Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 3.1% from December to a seasonally adjusted annual rate of 4.00 million in January.
PRESIDENT'S CORNER: Armageddon is Not Upon Us
In the fall and winter, we saw low interest rates, multiple offers, and a surge in home prices due to low inventory and pent-up demand. Then, just as quickly, we were hit with an increase in interest rates as well as inflation, which has definitely impacted the market, bringing us back to pre-pandemic pacing—and the first time some of you may have experienced a more measured market!
Back in June, we saw an abrupt increase in mortgage interest rates in response to financial market volatility that occurred as a result of higher than anticipated inflation numbers. This last week, we also saw an abrupt increase in mortgage interest rates, again thanks to financial market volatility after high inflation metrics and the Federal Reserve increasing the Fed Funds rate. As Realtors, we’ve seen an increase in first-time homebuyers, especially millennials.
Millennials now make up 43% of home buyers—the most of any generation—an increase from 37% last year. One-quarter of that group are older millennials aged 32 to 41, while 18% are younger millennials aged 23 to 31. As the housing market shifts toward more balanced conditions between homebuyers and sellers, millennials are still facing the challenge of saving, along with higher mortgage rates and inflation. Among millennial non-homeowners surveyed earlier this year, 44% cited too-high home prices as their reason for continuing to rent. However, even given these adverse conditions, resiliency and consistent buyer demand are still evident compared to the pre-pandemic market of 2019. While total transactions are down from the previous year, median sales prices continue to increase throughout the market, driven in large part by low inventory.
However, the third quarter sales numbers do not necessarily support the doom and gloom forecasts that many prognosticators like to make, especially when making comparisons to the pre-pandemic market of 2019. Also, the strong labor market seems to be playing a role in counterbalancing some of the adverse economic factors. The numbers support a conclusion of a resilient real estate market that is hampered by low inventory, but still supported by strong buyer demand.
In the coming months, it will be interesting to see what happens as interest rates continue to rise. Even though housing prices have increased by nearly 19% since March 2021, this clearly hasn’t caused millennials to become less eager to become homeowners.
I hear some people exclaim Armageddon is upon us. Spoiler alert: it’s not. It’s not time to panic. It’s time to retool your skills, educate and empower yourself to meet your client’s needs, and candidly it’s just time to get used to what is, quite honestly, a more normal interest rate environment. The low mortgage rates we’ve all grown accustomed to have been maintained at an artificially low level by a federally-subsidized bond market.
Have you ever noticed the one thing that all successful Realtors have in common? It’s not that they are all the best salespeople or that they are the most knowledgeable. It’s not about closing the deal as quickly as possible. It’s that they are true professionals. They don’t procrastinate and have strong communication and time management skills. They find joy in their jobs and most of all protect their clients’ best interests. I urge you to follow The Code of Ethics which describes the optimum performance the public has the right to expect and makes that performance the norm for Realtors. Essentially, The Code of Ethics boils down to one thing—treat others the way you would want to be treated.
At HGAR, our core values are Integrity, Professionalism and Respect. As Realtors, we must continue to retool and empower ourselves to serve our client’s needs in this fluid market. To renew your Realtor commitment, earn designations and certifications to increase your expertise and marketability, which will give you a professional advantage.
What gives me the greatest strength is the power and connectivity of our association. More than ever before, we need one another to help provide guidance, insight and faith. We have a commitment and a responsibility to be an authoritative voice for our members and our community right now.
Your association is here to support you with a wide variety of educational offerings available on-demand, hybrid, and in-person. I strongly suggest carving out some time to refresh your existing skills and learn some new ones. View our Education Portal at https://www.hgar.com/find-a-class. Amp up your confidence, amp up your expertise, amp up your professionalism, amp up your network, amp up your business and amp up your career! Get endorsed… Earn the award winning C2EX… Realtors Commitment to Excellence (visit C2EX.realtor). Realtors with a designation typically earn more than those without a designation. Gain a solid base of knowledge on all aspects of real estate and grow your business. Designations hold more clout and authority! Reenergize and earn designations.
As we enter this last quarter of 2022, make sure to always keep your eye on your goals. In this business, it is beyond important to set expectations, so you can quantify how successful you want to be. October sets us up to complete our goals. If you haven’t reached that goal yet, you still have time to plan, coordinate and finish strong!
As you can see, HGAR is thriving despite these strange times we live in. Thank you for pushing the Realtor frontier forward and for all your efforts to make our community an inclusive and productive one. Please do not hesitate to reach out with comments or suggestions and let me know if you’d like to get involved.