Real Estate Market Update Dec 19, 2023: RATE CUTS, Texas Lawsuit, RFK Housing Fix & 5 Marketing Tips

Mike Mills (00:00:08) - Howdy everyone, and Merry Christmas to all you reindeer riding realtors out there. This is the Texas Real Estate and Finance Podcast Real Estate market update for the week of December the 19th. As always, I'm your host, Mike Mills, a local Dallas-Fort worth mortgage banker, coming to you each week with news and highlights affecting the real estate market right here in the Lone Star State. And as we head into the holidays and the New Year, we're starting to possibly see the light at the end of the tunnel that has been the 2023 housing market. And just like you, I'm sure 2023 can't get in the rearview mirror fast enough. So what happened last week that has real estate professionals celebrating in the streets like Jimmy Stewart and It's a Wonderful Life? Well, first off, the fed not only announced on Wednesday that they weren't raising rates, but also indicated that they will start cutting rates in 2024. We'll dive into that and let you know what it'll mean for your business. Also last week, the National Association of Realtors gave their housing forecast for 2024 and predicted that the top two markets in the country for real estate demand are right here in Texas.

Mike Mills (00:01:04) - I'll tell you which markets are expected to see the biggest growth now. And not so great news. There was another lawsuit filed in Texas against Nar and several MLS in the state. We've got a few details on that as well. And 2024 will be another presidential election. Look, I know we're all super excited for that. But regardless, if you identify with the red or the blue team, if you're on team real estate, you might want to check out what independent Robert F Kennedy has to say about fixing housing affordability. He seems to have some pretty good ideas, at least about that. I'll let you know what he thinks can be done to fix all this mess. And finally, if you stick around to the end, I'll give you my top five real estate marketing ideas for 2024. We're all looking for whatever edge we can get headed into the new year, and I've got some great ways for you to maximize your sales in 2024. But before we dive into everything, as always, if you find this information helpful to your business and want to keep getting great content like this each week, please hit that subscribe button on your podcast platform.

Mike Mills (00:01:56) - And if you already have shared this with another real estate professional, that might also like to hear my sultry voice read the news each week. I appreciate all of you and would love to add more pod fans to our ever growing community. Now, before we dive into our topics, let's take a look at a couple other impactful headlines from the week. So first off, the average mortgage payment hit a record of $3,322 last month, according to The Wall Street Journal. Meanwhile, the average cost to rent hit a record $2,184 per month last month as well. So right now it is way less affordable to buy a home than it is at any other time in history. And although renting can be appealing, there's a lot of hidden costs that come along with that, not to mention the amount of equity that you pick up in your home. But either way, right now, housing affordability is at an all time low. In November, we saw over 700 chapter 11 commercial bankruptcy filings. That's the most since 2018.

Mike Mills (00:02:43) - These have been skyrocketing ever since the fed started raising rates. Mortgage rates are down 100 basis points and pricing over the last two months, bringing the average rate from about 8% in late October to around 6.625 as of today. Right now, housing starts are up. They're up 18% from last month and almost 50% from this same time last year. So builders are seeing demand and they're seeing the sales and they're liking both of them. But many of these homes are going to take time to hit the market. The good news is it looks like relief is on the way for our supply shortage right now. Last week, senators in Congress introduced a bill that would target trigger leads. These are those annoying phone calls that your buyers get after they apply for a mortgage. Right now, Congress is trying to prohibit Equifax, Experian, and TransUnion from selling your client's personal data after they apply for a mortgage, which will be a very, very welcome change. Jeff Bezos just invested heavily into a company that's Fractionalized single family real estate rentals and selling them in pieces to investors starting at $100 a share, letting investors spread their dollars across multiple properties and getting paid dividends on their rental profits.

Mike Mills (00:03:42) - They currently have funded over 400 homes at $125 million in value, and paid out almost $1 million in qualified dividends. I don't know what that does for home affordability, but investors should be happy. And last week, Bank of America published a report stating that the US housing market is currently short 4 million homes to get us back to a balanced housing market and bring affordability under control. That's a lot of houses to catch up with. Now, the big news from last week was the fed held their monthly meeting and announced not only were they not planning on raising rates again anytime soon, but that they had planned to start cutting rates in 2024. Now. Right now, the fed showed that they expected to cut rates four times in 2024, but many in the market are pricing in six cuts in 2024. Because why not now? This was a little unusual because in the past, Jerome Powell, whenever asked about cutting rates, has always leaned on this phrase of being, quote, data dependent. And aside from announcing back in 2022 that they planned on raising rates to combat inflation, he's never really confirmed one way or another about the Fed's future plans until this last meeting, because what can happen is what did happen is it sends the market into a frenzy of emotion whenever the fed makes plans like this.

