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REality
Welcome to the REality podcast--the best podcast for real estate agents. Join us each episode as we talk with industry experts and top producing real estate agents to peel back the curtain and reveal what it takes to make it in today's ultra competitive real estate business. This is real life, in real time, sharing real experiences of industry professionals to help both new and seasoned agents achieve their goals and realize their potential. Are you ready to take your real estate business to the next level? Let's get started now. Sign up for Gary's weekly FOCUS newsletter, delivered right to your inbox each Monday morning: https://mailchi.mp/e3771e6a2516/focus-email
REality
Your Real Estate Market Update with Tony Jarrett and Gary Scott: Winter 2025
The podcast examines the returning balance in the real estate market as seen in Q4 2024, addressing the factors influencing inventory levels, buyer demographics, and pricing dynamics. Key conversations include the importance of timing in home buying and the emerging market trends shaping expectations for 2025.
Welcome to Reality Podcast. New feature in 2025. A special guest that has been with us more than once. I want to say hello to my good friend and colleague, tony Jarrett.
Speaker 2:Hello, hello. Well, thanks for having me on the show today.
Speaker 1:Well, we are excited to have you. I always like to shout out to Ashley Bryant who, from our marketing team, makes this a reality, no pun intended, and one of the ideas that.
Speaker 1:Ashley had was how great would it be if every quarter we gave a little review of the past 90 days in our industry? And we have made a strategic decision to have Tony Jarrett be that guy. And so this is the first of four. I'll let you in on a little secret, tony we're recording this on February 11th Our listeners probably going to listen to it. The 18th to the 23rd, we're going to talk about Q4. Listen to it. The 18th to the 23rd we're going to talk about Q4. We're going to talk a little bit about Q1, but we're excited to bring to the audience an opportunity to get a perspective of the industry, the marketplace, and we're excited to have you be the guy to do it. So let's just jump right into it. You ready to roll, brother?
Speaker 2:Absolutely. Where are you going to start?
Speaker 1:I'm going to start with question number one. What are we seeing? What have you seen in the real estate market Q4 2024?
Speaker 2:Well, if I had to define it with one word, I'd call it balance. This is the first time in many, many years we're finally seeing some balance in our real estate markets and if you go back over the last few years, we had the pandemic that fueled a lot of real estate activity, especially with 3% mortgage rates, and we saw that it became a very, very strong seller's market very, very quickly strong seller's market very, very quickly and that's been our for the last few years. But this year, going into 2024, we finally saw some balance come back into the market and my definition would be buyers and sellers both at the table, both negotiating a little bit, and it feels healthier, it feels like a little more balanced for both sides. You know the mortgage rates move from three to 8% and now they've come back down a little bit. It's like a 7% mortgage rate today as an average and I think that's gotten more confidence for buyers to stay in the market and many of those sellers who refinance their houses at 3% have been sitting on the sideline because they don't want to move with that low rate.
Speaker 2:But there's this thing that's happening lately. It's called life. People have more kids, they need to move for a job, death, divorce, all those things come in. You can't set your life to a mortgage rate, and so I think we're seeing some of that come back to the market suddenly and that's starting to feel pretty good again.
Speaker 1:So let me follow up on that, because one of the metrics that we look at historically is you call it month supply of inventory, absorption and what I know and I'll give a little reflection back to those COVID years which you mentioned you know, in some markets, like the month supply of inventory was like 0.9. It wasn't even a month and historically Tony correct me if I'm wrong like six months in the past defined I would call the equilibrium. That's where neither the buyer nor the seller had the advantage. And I think one of the things that I think you and I heard when we were at an event this past January is today it's high twos, low threes, depending on what market you're in.
Speaker 1:You remember when Matthew Ferrara challenged us to the fact that maybe the new six is actually four months, which really speaks to the comment you just made, that at about 3.2 months in many markets like that, you're kind of feelinga balance which kind of contradicts if six months. So just expand on that just a little bit. I think, matt, you brought that up. I found that to be a fascinating perspective because I've had six months ingrained in my mind for over 30 years.
Speaker 2:Yeah, me too. I think if you gave a range four to six months somewhere in, that is what we would consider a very healthy, normal equilibrium. Whatever you want to call it, it's just a good place to be. When you go above six months, you're getting into an aggressive buyer's market where the buyers dominate. When you get below four months, you're shifting to a seller's market. So let me give you some trends on this In 2021, to go where you were going, 2021, we were three weeks on inventory supply. That's the lowest I've ever seen in my career.
Speaker 1:That's 0.75 months.
