Hey guys, here's a question:
How many transactions would you guess in the marketplace are cash transactions?
The answer is 23% of all transactions in the real estate industry today are cash transactions.
Now, why is that important?
It's important because when we're talking to buyers and sellers, we need to be able to talk about the impact cash buyers have in the marketplace.
So for instance, when I'm sitting with a seller, sometimes sellers will say, "Well, Jim, I only want to sell to a cash buyer."
Now I'll say, "Hey, I get it. I would prefer that too when I'm a seller. Cash buyers don't have an appraisal requirement. And a lot of times you can close faster and it's a little easier. I get it. No lender involved. But here's the reality of those numbers: Today the latest studies show that 23% of buyers are cash buyers. So that means 77% are not. Only about one out of four buyers are cash buyers. If we only want to sell to a cash...
We are in what we might describe as a normalizing market. What does that mean?
We've been in an abnormal market for several years. Our market's been almost a vertical. We've had double digit appreciation for several years. And this has been a run that we've never seen before.
We're about 12 years into a 7-year cycle. So there's an expectation that we're starting to see the markets shift.
A lot of us are seeing a slowdown of showings and energy. And there's some data that backs this up. Here's some of that data:
New listings in the largest 50 metro markets across the country rose 5.1% last month.
And 17.3% of all listings in the country had a price reduction in the last 30 days.
That's in line with pre-pandemic levels, what you would expect in coming into fall. So that's like 2016-2019 levels. Last year, we didn't see that because the market was straight up. It was on a tear.
But right now sellers are starting to say, "Hey, wait a second....
Hey guys, we know the market's changing. And because of that, every single showing you have on a listing is becoming more important.
We don't have unlimited showings anymore. A lot of showings are slowing down. So when we have a showing, you gotta treat a like gold.
So here's a question:
Are you preparing your sellers with checklists, to-dos, and forms that will help them prepare for each showing and really maximize the potential of getting an offer from a buyer?
Really what the client should be doing is making the home inviting, making sure that you're showing that the home has been cared for and maintained well, and third, we want to make sure you have great curb appeal.
Now I'm going to read to you a few things that you might want to include on your to-do list or your checklist or your forms that you could build out.
Now, when you do this, and we talk about these things, I want you to think about the last like 5 or 10 homes that...
Hey guys, you probably saw that the amount of jobs that were added in August to the economy was actually way lower than expected.
A lot of people attribute that to the rise of the Delta virus and people may be slowing down on hiring. But one thing we can be sure of is that there are a lot of jobs available in America.
There's 10 and a half million jobs available right now. One thing that we're starting to see is unemployment benefits being turned off. Or at least not the incentives added by the federal government. So that might bring more people to work.
But right now we've got to deal with what's here now.
So job wage growth in America so far is up about 4.8%. The challenge is that inflation is also a 5.2%. So it's eating up all those gains. When we look at this in terms of what's going to happen in terms of the real estate market, Lawrence Yun — the chief economist for the International Association of REALTORS...
Hey guys, the market is shifting. If you can feel it in your market, you're not alone. One study that's backing this up is a study that's just been done by realtor.com. It shows that of the top 300 Metro markets in the country, 45 are seeing significant price adjustments happening.
I'll give you a couple examples:
Des Moine, Iowa — 32% of the listings have had a price adjustment
Midland, Texas — 28% of listings have had a price adjustment
Toledo, Ohio — 26% of listings have had a price adjustment
Metairie, Louisiana — 24% of listings have had a price adjustment
Where I live, Portland, Oregon — 20% of listings have had a price adjustment.
So not every market's having this yet. But we're certainly seeing sellers starting to be wise to the fact that buyers aren't just going to pay infinity anymore. There is buyer resistance to pricing. We've seen the largest run-up in pricing. Prices have hit an all-time...
There's a new stat from the National Association of REALTORS, which states that 53% of our buyers and sellers now fall into a specific demographic group.
You can probably guess what that is...
It's the millennial generation.
Millennials aren't kids anymore. They're actually in their mid twenties or early thirties. They are definitely the driving force in the market. And they're far, far bigger than the baby boomer generation ever was.
So when we look at just statistically, the numbers of this, we have to embrace millennial marketing. It's super important.
And there's some things that we can do to do a much better job with them.
1. Social media
You know I was going to say that. That's where they're at. We've got to go where the audience is. That means we're doing 5 to 15 posts a week on different platforms that we know they use.
So some of you might be doing Facebook, Instagram, TikTok, YouTube, you name it. You just got to figure out...
Hey guys, the market's shifting. That's no surprise here — we've been seeing it for a few months. We're starting to see buyers put up some walls and say, "Hey, wait a second. I'm not going to pay infinity for a home."
And so buyers are slowing down their activity and we're seeing that. And it's also causing inventories to rise, which in turn, is causing sellers to try and avoid missing the boat so they're jumping in. This is causing inventories to rise even more.
So the whole market is starting to change. Not radically yet, but it will accelerate over time. And it's natural. It's normal. We're never going to have a straight up market forever. Right now, some people would argue that we're 12 years into a seven-year cycle.
Now for us, I have a question for you because you are either an agent that's market-driven or strategy-driven.
If you're market-driven, then high tide floats all boats. You do well in a great market and you do...
Hey guys, when you set a price on a property, how fast do you pivot if you got the price wrong?
And we all get prices wrong, I've gotten prices wrong. Anybody that's been in the industry for any length of time has gotten the price wrong.
So how fast do you pivot? How fast do you reach out to the seller to try to get that price adjustment?
There's a new study done by ShowingTime, which shows that the average across America, in our current market for there to be a massive drop in activity is five days.
After five days, activity goes straight down.
So we have a five day window to try to generate a lot of showings and hopefully multiple offers. If we get past that five days and we don't do an adjustment, we're probably going to have a hard time meeting the market where it's at.
So we have to lay the groundwork with sellers and have a conversation with them about this five day window. It's not two weeks. It's not three weeks. It's not a...
There are a couple of numbers we need to look at to understand where the market's at and what's happening with the market.
Number one is the pending home sell index, which had a decrease of 1.9% compared to a year ago. And again, a 1.9% decrease compared to last month. Coincidentally, it was the same number.
But when we combine that with an increase in inventory of 4.1% the month before and a decrease in interest rates because they fell back below 3%.
So we have to look at this as the whole and say:
Why would there be a decrease in sales when we've had an increase in listings and a lower interest rate?
Why aren't buyers saying, "Hey, I have more to choose from and my interest rates are going down. Why don't I own the market?"
Buyers aren't doing that. In fact, they're pulling back a little bit from the market.
The reason is...
Buyer price resistance
Buyers are saying, "Hey, it's been 112 straight months of home price increases....
We have two reports that have recently come out that show the market could be in a shift. And what we mean by that is that we've had this huge frenzy, right? But here's a couple of studies that kind of back up the fact that a lot of you in a lot of markets are starting to report.
You're seeing the market not be quite as intense as it's been, not quite the frenzy.
So here's the reports that we have:
The first one shows that the share of consumers who hope to buy a home in the next six months went from 34% a year ago to just 21% this year.
So people are starting to have some definite fatigue and resistance to pricing that's out there.
And related to pricing, which kind of goes right along with that study, is a new study that shows that even though we're still posting double digit gains in most areas, the rate of price growth is beginning to slow.
When we look at this, it's the second time it's happened in 13 months. And again,...
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