Mike Mills (00:04:48) - So why say it this time? Well, this for cut expectation comes from the release of the dot plot from the Fed's meeting notes. Now, the dot plot showed that the fed governor's expectation of fed rate cuts and the average between them was all about. Was about four cuts total, with some showing one and some showing six, but the majority being around 3 to 4 cuts next year. And they're going all of this is to get inflation down to 2%, with projections right now showing inflation to be about 3.2% by the end of this year, and headed to 2.5% by the end of 2024. So as it stands right now, they feel like the trajectory of rates is headed in that 2% direction, which has always been one of their stated goals. But a little lost piece of this story is that one of the biggest components in the core inflation that the fed uses to gauge their direction that they're headed in is housing costs. Now, housing costs doesn't include your mortgage, but includes things like rent and lodging away from home.

Mike Mills (00:05:36) - And rent is a huge piece of this calculation. And because of how rent is calculated, where they blend current rents with new contracts, the number lags in the current reflection of the market by about six months. And so right now it's showing rent running at about a 6% inflation rate. But in real time rents have been trending much, much lower. So when this number hits the calculations, we might expect a core inflation number to drop quite a bit. And the folks at the fed kind of know this as well. And see, after the fed announced this week, the markets took off in celebration with stocks, bonds and crypto hitting new highs for the year. But you see, another concern of many market experts is that the fed might be trying to get out ahead of deflation, and deflation is where the demand for goods and services drops to such a degree that prices fall and layoffs start occurring in a much quicker pace because the American consumer basically freezes their spending. Now, only time is going to tell how this plays out.

Mike Mills (00:06:25) - But as far as real estate is concerned, the lower mortgage rates will help ignite greater demand for the spring buying season, which is a welcome change for anyone in our space right now. Let's just hope that the increased demand doesn't put too much pressure on our inventory supply, driving the cost of homes even higher. But overall, this is really good news for housing. And also last week, everyone's favorite whipping boy these days, the National Association of Realtors, released their housing forecast for 2024, and Austin and Dallas-Fort worth were listed in the top two markets in the country for real estate demand for next year. Now, Houston, Philly, Portland and Washington, D.C. all also cracked the top ten as well. You see, Lawrence Yun Na's top economists stated that metro markets in southern states will likely outperform others due to faster job increases, and that the demand for housing will recover because of falling mortgage rates and rising income. Now, falling rates definitely demands coming back. Rising income. I don't know how much income's going up these days, especially when you compare it to inflation, but we'll take the man at his word here.

Mike Mills (00:07:20) - He also expects housing inventory to rise by 30% next year. Now we'll see about that one. I don't know if they're going to be building 30% more homes or if people are going to be listing their house at a 30% greater clip. But hey, let's see. You also predicts home sales to rise by 13.5% next year. Not home values, but actual home sales volume and median home prices were expected to rise by slightly less than 1%. So basically staying flat. So this is all really good news for housing, especially for us here in Dallas-Fort worth. But remember, predictions are just that. But count me in on the Lawrence Yun fan club for now. I love me some good housing news, so we'll take it wherever we can get it. Now, on the flip side, let's get to a little bad news as it relates to the ever growing list of lawsuits filed against Realtors in the US last week, a copycat commission lawsuit filed on Thursday by home sellers in the United States District Court for the Eastern District of Texas accused 47 real estate industry defendants of allegedly conspiring to artificially inflate real estate agent commissions, blah, blah, blah, blah, blah.

Mike Mills (00:08:15) - We've heard this story a thousand times now. This is the second one filed in Texas since the Burnett case was finalized in late October. Now, this list of defendants is 47 deep. But here's just a few to give you an idea of where they're going. So we've got the Texas Association of Realtors, Austin Board of Realtors, San Antonio Board of Realtors, Metro Texas, Houston Association of Realtors, Greater Fort Worth Realtors, El Paso, Fort Hood, Temple Victoria, Central Texas Listing service networks Ebby Halliday, Keller, Williams, fathom, and on and on and on. This is crazy. These are these are really starting to get silly. My hope is, is that maybe the attorneys kind of sue their way to irrelevance because as a country we generally have a short attention span. And once you see these lawsuits pop up over and over again, no one really starts to care. Everybody kind of starts to lose interest in it and moves on. That's my hope. At least we'll see how that happens.

