A Year in Review
It’s the final week of the year and, while relaxing fireside, I stumbled upon an article from the venerable authority on economic expertise and analysis, USA Today. According to the article, Rochester is forecasted to be the third hottest real estate market in the country in the coming year. They’re predicting another increase in the value of our homes; this time, 10.4%. On two occasions earlier in the year, realtor.com bestowed a similar accolade upon our sleepy little community citing the relatively low cost of buying a home (I love that these publications never consider our outrageously high tax burden, but I digress), lack of inventory, and the prevalence of bidding wars. Meanwhile, Redfin, citing the 58.8% decrease in inventory in our community in the past four years, predicted that we would soon see a dramatic increase in the number of properties available for sale in the area. I don’t expect that there is going to be a rush to list in the coming twelve months, however, I do see that, over the next few years, we will revert to the national mean and will see an increase in homes available for sale.
But, then again, what does all of this mean and how accurate are the predictions of these economic prognosticators? Aren’t these the same individuals who, for the past eighteen months, have been forecasting the imminent arrival of a national recession? Aren’t these the same pundits who led us to believe that in the middle of this past year, we would enjoy mortgage rates hovering in the range of 6.5%? The inability of analysts to accurately forecast the direction of the US economy and real estate trends was one of this year’s more intriguing stories. However, it wasn’t the most interesting. A quick roundup of some of the other real estate headlines in a fascinating, turbulent, and mercurial year would include:
- A jury found the National Association of Realtors and two national brokerages guilty of antitrust violations and liable for $1.8 billion in damages. Although it will take some time to fully settle, the ultimate outcome of this ruling will irrevocably alter the means by which agents are compensated for the work that they do on behalf of buyers. It’s a complicated case with far-reaching effect and there’s simply not enough space in this blog to discuss it. However, if you’d like more information, let me know and I’ll forward you my analysis of the case and that of Kent Gardner, who wrote a thoughtful and comprehensive article in the Rochester Beacon.
- Thirty-year mortgage rates started the year at 6.54%. Today, the same rate can be secured for 6.63%– about where they started. Along the way, rates fluctuated significantly, dropping to 5.99% and peaking over 8%. There was also the collapse of Silicon Valley Bank and several other regional lending institutions to provide intrigue along the way. Thankfully, based on the pronouncements of Jerome Powell and the Federal Reserve, it looks as if a minimum of three rate reductions are on tap beginning sometime in late spring. With any luck, a year from now, we’ll be enjoying the benefits of mortgages of 6% or less. If you want to know more about mortgage rates or financing, please call our lending partner, Majuwa Kowai-Bell at his new company, Cross Country Mortgage. He can be reached at (585) 472-9345.
- Lower mortgage rates should provide some relief in the affordability index, which reached historic lows in 2023. Only 15.5% of homes for sale were considered affordable for the typical US household. A Liberty Street Economics study found that a 1% decrease in mortgage rates would lead to a 5%-10% increase in existing home sales as a result of greater affordability. This would be good news for everyone!
In short, it was a wild year. Let’s hope that which is to come is more stable, predictable, and affordable. The economy seems to be on course for a soft landing and, as stated, interest rates are slated to come down. Inventory should also begin to rise. Unfortunately, there are some ominous clouds on the horizon, specifically the US presidential election, and the wars in Ukraine and Gaza. My gut tells me that, by most metrics, things will be easier but only time will tell.
Our Team
I wanted to conclude the newsletter by conveying a few updates as to what’s been playing out with me and the team. First of all, we’ve just concluded our best year ever. Because of low inventory levels, the local market is down 15% to 20% (we’re waiting for final numbers to be made available). We bucked the trend by increasing our sales more than 7%, transacting nearly $92,000,000 in sales! We couldn’t have done it without the support of the community who referred more than 80% of our business.
The other news is that, after more than five years with Keller Williams Realty, I’ve left to start my own brokerage, Elysian Homes. It’s going to remain small- we’ll be adding only one new member, Erin Cannarozzo, to the team. With the passing of time, we’ll slowly add a few other agents to grow what is known in the industry as a “super-team”. I would be remiss if I didn’t thank Chuck Hilbert, the broker-owner of the KW brokerage that we’ve been associated with. I am enormously grateful for his kindness and support in the time that we were working together. My team and I look forward to continuing to enjoy and nurture the warm and cooperative relationship that has come to define our partnership. Thanks, Chuck!
As you read this, the new year will have dawned and you will probably have more than 350 days to make it the best year of your life. Capitalize on every one of those opportunities! If I can be of any assistance in the year to come, please let me know. I’d love to talk. I can be reached at 330-8750. Happy New Year!