. 

Have a great weekend and we’ll see you next Tuesday!

– James and David