Speaker 2:I was like totally aggressive at 0.9, right, no, 2022, we went to three weeks and then in 2024, we started shifting to two months. So there was this moment of 18 to 24 months where there just was not much inventory and if it hit the market it was gone in two seconds is what it felt like. Then we went to two. This last year we're starting to dip our toes back into three and you said it best price point certain areas, but overall in most of our markets, three months. Now.
Speaker 2:Matthew's comments resonate with me because he said in today's world, maybe three months is the new balance. Four months is the new balance because we just don't have as much housing as we did 10 years ago and when that crash happened in 08-09, when we had 35% of our market was distressed, you had a flood of houses on the market. That doesn't exist now. But when we get back to that three months, that tells me that competition is increasing. That tells me we have more for sale signs out there and that means buyers, instead of moving at the speed of sound to get their offers in, are pulling back a little bit.
Speaker 2:So what's the other interesting thing is, with inventory supply, not only do you have the competition shifts, you really are starting to see different kinds of incentives out there and for the first time in years and I mean years we're seeing new construction and residential resale starting to align together with balance, meaning incentives. So three months supply of inventory. If I gave you a different definition, I'd call it a soft seller's market, meaning that the seller is going to get their price most likely if they price it right to begin with, but they may have to do things like concessions, repairs, and the builders are going through the same thing with concessions of closing costs but appliances, blinds, we're starting to see some of those things but we're still paying healthy prices. But we're getting some return back as buyers when it comes to some incentives to move.
Speaker 1:So I'm going to share two data points. Then I'm going to ask you a question. One of the things that we believe is critical for buyers and sellers to have an awareness is over the last five years, home prices on average have appreciated 57%. Over the last five years, equity buildup, equity growth which would include, as we all know, the appreciation plus the principal that I'm paying down is up 74%. So there are a lot of homeowners out there that have tremendous equity.
Speaker 1:You talked about a soft seller's market, which I love that description, and I think one of the challenges we have and I'm interested you're closer to the day-to-day market than I am is there are still certain properties that have, in a short period of time, they hit the market on a Friday and they're under contract on a Monday and those houses multiple offers waving like some energy in some listings. Correct me if I'm wrong. That feels like that transactional time of COVID. But I go down the street and now there's a house on the market for 67 days, 70 days, 75 days. I think it's really important for everyone to understand that there are some extremes, but understand the why of those extremes. Take a shot at that.
Speaker 2:Well, I think, if you break it down to price points, using the word sweet spot, anywhere from $250,000 to $450,000,. $250,000 to $450,000 in most of our markets specific to certain areas that are convenient to downtowns, convenient to playgrounds, the convenience of life closer to my work, those are moving quite quickly. Here's my challenge this year we are seeing the lowest amount of first-time homebuyers and as I look at my stats that I present to our team, one of the golden rules was that $250,000 and under that market has really shrunk a lot and it's almost like if I used to tell you zero to 200,000. In that range I'm having to move it up to 250, move it up to 300. And we're seeing that with new construction too. And so you're seeing a sweet spot as a first time home buyer around that 250 to 350 range and when you have more activity you have less inventory and that's where it's adding up.
Speaker 2:But what's very interesting to me right now is the inversion, meaning that 10 years ago I would tell you the most sweet spot was that under 250, 10 years ago I would tell you the most sweet spot was that under $250,000, then the next level, $250,000 to $350,000. It's inverted in the sense that the higher the price you go, the more sales activity you have. I mean, just wrap your mind around that. For a second meaning that if I told you to go up to $500,000 to $750,000 to $1 million, the air was thin 10 years ago. Now it's opposite you go up more and that kind of resonates with what you were talking about with home equity. A lot of people who bought homes this last five to 10 years have so much equity. They're taking that cash and leveraging it to buy more and they're rolling their asset and we're seeing more cash than we've ever seen in the market as well. I don't know if I'm answering your question, but that's the way we're going.
Speaker 1:So I think you gave a unique perspective to it and I'm going to piggyback on it. It was in a meeting this morning in what I'll call a kind of a second home market. Yeah, I asked the question do you have the same inventory challenges? And here was their answer we are selling anything over a million like hotcakes. 75% are cash. We are having trouble four to six hundred thousand because those people most likely are going to get financing. Our affordability has been diminished because of interest rates.
Speaker 1:Now let's again remind everybody about perspective. We're at 7%. When Gary and Tony sold in the 80s it was 10.5%. When our parents were in the business in the early 80s it was 16% to 18% and the average over 30 years is 7.92. And today it's seven.
Speaker 1:I shared that last week at a networking group up at Lake Norman and the audience was shocked.