Mike Mills (00:09:04) - But right now it's just kind of getting silly. But either way, it's just another indicator that they're coming after your business and that you need to have a plan on how you're going to approach buyers and sellers. Once this all gets shaken up, no one knows anything other than it's going to change. At this point, it's just a question of how. But in the meantime, you need to have your value proposition dialed in for your buyers and sellers to make sure that they fully understand how critical you are to these transactions, and that you're worth every single nickel that you earn. Look, we all know the value, but your clients who only do this a few times in their life need to be reminded. So get your value on paper so you can clearly make the case why they cannot afford to go into a real estate transaction without representation. Okay, so I've got a little bit of a love hate relationship when it comes to politics for my whole life. I'm very into it, and I know way more about it than I probably should, but also hate that you cannot really talk much about it these days without people getting all riled up on both sides of the fence, and this year should prove to be one for the history books, no doubt.

Mike Mills (00:09:59) - But part of the story this year, aside from Biden and Trump, is the addition of Robert F Kennedy to the field as an independent candidate. Now, this dude's quite a controversial figure because of some of his stance on a few hot button topics. And if you know who he is, you know what I'm talking about. But one area of his platform that I love is his stance on affordable housing, because right now, you can't get Biden or Trump to even begin to bring it up. And since neither of them agreed to participate in primary debates, we don't know where they plan to. What they plan to do or where they stand on helping fix this issue. But we know right now what Kennedy would plan to do if he was elected because he said it. So first off, he said he would incentivize investment in first time homebuyers by creating a 3% interest for first time homebuyer for a first time homebuyer loan. He said that his uncle JFK actually did this in the 60s. And what you do is you create a special loan program for first time homebuyers that's funded by Treasury bills sold at 4% interest, that carried a special tax deduction that would incentivize investors to put their money in.

Mike Mills (00:10:55) - And this would open up cheaper lending options for people that qualify for the program. Is he making the money cheaper to borrow? Can help offset the rising costs of homes a little bit more for those first time homebuyers. He also stated that currently, there's about $110 billion surplus in the budget for Fannie Mae and Freddie Mac right now, since the government took over conservatorship of the GSEs back several years ago, and that the surplus should be used to subsidize the building of more affordable homes for lower income earners. In addition, he stated that he would remove tax benefits to corporations using federal loans to buy houses right now and create legislation using tax penalties to deter large companies and hedge funds from buying up single family homes and turning them into rentals, which is something that we already see making its way through Congress right now, and legislation proposed by the House and the Senate. Look, this guy may not have all the answers, but at least on this subject, I'm an RFK fan. I'm hoping he can at least bring the conversation to the debate stage next year.

Mike Mills (00:11:47) - Because what I want to hear what the other really old guys have to say about this also. And finally, here are my top five marketing activities to kick off your 2024 with a bang. The days of just waiting around for your phone to ring or gone, we all have to work a little bit harder this year, and here's some ways you can bring your real estate marketing game to the next level. So my number one primary thing that every realtor should do is re-engage with your database. Look, it can be as simple as starting an Excel sheet. If you don't have one, call me, email me. I'll send you the one that I use with all my agents. I got a great one but five people on this every single day. And when you do this, engage with those five people in an intentional and deliberate manner. And I don't mean that you have to call them and ask them if they're ready to buy and sell real estate. I just mean text. Call them, DM them, whatever you have to do just to say hello, check in on them and re-engage with people that are already in your life.

Mike Mills (00:12:33) - If you really have a tight and workable database, it will be the core of your business for the rest of your career if you use it correctly. So there's no reason that every agent shouldn't make this a number one activity for 2024. Number two QR codes. These are great, simple tools that help you collect information that help you add to your database, which adds to number one so you can put QR codes on listing signs. So when people drive by, they can scan the QR code, get all the pictures, provide you with an email so now you have someone you can market to. You can send out mailers to luxury apartments and ask them to check in and see what what the cost are for buying homes these days. If you're paying that much in rent at a luxury apartment, there's no reason they shouldn't buy, scan this QR code and give me your email and I'll send you my first time homebuyers guide. Send out a mailer that says there's three things that every homebuyer should know in today's market scan the QR code, get the email address and give them the information, and then take those emails and that information and put it into your database, because that's where it really starts to earn dollars for you.

Mike Mills (00:13:29) - If you're getting into social media content. My number three is make searchable YouTube videos and be very area specific. If you live in Mansfield, if you live in Arlington, if you live in Wyoming, if you live in whatever city that you live in in this country, make videos pertaining to your city. Get really niche, make it to where these are the top five reasons to Mansfield. Here are seven things to consider before you're buying a home in Arlington. People love numbers. They love lists. They love the top things, the bottom things, the best things, the worst things. Use these buzzwords and put them into your marketing. When you're making these videos. And again, get specific to your area. If you want to be the king of real estate or the Queen of real estate in Dallas, Texas, or Fort Worth or Kingsmill or whatever part of town that you're looking to dominate in, make content related to that. You're going to have much more success right out of the gate. If you get really niche on your marketing content and then expand from there.

