The Greatest Housing Opportunity of the Decade is Here

Affordability. Affordability.

Affordability is the most talked about thing right now in the United States. If you want to understand what impacts affordability and what you should be sharing about it, you're going to love today's show.

Good morning. Is everybody here? Let's try. Good morning. It is wonderful to be in here. I was in New York yesterday, Florida. I flew in last night. I got up this morning. I didn't know where the elevator was. It's been one of those kind of mornings. But I'm excited to be here and talk about this market. A little bit going on right now, right. Even in the last week, we've seen some pretty big changes and moves in the market. Pretty interesting in what's happening. But I want to talk to you about a couple of things as we get started. I'm going to tell you what I know to be the biggest issue for Americans in housing right now, because we were just shown it about two and a half months ago. You can write this down, you can use all this information, take it and use videos, you know, make videos, all of this. The biggest issue in housing happened two and a half months ago, or it was a sign of it on election night. Anybody super political or want to talk politics? I sort of got caught up on that Tuesday night watching all the election returns and I don't normally do that. And what happened was fascinating if you saw it. Every politician, regardless of which side of the aisle they were on, if they won or they lost, talked about housing affordability. Did you see that? It's clearly the biggest issue. Affordability in this country is a big issue, but housing affordability is the biggest issue, okay? And people are upset. That's the reality. We need to be the expert on that. Now. Let me tell you this. Let me tell you how politics works in this country. Politics works. People get upset about something and politicians say, vote for me, I'm gonna solve it. That's how it works. Now, whether they can solve it or they can't solve it, who knows? But what every politician is trying to do right now are things that, that help improve housing affordability, get more people into houses. And we saw it happen this past week. The administration came out and said, you know what, we're going to make it to where Wall street can't buy homes, who cares, right? You know, as of the third quarter, 3/10 of 1% purchases were done by institutional investors. 3/10 of 1%. That's not going to do anything, right? But there's this tone in the country is, hey, we'll do this. We'll make the evil corporations pay for it or they're buying all the houses. That's why I can't buy one. But that's what's happening right now. Oh, by the way, what happened late last week? They said we're going to have Fannie and Freddie buy $200 billion in mortgage backed securities. Brought mortgage rates down to 5.99%. They sit just over 6% right now. I'm going to show you that in just a minute. But if you're not watching that and being the mouthpiece for affordability in your market, I'm convinced that you're missing out on it. So let me tell you what I'm going to do. I'm going to kind of take you on just a little bit of a journey, try to tell you the story of this market. I'm going to do a little bit of replay for last year. I'm going to give you everything that is forecast based for this year. I'm going to hit a little bit of expireds. How many people went after expireds here in January? A couple of people. How many people watched the webinar or did it and didn't do anything? You don't have to raise your hand. It happens from time to time. Let's start off this way, right here. Let's see are my slides up here. Having heard it is not as good as having seen it, right? Do you believe that having seen it is not as good as knowing it? You should know this information. Knowing it is not as good as putting into practice. Learning arrives when you put it into practice. Here's the reason I'm telling you that right now. If you want to take this information, you want to understand it, you want to know it, teach it to someone. Teach it to somebody on your team. Teach it to a buyer or seller. Show them what's happening. Teach it to your dog. I guarantee you you will know it. So what are the things that are the highlights? And some of this stuff you're like, David, I already know this. I want to give you a visual for it. Because listen, right here, having seen it is not as good as knowing it. I can tell people things all day long, but if I will show them, they will understand it more. Right here. What happened with mortgage rates last year, that's the visual. You're like, well, I know that and I've said it. I don't think the clients that you serve know that every day. We went from about 7% in January of last year. We know where we're at right now at the bottom, you know, 6% high fives. And I think we'll bounce around that. I'll talk about it in just a minute for this year, but just that move. It's good to see you, Doug. Jimmy told me to tell you hello. He said you're coming there this weekend. What does this mean right here? January 13th. Last year, 7.26. Today 6.07 on 500,000 borrowed. That's $393 in savings homes. I'm going to. Let's call that maybe the average borrow rate. It's a little bit higher than average. Just got $400 cheaper on the payment. That's a good thing. That's a wonderful thing. If you live in a market that's double that, you can do the math. It's $800. If it's half of that, it's 200. No matter what is going on, people want to know what is happening with affordability. This is something we should be talking about. Probably the biggest story right now, based on what I told you, what, what politicians are focused on, what Americans are concerned about. What's the other big story coming out of last year in real estate? It's this right here. Inventory right now is higher than it's been in the past five years. Let me explain this to you real quick. Some of you have seen it, different areas. We published it at KCM. The gray bars at the top are the last three normal years in real estate. 