Speaker 1:That was a perspective which talks about the ability to educate people. I think where I was kind of going I do think your price point, the inverted price point, is a fascinating perspective is the importance, today more than ever, tony, of pricing your home right, yeah, and making sure it's in the pre. You and I spoke this morning premium, primo, exemplary, can't even. There's not enough words Condition from the sidewalks being power washed and cleaned, and landscaping. I need to be the best, because when you are price trade in the best, what happens is the market will drive the price to the place the price should be, and what I've shared with people is when sellers who don't listen to the real estate professional choose a price that's too high, that same set of consumers will take that home to the price it needs to be or should be, and so I think it's really important more than ever today to price it right, price it at a point that allows and encourages the market to take it to the best place.
Speaker 2:Well, the way I give this analogy is you remember the first time you fell in love when you were dating. First impressions matter, and so when you put your house on the market, you're dating buyers. You want buyers to fall in love with your property, and you really. If I gave you some trends around why that's so important right now, here's probably one of the best things for your listeners is in 2021, guess how many average number of offers we had per listing? It was eight, eight offers per. None of us have ever seen that in our career. In 2022, it went to four. If I put my house on the market in 2022, I should get at least four offers. And then 2023, it shifted to two and right now it's one.
Speaker 2:First impressions matter and, to your point, if you overpriced the market and I only get one offer, I've missed the mark. And if your house is sitting on the market in a long period of time, I as a consumer, a buyer who goes, looks, my first gut reaction is what's wrong with it? They're asking too much and guess what? My offers are going to get less. So there's always the art and the science of everything. The science is getting it priced right. Put it on the artist, positioning it right so that it attracts the best offer in the beginning. I don't know why this is true. I do not know why, but when I came into this business, I was taught your first offer is your best offer. I don't know why that's true. You've heard the same rule, right.
Speaker 1:Not everybody heard it, but I've actually shared it and pretended it was my rule. By the way, I'm just going to go on the record because I can, as the host, this is the first time I've had a guest in a roundabout way ask me about my first date, and so we're going to quickly shift gears. Love, love, love having Tony on with us. You know I think that you know there's never a right answer. There's just a series of data points and information and perspectives. Data points and information and perspectives, but I think it's so interesting. The other thing I think about often is you talked about the average offer is one, and you talked about making sure it's in the right condition. The other thing I would say is price change, and price reduction is kind of like a bad word. To your point. If it's sitting on the market a long time, people question it. If it's sitting on the market a long time and it's had a price change, and that's really, I think, the greatest challenge. If somebody asked me today, tony, what's the greatest challenge for a seller? Yeah, it is really. It's about making sure you price it right and making sure when that professional comes in and asks you to take all the pictures of your family down, not because they don't like your family, but because the declutter, like everything, is magnified as the market has gotten into balance I love your word into balance, let's let's shift gears a little bit. I love your word into balance, let's shift gears a little bit.
Speaker 1:You've always been a thorough evaluator of data and information, which you've shared today on our podcast, which I love. One of your five major stats that you really zero in on is showings. So let's talk about what happened to showings Q4. And again to the audience we know the market is hyperlocal. We know that somebody listening is in a market and the data we give, whether it be 3.2 months or three, is a little different. We're talking about pretty accurate general statements, with the caveat that we know the market is hyper, hyper local and everyone is subject to some unique nuance based on some criteria or some factor. So I just want to provide a disclaimer that we're not talking about the Triad or the Triangle or Charlotte or the Mountains or South Carolina or Hilton Head. We're just giving an overall view that is probably pretty accurate. And so let's go to showings TJ.
Speaker 2:Well, we're definitely seeing showings decrease and again, we'll reiterate it over and over but during that pandemic, we just crushed so much activity into a short amount of time that in 2021, we were averaging somewhere around 12 to 14 showings per listing. And I will tell you, the joke among our team was that was probably in the first 24 to 48 hours. I mean, it was that intense. Then in 2022, it started going down to about eight. This last year I've been tracking it across the company. It's really starting to get more like six. But to answer your question about the fourth quarter, it started going down to four. Now I want you to think about that. I used to get 12 to 16 showings, now I'm getting four. It goes back to my first impressions.
Speaker 2:Now a lot of things happen in the fourth quarter. We had a US presidential election. I don't know why this is true, but usually in a presidential election, everybody pauses for a second and they wait. Second is we had a hurricane that hit the Carolinas. That really hit especially our western part, and so some of these showing stats just really pause for a lot of disruption. If you will, we're starting. And then January we had a lot of bad winter weather, but I am starting to see some of this start to pick back up again. So in perspective, I think it's a short term thing, but on the overall, it's not as intense as it used to be. So, again, we're going to say this over and over again but you got to hit the market right, because I do have less number of people coming through my house. I've got to get that first impression to that four buyers versus 12 buyers, and that is a trend across the markets.
