Real Estate Bold Predictions: Pent-Up Demand and a Strong Spring
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If you want to cut through all the chatter and learn the truth about the real state of the real estate market, then we’ve got you! Watch the replay of Brian Buffini’s Bold Predictions 2023: Mid-Year Update. You’ll also hear from former president and CEO of the Mortgage Bankers Association David Stevens who offered insight, advice and predictions on the mortgage industry. Click here to watch the replay!
The last few years have seen a seismic shift in real estate, leaving many would-be-buyers, sellers and agents alike feeling a sense of whiplash. While the market is still going through some changes, there are better days ahead, according to Brian Buffini, the founder and chairman of Buffini & Company. Recently, Buffini, a 30+-year veteran of the industry, shared his thoughts about these positive changes during “Brian Buffini’s Bold Predictions 2023: Mid-Year Update,” a special broadcast for the company’s customers.
Over the past three decades, Buffini has used his keen knowledge, analyzing an abundance of data from industry experts, to predict how the market will react.
His overarching views in this year’s prediction? Rates will drop, eventually settling into the mid-4% range by early next year, which will bring many eager buyers back to the market.
Pent-Up Demand to Buy
After the turbulence of the last few years which included an overheated market, the pandemic and then swiftly increasing mortgage rates, there is pent-up demand from those eager to buy a home, including:
- Renters — There are nearly 3 million households making $150,000 a year who currently rent.
- Current homeowners — Many are looking to downsize or move to a bigger home but do not want to abandon their low mortgage rate.
Many of these homeowners are flush with equity. In fact, the U.S. home equity is the highest it has ever been. Thirty-two percent of homes are owned free and clear, while another 30% have more than 50% in equity.
- Millennials — With the average age of first-time buyers at 35 years old, it is anticipated that millennials will become “the biggest generation of potential homebuyers”.
Mortgage Rates are Dropping
In the broadcast, Buffini also spoke with David Stevens, the former president and CEO of the Mortgage Bankers Association. Stevens has been one of the country’s foremost experts on the mortgage banking industry, advising policymakers, organizations and the media.
“There is one core reality,” Stevens told Buffini in the broadcast. “Rates are coming down again. By the end of the year, they will drop and drop more next year.”
“All economic indicators basically are screaming at market makers and Wall Street saying that, ‘Gang, rates are coming down’,” he added.
The current low level of inventory continues to be a concern, Stevens said, but the rising amount of new housing starts should help boost overall inventory. He believes that when mortgage rates hit the low-5% range and eventually drops down into the mid-4% range, overall inventory will start to rise, buffered by those home sellers who had been sitting on the sidelines (due to their low rates in the 2 to 3% range) decide to sell.
Experts believe that there will be nearly 500,000 more homes sold in 2024 (4.7 million) than in 2023 (4.2 million). In 2025, that number is expected to grow to 5.2 million, Stevens said.
Banks are Safe for Consumers
Although Stevens concedes that the nation’s banks are not quite “out of the woods yet” after two prominent banks failed earlier this year, the average consumer need not worry about their own funds.
“They should keep their accounts under the [respective financial institutions] limits and make sure their bank is FDIC-insured,” Stevens advised.
With that being said, there is a concern for commercial real estate owners, he noted, as many are or will be looking to refinance.
Prepare Now for a Strong Spring
“This nation is standing on the front doorstep of the largest wave of home-buying demand in U.S. history,” Stevens said.
He advises that agents “don’t focus on the here and now”.
“It’s an awkward, technical environment brought on by the Federal Reserve trying to control an overheated economy,” he said.
Buffini agreed, noting that “spring will become the selling season again”.
Real estate agents should take the opportunity now, he added, to do the necessary groundwork to prepare for the listing season.
It is crucial that agents go back to the basics and “get in front of their clients,” with the Real Estate Report, other marketing collateral pieces, Pop-Bys and meetings. Laying that critical groundwork and getting listings when clients are ready will help agents create thriving businesses.
“When the market becomes hot again, if you don’t want to be a ‘chaos agent’ and burn out, then you need to be a listing agent,” Buffini stressed.
Buffini & Company – We’ve Got You!
Buffini & Company’s coaches are also gearing up now to help get their clients ready and positioned for a strong 2024 selling season. To learn more about how a coach can help you take full advantage of the extraordinary year to come, schedule a free Business Consultation.
To watch the full replay of Brian Buffini’s Bold Predictions visit buffiniandcompany.com/bp.