Mike Mills (00:14:19) - But be hyper focused and tell people why they should call you and use and move to your area. Because that's the kind of stuff that people are looking for. Number four host open houses. Again, I know everybody talks about this, but I'm going to say it again, be intentional and deliberate about it. People love looking at homes and many people want to buy right now, but they're afraid to because of the rates and the cost. And this gives you a great opportunity to give people information and share what you know is a real estate professional on where the market is and where it's headed. Because like we all know, when rates come start to come down, which they are, home prices are going to go up. So every day that somebody waits to buy a house is is it's going to get more expensive. And these open houses give you a great opportunity. Connect with people. And by the way, there's two ways to look at this. I know agents that do open houses for brand new listings, because that's a place where you get the most amount of traffic.

Mike Mills (00:15:07) - Typically speaking, when a house comes on the market for the first time, you're going to get the most foot traffic at that point. So go host an open house, have your QR code ready so they can scan it, give you their email, and you can put their information into your database. All of these things tie together, and if you use open houses in a very specific manner, you can get a lot of business. I made a video when one of my market updates in the past, where I went through an entire process of what it takes to host an open house, and from how many signs you need to, you know what you should do a couple of days before and how to prepare for it. But at the end of the day, you're trying to connect with as many people as possible. Another way you can look at open houses is by taking old listings. Now, you're not going to have as much foot traffic on an old listing, but with a lot of realtors maybe not doing their best work these days, and a lot of people looking to get out of the business, holding an old listing might help you pick up that listing.

Mike Mills (00:15:57) - If for some reason that listing agreement expires and there you are, doing your best to try to help that client sell their home. And you never know, you might get a phone call and you might get a new listing out of it, so you can price it appropriately and get it to move. Now, this last one might seem a little bit more morbid, but I did read this somewhere the other day, and I don't think it's a terrible idea. It's just about how you approach it. But there's going to be a lot of agents that leave the business next year because of volume and because of what's happening with agent commissions. That's an opportunity if you choose to take advantage of it. If you have friends that you know, have been in the business for years and are looking to get out of it, well, this again ad can add to your database. Reach out to those friends and say, hey, look, if you're hopping out of the business a I'd love for you to send any of your past clients my way.

Mike Mills (00:16:36) - You know, maybe you could work out a friendly, uh, handshake after that, but I'd love for you to send clients my way. But I would also, um, appreciate it if I could get access to their database, because then you can put those people into your database and start marketing a group of home buyers that have worked with somebody that you know. So it's almost like a warm introduction. And if that person leaves the market, maybe you could craft an email together to send it out to all their past clients and say, hey, look, you know, Jane Jones is stepping out of the business. I love each and every of my clients, but I'm moving up to a new chapter of my life here's, you know, uh, Sammy Seller and I can't think of names right now. Um, here's Sammy Seller, and she's going to take over my business. If you have questions. I trust her implicitly with all of my past clients and would love for you to reach out to her if you ever need to buy or sell your home.

Mike Mills (00:17:21) - There's lots of ways that you can help take advantage of the market that's occurring with agents leaving the business, and one of those could be reaching out to them and saying, hey, if I could use your database to market too, I'd greatly appreciate it. And you guys kind of go in, you know, together on that. Look, you can't be great at everything, but pick 1 or 2 of these and become a ninja. But whatever you do, you got to do something because 2024 can be one of your best years ever, or it can be the year that you have to find another job. Those that put the work and effort in will reap the benefits. You gotta wake up and you gotta do something tomorrow no matter what, so it might as well be something that will put money in your pocket and help you pay your bills. Make a plan and execute it, and you'll be one of the success stories of 2024. Well, again, that's all for today. Thank you for sticking around, and I thank you for being here with me each and every week as we dive into this crazy business that we all love.

Mike Mills (00:18:11) - I hope you learned something that you didn't know today, and I hope to see you back here next week. Same bat time, same bat channel and join me on Friday as I welcome Lance Lambert to the podcast. Lance was the real estate editor for fortune magazine for several years, and has been in the real estate journalism business over a decade, and now he has his own platform, where he dives deep into topics that we cover here every day called club. He's going to join us to talk about the current housing market and where things are headed for next year. He's a wealth of knowledge and should have a ton of great insight, so be sure to tune in for that one. In the meantime, I hope you all have a very Merry Christmas and enjoy fun times with family and friends. We all work so hard in times like this. Remind us why. So enjoy your time with loved ones, be great humans and keep grinding out there. We'll see you next week.