Speaker 1:Well, I think it's really important to highlight, tony, two things that you mentioned. Today is about our assessment of Q4. There is a reality called the presidential pause. It's a reality. It's a six-week time period somewhere between the middle of September and election day. It's a pause and what we have learned over the years is that pause the following year more times than not actually every election year, but one in the last.
Speaker 1:What last 24, 28 years we've seen an accelerated activity in the real estate housing industry and so much of that comes from just the fact that there's certainty in what transpired in November. We're not going to go political, but the uncertainty became certain, whether you like it or you don't like it, whether you voted there or didn't vote there. But my answer anytime we remove uncertainty in our lives, we've got more confidence. It's almost an inverse relationship. So the presidential pause is real, tony, I know you spent immediate, intentional time in the high country when the thousand-year hurricane hit Western North Carolina. So we get a presidential pause, we get a hurricane September 25th, 26th, 27th, and so I think it would be great for our listeners.
Speaker 1:You know you were feet on the street Listeners. You know you were feet on the street in Boone, blowing Rock, west Jefferson in the moment. And then we're going to share a little interesting, I think, real estate trend that we're experiencing in January from Asheville to the high country. So just share a little bit about your observations. Fourth quarter into first quarter Hurricane Helene in the high country. So just share a little bit about your observations. Fourth quarter into first quarter Hurricane Helene in the high country.
Speaker 2:So in the high country, you know, october is typically the peak season for most things in the mountains Vacationers, people coming up to buy properties, you've got the season of the colors of the leaves, I mean, it just draws a lot, and it hit at that time. So what we saw was a couple of interesting outcomes. One is a majority of the stuff we had on the market was OK probably 80%, 85% Everything that was pending just most of it closed. We were lucky in the sense that the activities that we had weren't too hit, and it was the other thing. I have a house up there, and so it's like one mountain got hit bad and another mountain it skipped, and you had that going on as well. And so what we saw, though, is the seasonality is already hitting in the mountains normal again, that balance we talk about. So in the winter, people start to pull back a little bit from the mountains unless you're a skier and going up to ski and have fun that way, but in the spring, I believe it's going to pick up a lot.
Speaker 2:The infrastructure has been part of our challenge, meaning there's been a lot of roads shut down for one to two months at a time. There are still sections of the Blue Ridge Parkway that the locals in the high country use to move around and it's part of it still not reopened. I just saw, actually today, that the North Carolina governor announced that there are certain sections may be reopening by March 1st and then some of the other parkway. Their goal was around June 1st to June 30th. So I think over the next three, one to two quarters, when you see that infrastructure, I think you're going to have people come back.
Speaker 2:I think we may have a strong demand to come back to the market but we've not seen in the high country a lot of inventory come back this first quarter for sell signs because I think people are in this pause mode right now. But we're just now in the last few weeks, starting to see buyer activity pick back up again. But when it's snowing, like in January, and you've got eight inches of snow and you have roads out, it causes a problem to go show and we've been experiencing that. Tell me what's your perspective on Asheville? I think Asheville is probably a little better position just geographically as a bigger region and a bigger, but what are you seeing with that?
Speaker 1:I think it's interesting. You and I were on a phone call 10 days ago and you said to me you said, you know, I just I think we're taking a little longer. And I said to you, I said, well, we're starting to see some energy in Asheville. And I think what's really interesting is, when the storm hit, we obviously talked to some of our real estate friends around the country in Florida and Katrina, and they all said the same thing For anywhere between four and six months man, it's a grind. It's a grind. People's lives, tragedies, I mean it's a grind. And then there's this pent-up thing and I will tell you our listings in the Asheville Mountain region were significantly ahead of January a year ago. To Tony's point. So I'm going to go back to our listeners and remind us of how hyper-local the real estate market is. You know we always get these calls from the media tell me about the real estate market. They like want one word or one sentence to describe it all. Well, you can't do that. You just can't do that.
Speaker 1:So let's continue to talk about the market. You know we talk about. You know metrics and things like that. You know one of the ones that has always been one of my favorites, which is the percent list sale to close price. And you know, when you think about some of the data we've talked about today, we've talked about days on the market or month supply of inventory. We talked about interest rates you know, clearly that's one that hovers out there. Talking about list price to sale price, like these, are things that you and I looked at with a microscope back in the 80s and 90s. We had to calculate our own data to create our own messaging. I think list to close price is critical. After you share your thoughts, then I'm going to share a caveat that I think is also critical for us to take into account as we enter 2025. Let's share with everybody what we saw. You saw from a trend perspective list price to close price.
