Do you hear that mariachi band playing in the background? No? Well, neither do I. I was supposed to be writing my year-end newsletter while lying poolside in Mexico but, instead, I found myself stranded at JFK for twelve hours struggling to get back to Rochester after an airline snafu. It was an unusual way to end the year which had, up until then, been near-idyllic. (Alright, there was the detached retina that I experienced back in October, but this is a real estate newsletter not a horror story, so I’ll move on and spare you the details.) My point is that, much like the local real estate market, despite some setbacks, there was a lot to be thankful for if you were simply willing to focus on the positive!
A Year In Review
The year started out with much of the same celebratory bombast and excitement that we had experienced in the preceding eighteen months of housing sales. A strong economy, the need for more living space imposed by a larger hybrid workforce, and low interest rates meant that sellers continued to control the market. Bidding wars were still the mechanism by which most properties were sold and, as a result, most sellers danced the Macarena while many buyers sulked.
This past spring, specifically the 16th of March, television news anchors were broadcasting the anniversary of the war with Iraq which had started twenty years earlier. Without necessarily realizing it, they then began to report the start of another US-sponsored war, albeit one that was inherently different. The enemy, this time around, was inflation and our commander-in-chief was Jerome Powell. The chair of the Federal Reserve knew that he had to conquer runaway prices and he had one powerful weapon at his disposal- monetary policy. Beginning that day and continuing throughout the remainder of the year, the Federal Open Market Committee raised interest rates a full three percentage points driving mortgage rates from 3.22% in January to a high of 7.08% on October 27th. As a result, home sales began to decline and, by November, they had plummeted a breathtaking 35.1% from the preceding year! So, you ask, where’s the silver lining that I mentioned in my opening paragraph?
Looking Ahead
Well, the good news is that inflation has dropped from a high of 9.1% in June to 7.1% in November. Historically, it takes some time for inflation to begin to fall but, once monetary policy has taken hold, it begins to come down rather quickly. Meanwhile, economists continue to suggest that the United States will probably suffer a recession in the coming year, however, an increasing number are stating that it will be both mild and short-lived. In other words, Powell may be able to navigate the soft-landing that we have all been hoping for.
Next, let’s focus on some of the good news associated with the local real estate market. The latest figures from the National Association of Realtors show that, at the end of September, real estate values in the Rochester region had risen 37.5% in the preceding thirty-six months! Stated another way-If you owned a typical, median-priced home valued at $224,000, you probably enjoyed an $84,000 increase in equity in the past three years!
Hungry for even more good news? That gain is probably locked in. Yes, real estate sales have slowed, however, prices have not tumbled, and they won’t. Why? Supply and demand. The number of prospective buyers still significantly outpaces the number of individuals willing to host a For Sale sign in their front yard. It’s unfathomable to contemplate a scenario in which this pressure is released as a result of thousands of new homes coming on the market. Given that most homeowners are currently locked into mortgage rates below 3.5%, it’ll probably be a few years before we see any significant shift in this trend.
A lot of the good news that I’ve mentioned has been quickly summarized in three recently released news stories. The National Association of Realtors slotted Rochester in the number two spot of its monthly Top 20 Hottest Housing Markets. Redfin has listed Rochester as one of the ten cities in the United States that will hold up best in the coming year. While realtor.com is forecasting a 5.3% increase in property values throughout the region in 2023. All in all, if you’re a homeowner, you’ve got plenty to celebrate!
As I mentioned, those looking to purchase their first home will continue to struggle for the next few years. There are, however, a few strategies that these buyers may want to immediately consider. Competition is always thinner during the winter months. Act now before the hordes of would-be homeowners begin lining up at Open Houses in the beginning of February. If you’re successful in your quest, you may be able to lock in a mortgage rate currently set at 6.8%. Yes, that’s still higher than the standards of the last decade, however, it’s a bit lower than the rates that were available two months ago. And, if rates should drop to the 5.4% that the Mortgage Bankers Association is forecasting for the final quarter of 2023, you can always refinance. If you want to discuss your personal mortgage needs, there’s no better mortgage broker in Western New York than Majuwa Kowai-Bell, our partner at Genesee Regional Bank. Call him on his cell for a thorough consultation! 472-9345.
Our Team
I want to conclude this newsletter by talking about some of the many, significant changes that I’ve been working on in my business.
- I purchased and renovated a building at 1357 Monroe Avenue in Brighton to accommodate our growing staff. It’s beautifully furnished and, later this month, I’ll be sending out a video of the finished product.
- I’ve hired Ed Kelm to act as our new Chief Operating Officer to help me oversee strategy and growth. His first few weeks on the job have confirmed that my initial assessment was correct- I hired a superstar.
- Amy Hatch will be joining us after the first week of January to oversee a more coordinated and integrated social media presence. I’ve known Amy for more than twenty years and look forward to tapping into her formidable expertise.
- In the coming week I hope to conclude conversations with two new agents who, I hope, will be joining the team.
- George Martin, the music producer, is often referred to as “The Fifth Beatle”. Without his guiding hand, the Fab Four may not have gone on to conquer the world. I’m not currently recording any music and I’m not interested in world domination. Nevertheless, I want to convey my gratitude to the guy that we think of as our “Fifth Beatle”, Jim Mahan. Jim is our executive coach and, once again, educated, inspired, and guided us this past year with his remarkably self-effacing and soft-spoken manner. If you’re thinking of growing your business or need some executive coaching, call him. He’s incredible. 738-3571
Finally, I would be remiss if I didn’t conclude by thanking my dear friend, part-time-sister, and work-wife, Nicole Martyniuk. As our Operations Manager for the past thirteen years, Nicole helped to grow our sales to $85,000,000. We couldn’t have done it without her. My vision for the next few years involves strategies that take advantage of her unique gifts; in particular, her larger-than-life heart, her kindness, and her perpetual optimism. EVERYONE needs to have a Nicole in their personal life and in their office. I have no regrets in denigrating myself on my hands and knees when I begged her to take on her new role and I’m so grateful that she agreed to do so. My life and my business would be much emptier without her. Thanks, Nicole!
I hope that the coming year is filled with as much happiness and success as I plan to enjoy. As you read this, you’ll have nearly three hundred and fifty blank pages to fill before 2023 draws to a close. Fill each of those pages with memories of a life in which you lived hard, played hard, and loved hard! If you’d ever like to discuss your personal real estate needs, feel free to give me a call at 330-8750. Happy New Year!