2017, 2018, 2019. It's how inventory comes to market each year. The colored bars below are 21, 22, 23, 24. Red bars, 2020. The white line is this year. Right. So inventory is making a return across the country. Not every market is alike. I'm not saying that. But what we do know is inventory has grown. It's forecasted to grow as we go throughout this year, too. Okay, so another big story. Things got cheaper, more choices for people, and prices started to sort of cool off. We now have states that lost value over the last year. We have states in the Northeast that are still cooking right along, some in the Midwest that are sort of even a very bifurcated market right now. But this is the information that I want to get in front of people. Now, Tom mentioned we were talking, you know, several weeks ago about this presentation. He's like, you gotta bring some things for folks that are here from Canada. Who's here from Canada? All right. That's awesome. You don't have to be sorry for that, we're gonna talk about that. But what's the other big story? Obviously, two thirds of Americans have paid off their mortgage or have at least 50% equity. Equity still strong across the country. We know that to be true. Now listen to this. Listen to this for my Canadian friends. Canadians have significant equity in their average 74% of the home's value, on average. That's strong. Very, very strong. We don't live in a market, a real estate. We probably live in what I would say right now, under the surface, the strongest real estate market of our lifetime. Do you think the clients that you serve know that? They're like, well, when it crashes, I'm gonna buy some foreclosures, right? Because they don't know it. You know what they would call that in sort of economic terms is the curse of knowledge. Because I understand something, I expect that you understand it, because I've said something once, twice, or five times. I expect you to know it. Anybody have kids in this room? You ever have to tell your kids to brush their teeth? You're like, I told them to brush their teeth. Right? I have three kids. They're 18, 21, 23. My oldest just graduated from college this past year. And I'm like, this is awesome. Get a job. He has a job. Love that. But I ended up making friends with the real estate professor, and at kind of the last year of when he was in school, and she said, would you ever come out and talk to our real estate club and real estate classes? And I was like, I would love to. And so I called Jake up and I said, hey, I. I got an opportunity to come down there and speak. And he's like, no way. No way, you're not coming here. And I was like, why? He's like, I will never hear the end of it, of my dad being here. And so that never happened. Let me just go ahead and tell you. My younger son, he's 21 years old, he called me up one day. I promise you, this is exactly what happened. And he said, dad, would you ever consider coming to speak for our real estate club? And I was like, justin, I will do that all day long. So he's now my favorite son. It wasn't hard to make the distinction. You know, let's keep talking about Canada here. Home sales in the past year in Canada decreased by 7.6%. New listings or inventory grew by 1.8%. Average price decreased. So we're seeing the US market in the Canadian market sort of react to what we've come out of the last several years. And what I would say in this transition of a much more healthy market, right, 2024 and 2025, from a transaction standpoint, will go down as two of the slowest years in real estate when adjusted for population growth. Do you know that? And we're all here, we're all making it right. So what's the question? I think that's on everybody's mind is what's ahead? We got this words here, steadier and stronger. I hope you take those away. Now get your phone out. You're going to want to take pictures of these because you're going to want to share these with people that are wondering right now, should I buy a home? Should I not? What do we do right here in 2026? Realtor.com said we expect a housing market that is steadier but not yet off to the races. Okay, so anybody talking about doom and gloom, Anybody talking about when are we going to get back to the good old days? This will be a steadier market, but not off to the races. We're blowing the doors off here. We anticipate affordability will improve modestly. Remember we talked about the biggest issue for Americans, afford affordability. The result of our expectations of slightly lower interest rates, only modest increases in home prices in a more balanced market than in recent years. These are the things to pay attention to as we go throughout the year to be talking about, putting into practice, being the expert on. There's so much information available in the world today, and yet people are more confused than ever. You know, I've said this many times this past election cycles, multiple election cycles, is the first time in history in this country where podcasters had more influence than media than traditional media. And think about it. That makes sense. We get it right. People don't look at media today and think, you know what? I believe everything that they're saying. I think they have an agenda. I think they're trying to do this. How do you take your news? Do you take it conservatively? Do you take it liberal? What do you want? Because we'll serve it to you however you want it. And we can be the voice of truth. So what is affordability? Okay, let me just, let me just break it down. I've talked about this a fair amount. If you've followed kcm, you know this. What influences affordability rates? Mortgage rates. So what I tell you, mortgage rates have come down. They're forecasted. I'll show you in a minute to sort of slowly come down. Two home Prices, I'll cover that in just a second. But I'll tell you this. Homes are not going up, you know, to the degree and the value and the pace that they were. That's a good thing for affordability. The third thing is