Speaker 2:Well, as we frame this in a healthy market, I will tell you a 97 to 98% list price to close price is what I would consider healthy and that's no price reductions. When you hit the market right, if I could get a seller around 98% and that's what concessions and price reductions whatever that's a good outcome. Well, let's go back to that pandemic world we were in. We were averaging in a lot of our markets somewhere between 104 to 110% of list price with multiple offers. Remember my trend of eight offers and four offers that drove the price up. I know this is my 35th year. I'd never seen numbers like this before and I just scratched my head and go, how long is this going to last? Well, it's starting to shift back to healthy. And go, how long is this going to last? Well, it's starting to shift back to healthy.
Speaker 2:So we have been in 2023, we shifted down to 100% and then in 2024, we started getting in that 99, 98. And this last quarter, we're averaging somewhere around 97, 98. Now, if you miss the mark, if you overprice and you get too aggressive and you start reducing the price, that number is closer to 94 to 95%. That's the stat I don't want you in as a seller. I want to keep you into that 98, 99%, and so we're starting to see, with those concessions in there again my phrase of a soft seller's market.
Speaker 2:If I can get you to that 99, 100, then let's get that condition, let's get that balance of money for repairs. And I'm starting to see some people in this market with rates mortgage rates, maybe buying a point down or paying closing costs and I know we've got a product that's really helping with that because you want to reduce your closing costs and your finance costs to get that price for the seller. And they are. They do connect those dots in this market. But it's getting healthier too. I think the 100% days are just about over. I think it's more than 98, 99, healthy, healthy price ratio.
Speaker 1:What are your thoughts? Well, I think, tony, as you and I meet each and every quarter, I think these are, you know, we'll get a relative perspective from the previous quarter. So one of the things that I think is really important, you know, this list price to close price. I always like to say initial list price to close price, yeah. And so one of the recommendations that I'm going to make to our listeners and you know, a little old school I'm kind of going back to when I was listening and selling real estate is I would look at market data on days on the market and list price to close price. Then I would look to see how the branch I was in did compared to the market and I always looked at how I did I was in did compared to the market, that I always looked at how I did. And so you know, I know we're in a relationship business, but we have to know our client, we have to know what triggers them. An example would be if the average day on the market is 36 days and the average list price to close price is 97., my average days on the market is 19 days and I get 98.7%. So I'm going to show you empirically that my pricing strategy will get you the maximum price.
Speaker 1:You know, I think sometimes we have a tendency, tony, to make some general statements that we know are true, but there's a whole group of our audience prove Show me and going back, probably for another podcast is how important it is to really know what makes your client tick, how they think I've got the look and I know we got all kinds of personality types and we as professional, trusted advisors have to understand what it is. And then we got to modify our presentation and our approach. We're getting way over our skis on the market, but I think this is a nugget that's really. I think it's going to be as important next year as it's ever been, or this, this existing year, as it's ever been.
Speaker 2:Well, you just gave me a nugget for my future coaching, because I had thought about that and I had forgotten to put it down because back in the day and this is going to sound silly pre-pandemic we used to talk about and then my word would be results. These are the results I get from my clients and I love your analogy of using those numbers because I want to outperform the market for my clients. And when you think of it in those terms, we kind of stopped doing that when this frenzy market that we experienced from 21, 23, it was just like all rules just threw out the window. And now it's to me it's like exercise is muscle memory. I'm having to go back and do things I haven't done in a long time and it feels foreign to me.
Speaker 2:And that comment you just made is something I hadn't thought about. Agents should really know their own specific numbers and how they measure against the market for the clients and they'll be truthful with it. Make sure that you know your numbers and don't exaggerate those numbers. But if I'm a client and you're performing that well, I need to know that. That's an excellent point. I got a client and you're performing that well, I need to know that.
Speaker 1:That's an excellent point, I got a winner from Tony Garrett.
Speaker 2:Yeah, I'm writing that one down. You guys can't see him, but that guy is making some notes you brought up again.
Speaker 1:You brought this up which I want to refresh. Like I ask this question not infrequently what is the number one thing buyers and sellers want from us? And here's what typically happens Communication, follow-up, follow-through, knowledge, results the number one thing they want. So if we believe and I believe that now I get results by what Great communication, follow up, follow through, knowledge, dispute resolution, outstanding negotiation but if you think about it, you know, I think sometimes I was on a call right before we got on here, tony, and the gentleman was sharing with me. He says this is simple to understand and difficult to execute.
Speaker 1:So if you think about these two things, that your client wants results and probably your greatest asset is your ability to effectively negotiate, yeah, probably your greatest asset is your ability to effectively negotiate, and the reason I say that is, then I ask this question of everybody listening what have you done in the last six months to get better at negotiation? Like, am I preparing myself better to be better at something that is key to my results? And then I take your comment a step further know my numbers, know my branch numbers, know my company numbers and know my the market numbers so you can really present to that buyer or seller particularly a seller that our company outperforms. The branch I work in, my team outperforms and I outperform, therefore right, and so I love that conversation. So thank you for getting so inspired by that topic today.
