Same Stuff Different Day

Welcome to the new year– although to many it’s best described by the acronym “SSDD.” Based on conversations with brokers, it does feel like the movie “Groundhog Day” in which the main character, Bill Murray, finds himself reliving the same day over and over. The real estate industry seems like it’s reliving past days; the last couple years have been a wild ride and it’s going to carry well into 2022. 


Home sales reached the highest level in 15 years, with an estimated 6 million homes sold in 2021. Homeowners saw average home prices skyrocket nearly 20% which was the largest annual home price increase in the history of the House Price Index. In many hot markets especially in the southeast, the price increase was more than double that.

However, for buyers, it was a different story. Although mortgage rates remained at record lows, it was difficult to even find a home to buy. Inventory of available homes reached an all-time low early in the year and competition was extremely stiff especially for first time buyers who were competing with investors and institutional buyers. 

The overriding news was that inflation shot up at the fastest pace since 1982. Most experts say housing demand will stay strong in 2022 unless inflation continues to outpace wages at the same pace of 2021, which could cool buyer activity.

Everyone’s making their predictions, so I’ll jump in with mine as well:

· 2022 will continue to be a growth year although there will be some cooling, mostly due to inventory shortages 

· Prices will increase 10% with fewer bidding wars

· Average mortgage interest rates will rise above 4%

· The buyer-to-seller ratio imbalance will continue throughout the year
· New home construction will continue to lag due to the rising cost of and lack of building materials as well as labor shortages
· Affordability looms as a major challenge for many as inflation, prices, and increasing interest rates will impact many buyers 
· The pandemic is the ongoing unknown. The fast-moving omicron variant is becoming the economy’s wild card
· It will be interesting to see the effect of stock market fluctuations and the mid-term elections

What will remain the same is how brokers react to the changing market.

Some will stay the course; others will look for opportunities to be more competitive and scale their growth. A certain percentage will be ready for personal changes and a path that enables brokers to take their chips off the table by selling or merging in today’s hot M&A market so that they may focus on other aspects of the business or just slow down.

Some examples of successful brokers taking advantage of market opportunities include:

Sharon, the owner of a 100+ agent firm in a high-demand Florida resort market was feeling the pressure all around her. “We were always the top boutique luxury brokerage in the market but in recent years, I found we were getting squeezed and losing deals to other newer and larger companies. It was getting increasingly hard to compete and as the years went by, I found my company was making a lot less money. It was frustrating.” 

She eventually sold her company keeping a hand-picked group of agents who now make up the premier team operating within the acquiring company. “Although we all stayed with the new company and use their incredible branding, we market our team using the name of my original brokerage. Now we have tools, resources, marketing and referrals that we didn’t have as much of before. I am able to spend my time focusing on the parts of the business I enjoy and it’s much more financially rewarding for me.”

Aaron was a broker/owner who had a light bulb moment following a company happy hour. “I spent the entire time on the phone working through issues with a couple of my agents while everyone else enjoyed the social time.” Later that evening, I was curious and looked at how much money I had made for those agents and compared the earnings of my top agents. That’s when I decided I needed to do something different– I should be an agent. I knew I would make a lot more money and have a better work-life balance without getting all the phone calls from agents that always start with the phrase– I know you’re busy, but…”

He merged with a larger brokerage that had a similar culture. Aaron negotiated a financial package in which part of the purchase price included ongoing commissions for several years based on the firm’s company dollar. The arrangement has worked well.  He manages his own deals at his pace and has few interruptions. He has remained the top agent with the company and has become very protective of his family time to the point that he almost never works weekends, something he could never have done as the owner of the firm. 

While there are a number of paths for brokers wanting to explore financial and lifestyle options, each broker’s needs are different. It takes expertise to find the solution that makes the most sense for a broker/owner’s long-term gain. 

It reminds me of the great quote from American motivational writer, William Arthur Ward, who said“the pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

Happy New Year and hang on for the ride!

This article was written by Rick Ellis, MBA and published in Realty Biz News

Texas welcomes Corcoran

We have a new home in Texas as Houston welcomes its first Corcoran affiliate. Corcoran Group, LLC today announced the continuation of its expansion by welcoming its newest affiliate and entrance into the state of Texas with the launch of Corcoran Ferester Realty, led by Beth and Bob Ferester, based north of Houston in The Woodlands. Read full story here.

Corcoran lands in Puerto Rico

Puerto Rico is now Corcoran as a long-time luxury international brokerage, Gramercy Real Estate Group becomes Corcoran Puerto Rico. The continuation of the firm’s global expansion perfectly complements its growing Caribbean footprint. The affiliate is led by Blanca Hebé López Pierluisi, a former Corcoran affiliated agent and Puerto Rico native, who returned to the island after working on numerous successful new development projects with Corcoran Sunshine Marketing Group in New York City. See article.

Corcoran now has more than 150 offices in 32 markets across the United States. Corcoran is growing and we’re looking for a few good firms to grow with. Click here to learn about the Corcoran Network.


Inflation? There’s Another Explanation for Rising Housing Costs

Responding to stubbornly rising inflation, the U.S. Federal Reserve has pledged to raise interest rates more quickly than expected, which will likely dampen a red-hot housing market. On the other hand, it could be that the housing market is booming because it is on the cusp of a fundamental shift — one with long-lasting implications for the U.S. economy. Read more.


‘There may be a slight correction in pricing.’ Real estate attorneys and economists on what buyers need to know about the housing market in 2022

Though housing prices have been rising, mortgage rates remain near historic lows — some 30-year rates are still around 3% and some 15-year rates around 2%, as you can see here — though many experts think they will rise. And that’s leading many Americans to wonder what to do about buying a house now. So we asked pros to give you advice on what to know now if you’re thinking about buying. See full article.


What will the 2022 housing market look like? It could ‘come back down to sanity

No one knows exactly what the future has in store. But housing experts tell CNBC Make It that in 2022, buyers can expect similar trends to the past two years: elevated prices, low inventory, and fast turnaround. Read article on CNBC.