wages. The Fed tracks wages. We can tell that people are making more money today than they have in the, in sort of the last decade at a faster clip. That's a good thing. I was in New York yesterday and they're like, what about taxes and insurance? I'm like, that's a problem, right? It is. I believe that will be the fourth component that's added to affordability. Again, let me explain how politics works in this country. Politicians hear what Americans are pissed off about. They're like, I'm going to solve it. We'll see if they can, and they run to it. Right now, there is a big spotlight on housing. And whether, however you lean politically doesn't really matter in this conversation about this, because we want things to happen that help people buy homes. Right? And hear me in that. I believe that's what you will see happen out now. The impact of it, what they do, that's still yet to be determined. But I would take that environment over anything that way. So let's get into a couple forecasts. I've got about 10 more minutes left to give you these. Get your phone out. This is the latest forecast for mortgage rates up through the last couple years. What do you see there? 1. Let me just draw out a couple of things. We're already beating every one of those forecasts. Here's the lesson for you today. You can take this home. I promise you, even the experts don't know what's going to happen. Right? I was on a podcast the last week when, you know, kind of all the mortgage stuff was happening, and they said, well, is this going to stick? Is this going to stick? Are we going to be now in the fives? I'm like, well, tell me what's going to happen tomorrow. Something could happen tomorrow to shoot it right back up to six and a quarter or six and a half. Whatever it is, I do believe this year, based on these forecasts, we'll bounce around in the low sixes, we'll dip our toe in the fives. What's the word there? Listen, if I was working with a buyer right now, even sellers, think about how you want to do this. I would be ready for those moments. If you were ready and we hit 599, lock in, we can get whatever it is that's A huge opportunity. If you're a seller. You want to think about that. What's my messaging to my sellers right now? Get ahead because there are going to be more buyers that ears perk up in the market. Okay. But that'll be the outlook for mortgage rates. You can explain that to people right here. Rick Sharga, he does a great job. Inventory will continue. Sorry. To increase through at least partly due to the pace of sales slowing down and some older homeowners deciding it's time to downsize. So mortgage rates kind of bouncing around the low sixes. More inventory here. The forecast right now from Bright, From Compass, from realtor.com, they all sort of land in this 10 to 15% range. Probably 10% more homes on the market this coming year. All right. And I think that'll come from a number of different places. But people that maybe put off the decision in the last couple years to do something are now doing that. Odetta Cushy said this. She said, looking forward, expect a two speed market. Lean inventory in the Northeast and Midwest keeps conditions relatively tight. Price growth steadier while parts of the south and west remain soft. Understanding what's happening nationally is critically important right now because we have people moving into markets, people moving out of markets. You don't have to become an expert on everything happening there, but you should apply your local expertise. Right. Because every time the client that you serve. Good to see you, buddy. Every time the client that you serve turns on the news, they're educated at the national level. Right. And then you need to say, well, let me show you exactly what's happening right here. Price forecast. This is everybody that forecasts prices and what they're going to do for the coming year. You see an average about 1. Let me slide out of your way there. Did you get it? Well, thank you. She said she wanted me in it. I was like, I know. 1 to 2% nationally in home price appreciation. You know, I don't see MBAs on the end there calling for, you know, 0.3% decline in home prices. There's not this case out there to be made for this national fall in home prices. Like, well, David, we know that. We've talked about that. Everybody knows it. The clients that you serve don't know it. Right. They're like, well, I was just at, you know, holiday dinner with so and so and they said they wouldn't buy a home right now. Right. Anybody get into any discussions over the last few weeks about how's the market, what's going on? Canada, the national average home price is forecasted to increase by 3.2% from 25 to 26. You see the number there? This would mark the sixth straight year with a national average home price has hovered around the $700,000 range. So seeing things, you know, in somewhat between Canadian and U.S. markets in home price appreciation, not what we saw several years ago, that's a good thing, right? Realtor.com Rising incomes which should outpace inflation give buyers more purchasing power. I do believe that'll be true. Helping to shrink the share of paycheck that is to be put towards mortgage. The monthly payment to buy a typical home is expected to slip to 29.3% of median income. Still higher than we want it, but it's coming down first year below 30% affordability threshold since 2022. Now listen, this, this next slide. I've got five minutes left. This next slide is critically important to understand. A pretty fun thing to show people right now in the market. Wage growth will outpace home price growth this year. See at the far right, the 2026 forecast. How many people remember the time where, well, you can't buy a house because they're going up faster than people are making money. Right. Things are starting to shift. There are so many. I recorded a video yesterday in New York just on the, on the past year and in the drop in mortgage payments, you know, on the average home, it's about $330 over the last year. Putting this content out in the market, I am convinced right now is what will win. It's what will start conversations. You want to start a conversation with somebody? Start talking about mortgage rates. Start talking about home prices. People have opinions, right? They'll share them with you. There's a joke in there somewhere. Total home sales are expected to rise. Are you excited about that? You can clap for it. I mean, I'm not gonna, I'm not gonna make you do it. Good to see you, buddy. So this is existing home sales and new construction. 