Speaker 2:Well, you know, good agents know the market. Great agents understand how the market impacts our client and what trend they need to shift. And I will tell you, for a couple of years we didn't have many trends. In other words, it was over one or two years. Now we're getting back to that healthy where you better know your stats, you better know your trends, because things are moving. Seasonality is back. Seasonality is back. Remember we used to talk about the spring market versus the fall market. You need to zig and zag, if you will, with your clients and checking in with your sellers every week. It's kind of important we weren't doing some of those things for a while. Checking in with your buyers, giving them updates you really need I think that's the great agents. I think that's what you were pointing out.
Speaker 1:Well, you reminded me of something I was going to say when you talked about we went from 12 showings to four showings. Yeah, at 12 showings, your communication with your seller is why you've got no offers, and at four, it's why I've got no showings. Right, and it's to your point. And you know, unfortunately there are agents out there that will have a tendency to avoid that conversation rather than be proactive with that conversation. So, really, really, really, great, great point.
Speaker 1:So demographics I know that you and I, as we prepared for this, we came at the demographic, our population, a little from a little different perspective, ending up at the same place. And so you know, while the boomer generation and boomers aging in place has been part of our inventory challenge, I always say the good news is they're healthier and living longer. The bad news is they're not selling their houses right. And then you've got the millennials. You made a comment earlier and you said that first time, homebuyers as a percentage of the total was as low as it's been, I think, in 25 years. But I could be off by 24% of every sale. Healthy real estate market is 32 to 36% his first time. So think about this. We've dropped almost a third down to 24% in 2024. You and I had a really interesting conversation that I want you to share with our listeners about some opportunities and why the demographic data is our friend in our industry, not our foe.
Speaker 2:Yeah.
Speaker 2:So good news. Bad news 2010,. Record number of first-time homebuyers in the United States. It was 50%, Meaning 50% of every deal in the country was first-time homebuyers. 2024, it was 24%, so it's cut in half in 15 years. Why is it cut in half? Mortgage rates going up, prices going up, inventory going down. It was a combination of things, but here's the hope for the future the median age. Median age of a home buyer in 2024 was 38 years old. That's the highest ever recorded. So we're seeing an older buyer.
Speaker 2:Now let's talk about generational. The boomer generation has been sitting in their homes. We're going to see 12,000 people a day turn 35 years old because of that generation. So they're in the peak season of buying their first home. They're doing very well with their wages and their employment and for the next two or three years, they're going to be in their prime to buy. I think that's very promising for the real estate market to improve on that. 24% first-time homebuyers and that generation is good. Based on I don't like to stereotype any generation, but they are good savers. Based on I don't like to stereotype any generation, but they are good savers. They based on every stat I've ever seen they sock money away better than our generation did. Nobody told me about a 401k until I was in my thirties. This generation, based on what I'm seeing, is starting to sock it away. You could probably talk better than that than I can with your kids, because I think I watch your kids and I think they're putting money away.
Speaker 1:Well, here's what I know. I always say I own three millennials. Actually the three millennials own me. That's a whole different thing, but it's interesting and I will speak to it. Because what's interesting? You are absolutely correct. They are far more advanced at their ages in savings. I bought a house at 22. Yeah, and they didn't yeah. So I want you to go back to Tony's point. 35 is the sweet spot. I go back and watch a video of Mark McGoldrick sharing a stat with us eight months ago. I'll never forget it, and it was birth rate. I'm sitting here listening to our mortgage guy, who's a great economist as well. 1990 birth rate was the highest in X number of years. So then we do the math Born in 1990, more people, more births are 35 this year, more births are 35 this year. Tony just said 12,000. So that's a huge piece of the demographic trend that is in the advantage of home buying and selling.
Speaker 1:The millennia, or the boomers, that I predicted. We predicted as a team years ago, the next year's the silver tsunami. Remember all the boomers and I'm one all the boomers are going to sell their house. Well, they didn't have any place to go. Many of them got put on hold during COVID, because they were, you know, they were, you know, a group of people that didn't want to get out more than others. Right, then I think about the next generation, or the last generation, I think, that's Gen Z, right, the 18 to 24 year old. They don't even know they could have gotten two and a half percent in 2020. They don't even know what they don't know, and so we believe now this is less about the fourth quarter last year, tony and it's more about an opportunity for the future.
Speaker 1:But we really believe that from a population growth and you know we are seeing inventory rise let's not get caught. Let's not get, you know, caught thinking that it's been resolved because it has not.
