Things Work in Cycles
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Anthony: The highs never stay high as long as people think and the lows never stay low as long as people think. Things work in cycles, folks. It’s never too slow forever. It’s never too busy forever. It’s the way things flow. It’s consumer behavior, human behavior, just the way that things work. There is absolutely no denying that it has been slower now for at least a few weeks.
If you look at it, you’d say why. Think about the data. Last week, mortgage applications hit a 25-year low, purchase applications hit a 25-year low that week. Why? Well, we had two weeks in a row of a horrible stock market and then the hurricane essentially wiped out purchase applications in the state of Florida because that’s where it hit. Will it stay like this? No. The highs never stay high forever. The lows never stay low forever.
One of the most interesting things that I find that’s going on in the market, that I actually paid better attention to than all the noisy things, noisy things are stock market and the news, pay close attention to homes listed. If I look at the state of Massachusetts, we are at 10 weeks in a row of less homes listed than the identical week the year before, back to 2014. We normally keep our data– If you look at marealestateupdates.com, we normally have four years of data on there.
I asked our marketing people. I said, “Can you go back further? I want to go back to 2010, 2005.” Yesterday, they got it back to 2014. This 10-week period is the lowest amount of homes listed during that exact 10 weeks in several years. I don’t know how many years, we’re going to figure that out. I’m going to have that information for you within a week or two. That’s what you have to pay attention to. That’s a key indicator. One of our best right here, AJ Bruce. Say good morning.
AJ Bruce: Hey.
Anthony: That’s what you have to pay better attention to because those are indicators of what’s to come. That is also why, as annoying as that is as a realtor to see that many less homes listed, there is a positive side of that. There’s no denying demand is down, right? Demand to buy a home is down. There are less buyers. There’s some buyers that went into hibernation. There’s a little bit of a lack of motivation going on out there, which is actually understandable after 20 months of a complete frenzy, right?
Stay with me here. If there are less homes listed, what happens? We don’t end up with an oversupply. If we end up with an oversupply, that’s how prices start collapsing. There’s some pros and cons to the various data points here. Now, by the way, I just mentioned Massachusetts. I’m obviously not there now. I’m in Aruba at our Presidents Club trip, but I wanted to talk to you about all this because I’m in a position here for this week that I’m having the chance to talk to literally our top realtors across the company. We’re having discussions about– informal discussions at the pool and stuff on what’s going on out there, what’s going on with buyers.
Now, another interesting thing that I’m hearing is suddenly in the last 10 days, despite the stock market and everything else, buyers have seemed to come out a lot stronger. Now, as strong as it was a year ago? No, no, no, no, no. I’m not going to try to claim that, but stronger than it’s been for about three, four weeks. Why is that? Well, what a lot of buyers are saying is, “I want to get in before rates go up even more.”
Bingo. Finally, when rates went first up in June, go back in my videos, scroll back on, crush it all the way back to June and you will see I was saying rates are going to continue to go higher. Then we get into August and they dipped a bit, and people were like, “Oh, maybe they’re going to come back down.” No, we were certain they weren’t going to come back down. One of my top advisors, research person, Jerry Bourgeois, he said at the time, he goes, “It’s like we’re in the eye of the hurricane in August.” He goes, “Ain’t going to last.”
I said, “I agree with you,” because we watch what the Fed does, we watch bond markets, we watch everything. Now, rates are right around 7%. Yesterday, they went over 7. I think that they’ll bounce around that, but by the time we get to next spring, I think we’re going to be pushing 8%. You need to be conveying that to your buyers. If they buy, great. If they don’t, they don’t. You need to be the information source and let them know what is going on and what you expect.
In the early summer when rates first started going up, we heard a lot of buyers saying, “I’m not paying this rate. I’ll just wait until rates come back down.” Well, that didn’t really work out for them. They settled a little bit in the month of August, but there was no real rate reduction. Oh no, it’s going to rain on me. There was no real true sustained rate reduction.
We’ve got some things going on here in the market. Obviously, it’s finding it’s equilibrium, but there are still buyers that will buy, there are still sellers that will sell. You just have to find them and you have to educate them on what the hell is going on. We’re seeing a lot of sellers that are pricing their homes like it’s last year and we’re seeing buyers act like it’s ’08. Fun business, isn’t it? The emotions, the pride, all these things.
We had a property earlier in the week that I heard about, because it was from my sphere and I had sent it off to one of our realtors obviously. This property, they had five offers, a couple over asking. Seller says, “No, not taking them. I’m not taking them ” Yes, okay. How’s that going to work out, right? We’re going to see some of that. That’s what goes on.
For those of you that have been in the business three or four years, you’re going to see behaviors now out of sellers that you have not seen before. That’s why you need to be in touch. You need to be educating so that you can decrease the amount of buyers and sellers whom you fight with. Believe me, there’s going to be some fights, there’s going to be some unreasonable sellers. It’s just the way it is. It’s the nature of the business. Us realtors, we get more credit than we deserve when homes sell fast. Be honest, do we? Yes, come on. We definitely get more credit than we deserve. We also get more blame than we deserve when homes don’t sell. It’s just the nature of the business. That’s all folks.
Remember, it never stays too busy too long or as long as people think, it never stays too slow for as long as people think. I expect that between now and the end of the year, we’re going to see some lackadaisical behavior out of consumers. We’re seeing it in all segments. Brother runs a family landscaping business and he’s like, “Man, we’re not getting as many jobs. People are more picky, they’re more slow.” I talk to people in the car industry, all of a sudden they’re starting to get some