Homeowners are holding on to their status quo, while new buyers are struggling with home prices that remain high this year. Inventory is tight and home sales are at their lowest level in decades.
But if you need further signs of disruption, just ask the people whose livelihoods depend on the real estate market how they’re doing.
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According to Alignable’s monthly report, 45% of self-owned real estate agents said they had difficulty paying office rent in November. This is 5% higher than in October and 10% higher than the September reading.
Corey Barr, senior vice president at TTR Sotheby’s International Realty, said the numbers are not surprising, noting that recent interest rate hikes have pushed up mortgage rates and slowed home sales.
“I think the Federal Reserve has put us in a situation where they’ve essentially frozen the residential real estate market by keeping interest rates low for a long period of time and then raising them rapidly. ” Barr said.
“It has created incredible distortions in our market.”
Sluggish sales hit real estate agents
Barr, who has worked in the real estate industry for more than 36 years, starting with his own company in Chevy Chase, Md., knows how experiencing the ups and downs of the housing market can be when running a small business. He said he knows who he is.
“We are in a position in the real estate cycle where brokers, especially smaller ones with lower market share and fewer assets than larger brokers, have the hardest time weathering the storm,” Barr said.
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Home sales have been extremely slow over the past year as prospective buyers wary of high mortgage rates and backing out of deals at a record pace, leaving more agents unemployed or seeing their incomes decline. It is decreasing.
The number of pending home sales in October was down 1.5% from September and 8.5% from last year, marking the lowest amount of pending home sales since the National Association of Realtors began keeping statistics. This is even worse than during the 2008 financial crisis.
Barr also expects the number of real estate agents to decline across North America as the market shrinks.
More than 60,000 agents left the industry in the six months ending in May, according to NAR data analyzed by Reventure Consulting, which provides real-time data on the housing market.
The market may improve next year
Mortgage rates have fallen in recent weeks, convincing homeowners previously locked in rates of 2% to 3% to put their homes on the market and relocate to keep inventory tight. is still not low enough, Barr says. .
He also noted that while the period from early November to early January tends to slow considerably, he expects mortgage rates to pick up in the spring if they continue to fall.
As inflation subsides, many experts predict the Fed will reach the end of its tightening cycle and may even introduce some rate cuts in 2024. This could push mortgage rates even lower, giving the housing market a much-needed reprieve.
In fact, some analysts are predicting lower mortgage rates next year. Lawrence Yun, NAR’s chief economist, predicted in early November that mortgage rates could hover between 6% and 7% next spring and home sales could rise 13.5% in 2024.
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