Speaker 2:But to your point on the silver tsunami, one of the things that's given us confidence that the boomers are coming back is the average age, or no, I'm sorry. The median age of the second purchase is now 61 years old, and so you're seeing that starting to shift. You know, when you think about us globally I heard this economist say that really resonated with me China was the world. They were leading the world economy a decade ago and 10, 15 years ago they started saying their population was too much, so they started putting birth restrictions. Today the Chinese economy is in trouble.
Speaker 2:In economist, that we heard really got me thinking differently. I thought why was the boomer so productive? They just had so many people creating more jobs, creating more wealth, creating more opportunities. And now the millennial generation, who's hitting their prime buying. They're going to be more than the boomers. I think we could be in a really good position from the years 2025 to 2040, according to this economist. That got me thinking differently about this.
Speaker 2:And so there's always an affordability prices. But when you invest in real estate, you know it's kind of like that joke. You should have bought a Google stock when you should have bought Amazon stock. You should have bought a house 2019, 2020, 2021. And now this appreciation rate which we haven't even got into. That's so healthy right now. It's a good investment. And those who are 35 to 40 jumping in for the first time that cost of waiting you talk I saw Mark McGoldrick talk about there definitely is a difference. You're going to make more by this investment versus waiting on mortgage rate from going from 7% to 6%, you're losing five percent a year in appreciation. That's a big takeaway right now in this market.
Speaker 1:Yeah, so. So I want to come back to that because we owe it a little bit more time. The concept is the cost of waiting, yeah, and understanding what that means. You know, I do think about Mike when he, or the economist market strategist that was sharing with us, you remember he was saying you know, the keys to the economy are the 35 year olds, and then I have a 32 and a 34 year old and a 42 year old, and that like scares me to death, that they're the key to the economy going forward.
Speaker 2:Right, but I have a 30 year old and he's bought a second home so I'm very proud of.
Speaker 1:I mean, it's like, yeah, you're doing it, you're doing great and then we joked, you talked about the birth restrictions and then you know, my son ends up having two. So uh, we're, we're. The scots are trying to do their part here in this generation. But let's talk about price appreciation and let's talk about the cost of weight. Like I think there's a belief that I'm going to wait for race to go from seven to six and then I'm going to buy. And people need to understand that that is not how the math works. Expand you mentioned it a minute ago. Just expand on it and make sure everybody understands exactly the message.
Speaker 2:Well, it goes back to our conversation around balance. I think any year that you buy a home and you expect appreciation, the rate has typically been 3%, 4%, 5%, 5% would be really healthy but 3% to 4% would be kind of an expectation. Those expectations change. You mentioned this earlier. I think we've become conditioned to what we are in that minute and we had 21 and 22. We were seeing in the Carolinas anywhere from 14% to 20% price appreciation in a 12-month window. That's unsustainable. I've never seen it before and we're definitely seeing that come back down In the last probably two years. You can track it every quarter that it's getting back to that 3% to 5%. Now in relative it's all about the price point where you're buying the house et cetera. I know that some of these price gains could be even greater in certain price points, but as an average it's been very healthy. Again, the concern I have to share with the audience is that we still have sellers living in 21 and 22, thinking that their house is appreciated a lot more. Now a couple of things have happened. One is I can't speak to Charlotte but I'll say in the triad region we have two counties that are doing price appreciation or tax evaluations again and that's been the big discussion this last few months, especially in Forsyth County and Guilford. I've been reading some of those price evaluations in just the last four years are going to go from anywhere from 50% to 75% what they were just four years ago. That's very healthy appreciation. So it's been an adjustment for people.
Speaker 2:But the other stat I want to share with your audience is price reductions. I find this, of all the stats I'm going to give you today, this is the most fascinating to me. So in 2022, when we were doing that kind of price appreciation, we were averaging around 243 price reductions per month. 243. That's less than 3,000 in this specific region. I'm at 3,000 price reductions in one year. Then in 2024, it moved from 243 a month to 308. From 243 a month to 308. I'm sorry that was 23. But in 2024, we're averaging 475 per month. 2022, we were averaging 243. 2024, 475. We're going to cross almost over 6,000. That's a 95% gain in price reductions.
Speaker 2:My definition of that is insanity, because you mentioned it earlier, that when buyers are looking and they see the house sitting for a long time and multiple price reductions, man, are we missing a mark? And we're actually. Our sellers are going to come out worse when it comes to negotiations, their position, their terms and of all the things I'd stress of the big trends, I'm seeing that trend just stuck out like nothing I've ever seen. I've never seen that many price reductions, and so I know it's hard. It's hard to have those discussions when you have an asset that's been growing. You want the most out of your asset, but you also need a professional to coach you to say, if the art and science, if we hit this art, that one offer that we're averaging, let's get you two offers, get you a higher price, get you better terms and do it quicker. To me that's the, of all the trends we talk about. To me that's the most significant one I'm seeing.