24. We did about 4.7 million. Normally when we hear numbers, they're existing home sales. This is the combination of both. 4.7, 4.75. Call it there similar years, 5.1. Okay, here's the thing. Why is this, why is this being forecasted? They see a little bit better mortgage rate environment. Hear that? People that put off making a decision over the last two years, we will see more transactions come into the market. That's a good thing. So if you think about these things, these are the things that people are concerned about. Right now they want to talk about in the Canadian market in 2026, national home sales are forecasted to rebound by 7.7%, the highest level of activity since 21, still well below that peak and slightly under the 10 year average. Historically, national home sales have only ever cracked the half million mark seven times, with the first time in 2007. That's a breakdown of the market. What's going to happen this year? I think we'll be in a better mortgage rate environment. We will sell more homes, more inventory will be on the market. You can say those things confidently. Could something change? Absolutely it will. Let's see what tomorrow brings. Right. The number one reason people don't share this information is they're afraid they're going to be wrong. Right. And my coaching to you is everything that you bring to a client say, hey, here's what's happening right now and if that changes, I'll update you. Right. That's our job. So for the last couple minutes, let's talk expired listings. This is a refresher for anybody that's like, I don't know if I want to do it, I'm not sure. Let's talk about it for just a minute. Just as a recap, we did a webinar several weeks back. The number of expired listings in January has been higher than, I'm going to say the last decade. I think probably higher than we've seen in a couple of decades. A High Point was 185,000 listings expiring in this country. And I really think at the end of the day a lot of these listings have expired because there's a disconnect with sellers right now. Right. And every one of you in your own markets know that and know what that is. And it's not the same everywhere. But most people are like, if it doesn't sell on the first day, they're like, are we gonna sell it? Right. And so they end up, you know, not selling the house. We've talked about this many times. If you can meet somebody where they're at, you can help them. I've talked about Red X and doing the survey. The number one emotion that any expired seller feels is embarrassment. They've told the folks at the kids school or wherever they're at, at church and we're going to sell the house, we're moving on and now we're not. So what are the facts about expireds? These come out of everything happening this past year from listing expires an average of 36 days till they relist if they're going to relist. We're in prime expired territory right now. Once the house is listed, an average of 6,75 days to sell. If you're going to sit down and talk to somebody that didn't sell their house, this is important information to bring to them. Right. This is all based on everything that's been collected from people that didn't sell their house this past year. This isn't things that like. Well, this is sort of a guess. Second sellers who relisted with a new or different agent 54% of the time they sold their house think that's important. There are two types of agents in the room right now. You know that, right? One's with a listing that's going to expire and one that's going to call them 54% sold, 36% who relisted with the same agent. You're more likely to sell your house when you relist with a new agent. Why is that? That's sort of the encapsulation of a hard conversation. Right. What's the hardest thing to do in life is have a hard conversation with someone. Right. We've got to do that with sellers right here. Sellers who made the switch sell faster once back on the market. 74 days with a new agent versus 89 with the same agent. It's important, Right. Sitting down. I'm sitting down with somebody. This is what's happening. This is the one. I was in New York yesterday, Tom, and they're like, what's the price? It's lowering the price. Well, what about this right here? Price matters. Yeah. Did you know, statistically you are more likely to sell your home when you relist at a higher price? But, but, but listen, hold on.

Did everybody just hear that?

Here's what that says to me, though. Yeah, Price is important, but expertise is even more important.

And your brand and your marketing plan, how you do what you do.

Yeah. Thousand percent. 47%. Statistically more likely to sell at a higher price. 45 at a lower price. What's the one thing you know you don't want to keep the price the same? Statistically. Last one.

Should that slide be in an email that they text or send to expired listings?

Absolutely.

What do you guys think?

Absolutely.

I can't hear you. What do you guys think? But, Tom, I don't like expireds. Good. No one cares.

Do you like helping people?

Just checking.

Last one right here. We'll wrap it up on this. Of the 2.4 million listings that expired in 2025, 1.3 of them still haven't relisted. This isn't just a January thing. Talking to people about their motivation, what caused them to want to sell, I think is critically important. Now is the time, Tom. That's everything happening in the market right now, to be able to take it, take action and move ahead on that. That was awesome.

Can we give David a giant thank you round of applause?