Speaker 1:Well, I think it piggybacks a comment we had early on and that is create a price and a condition that gets you three or four offers and let those offers get you the price. You know price reduction and price change is it will, is a detriment to the sellers, and you know I have been in the business. Let me just give it a try. Let me just give it a try Now, every once in a while it takes, every once in a while it takes, and I've been proven wrong when I was listing real estate, as you probably have too. The confidence.
Speaker 1:And the other point you brought up earlier and I'm going to expand on it is you talked, tony, about know the market. And I'm going to take it a step further. I want you to know the market every day. Not know it when I'm going out on a buyer consultation, not knowing it when I'm going out, like every single day, because here's what I know and you know and we know when we are talking to anybody that we see in the coffee shop or the grocery store at the gas station, like the good news about our business. Everybody wants to know what's happening Right. And Stephanie Gossett said it best one day. She said I'm just thankful I don't sell vacuum cleaners, right? Not everybody asks you how your vacuum cleaner is doing, but everybody is asking and so know the market in the moment. Like, become that expert. Don't just refresh yourself when you need it. Stay in the moment and in the market in real time.
Speaker 2:Well and to that I'm going to expand on your comment Know your price ranges, because back in the day, pre-pandemic, you could look at three to four price ranges I'm talking about from the starter home up to the million and you'd see different trends and different price points. Was no matter what price point, you were getting crazy results. Well, guess what's happening? We're starting to see the market start to tear again, that you may have a balanced market in the mid-tier but you may have a buyer's market in a higher price or a seller's market. You really need to know that at that moment. So I think it's an excellent point.
Speaker 1:Excellent. Well, we are about to tie a bow around 50 minutes of fourth quarter 2024. I know that Tony and I have had a fun time. I think there's a lot of great information in there. Again, our goal in effective, more efficient. Add an idea. I just think it's so critical. I'm going to close with one of my favorite things to ask, and that is Tony Jarrett's one piece of advice to our listeners maximize your success in 2025?. What is your one recommendation, one strategy?
Speaker 2:My answer would be really setting clear expectations for your clients and then taking those to a rule in your agreements. For example you mentioned it earlier, gary if you're going to test the market in a certain price point, you're going to let the seller test that price Then what are your rules? And setting those rules clearly in writing on your agreements and saying I'll try it your way for seven days, two weeks, whatever that is, but we must go to the market to perform for you and I'll test it your way for seven days, two weeks, whatever that is, but we must go to the market to perform for you and I'll test it for a little bit. My concern is we're not very clear with those rules or we don't hold our clients accountable to those rules, and then it just goes the wrong way. And when it goes the wrong way, then the offers get worse and your client gets unhappy.
Speaker 2:I think we need to live by whatever that is, and consistency in 2025 is really important, because both sides of this market have balance now and you really got to make sure that you're setting different boundaries. It's almost like go sit with your manager, go sit with another agent and really talk about some of the scripting that you're doing, some of the rules that you're setting, because again I go back to muscle memory Some of this we haven't done in a long time. There's no shame. One of my words is unlearn. We have to unlearn some of the things that we have been doing this last couple of years because they don't apply anymore. So my advice to everybody I like where you were going is stay in zone every day, but really live in your creed of whatever it is to deliver the best results for your clients.
Speaker 1:You mentioned my bit of advice. I read this yesterday. I'm going to present it tomorrow, you'll hear. It is consistency. But this definition I'm going to share today before tomorrow. So the good news is no one's going to hear this before I share it tomorrow. So we're in good shape. Consistency, tony, is what transforms average into excellence. That's pretty well said, right, agreed? I think one of the great words is transformation. When you transform something think about the movie, right you change it dramatically in the way it looks, in the way it operates. If we can affect a transformation of our business, of our industry, that's when we go from average to excellence and that probably leads to a great 2025.
Speaker 1:If we could give an ovation to this man, I want to just say, tj, thanks for joining us in the month of April. We will be back giving you a report on Q1 2025. We'll talk about days on the market, we'll talk about appreciation. We'll talk about the cost of waiting. We'll talk about days on the market. We'll talk about appreciation, we'll talk about the cost of waiting. We'll talk about all the things again, and so what I'll do before that comes out is I'll send this one out. If anybody wants to compare and contrast, we might do a little bit. So, tj, as always, partner, good to see you. Thanks for being here with me and I look forward to seeing you tomorrow. Sooner, yep, I lost my control of my my mouth, so I'm in good shape here as we close out reality to our listeners. Thank you. Without you, it's not possible. We appreciate you. Thank you, bye, bye.
