Is it ever safe (or wise) to have an opinion in Real Estate?

Question for you guys – are mortgage lenders human beings? What about realtors? And if you believe real estate professionals are in fact people too – should they have opinions? Lastly, should those opinions impact the advice they give their clients? Let’s talk politics (specifically the latest tariff news that you probably missed), let’s talk AI and let’s talk covering your own ass.

We’ll start with the news. 

This week we saw three interesting headlines. The first was that sellers now outnumber buyers for the first time in over a decade. Are we finally in a buyer’s market? The New York Post, not to be confused with the New York Times or the Washington Post – reported that as of April there were nearly 500k more homes on the market than buyers actively shopping. Does that mean demand is cooling? Does that mean prices would come down soon?!   

Kinda, but not really. Here’s why. The median sales price still rose 1.8% year-over-year in April which was the 22nd straight month of annual price growth. How could inventory be increasing but prices not going down?

Three reasons. 

1. The need for homes measured by household formations has not decreased. The ability to buy homes has. Based on population, we still have a huge shortage of homes available for sale. 

2. There is a 3–6-month lag before we’d see this ratio of buyers to sellers impact prices and by then the ratio may be inverted back the other way. 

3. In order for prices to fall, you need sellers to be desperate. They have to be in a position where they must sell, and they must sell now. Then they start cutting prices to whatever it takes to move the property and that’s when you start to see home values decline. Based on the data and my own experience assisting buyers in attempts to negotiate, sellers aren’t that hard-pressed. We are getting deals but when we get too aggressive with our price or request for seller concessions, we are also getting rejections. 

The second bit of interesting news was in regard to inflation. April’s Personal Consumption Expenditures came in at 2.1%, which was the lowest since March of 2021. It didn’t move the markets much because of inflation concerns and housing costs within that reading were still really high. The shelter component rose 4% year-over-year! When these numbers came in, there were whispers of a Fed rate hike before the end of the year…however when Trump met with Powell this week, he was clear that he feels that would be a mistake.  

Late Last Night 

Then, Thursday night – the first ruling came down on Trump’s tariffs. The US Court of International Trade ruled that the majority of Trump’s new import taxes were issued illegally because he actually can’t invoke an emergency law in order to do trade deals. This will get tied up in appeals but ultimately, the case is likely to end up in the Supreme Court.

I guess there were actually four pieces of news I want to share. I just wasn’t sure if your attention spans could handle that…three is the magic number it seems but I’m going to break rules and share more. 

While Trump has argued that tariffs will fan the flames of economic growth, economists have voiced concerns that they will do the exact opposite. This week GDP numbers came in showing the economy shrank .2 percent. It might be fair or even logical to blame the previous administration but there are two factors here that shouldn’t be ignored. Consumer spending (how much you and I are willing to go out and spend our money) and net exports (how many American products are being shipped out. Read: Impacts of Trade War.)  The primary growth engine of our economy is consumer spending, and it was at its weakest pace in two years. The 5-point decline in net exports underscores a tangible impact of new trade policies, specifically when it comes to retaliatory tariffs…

But now, I might be going too far. I am only a mortgage lender after all.

When it comes to current events, an interesting question came up this week. Do you think realtors and lenders should have an opinion on current events? I tend to lean the direction of realtors and lenders being humans first. I also think that taking the time to understand the economic news that impacts interest rates and then ultimately home sales is not only advisable but should actually be a requirement of real estate advisors. Hence the motivation to put out this weekly blog. 

Then, when I really dive into my role I think – how could I possibly give the best advice to my clients, if I am not up to speed on the news? I know many professionals who don’t tell their clients what to do, because they don’t want any liability. Which brings me to the fastest growing threat we’ve seen as realtors and lenders: Artificial Intelligence. For the client that doesn’t want guidance or my opinion, I think the AI bot will do just fine to unlock doors and write contract and get you an instant preapproval.  As long as you know what to look for in the house/neighborhood, what loopholes to beware of in a contract and what financing type is best for your long-term goals. 

To put my money where my mouth is, let me tell you how I think current events should impact your real estate strategy: 

In general you will find I advise my clients to make the best decision we can based on the information we have now. I also like to keep the door open to make more good decisions as more information becomes available.

If you are looking to sell in the near future, I would list it sooner rather than later.  Mortgage applications have been up week over week, so we know buyer demand is still there.  We also know that homes priced appropriately are going into contract quickly. Values are still supporting bidding wars too, which is a piece of insider information. A friend of mine asked two different realtors to give him an appropriate listing price for a home he wanted to sell here in Reno. One realtor came back at $530,000 and the other at $680,000.  My friend went with the agent who was vouching for a $150k higher profit for him. The house went into contract within 48 hours at $675k.

Another real-life story. My clients were in a competitive situation and offered $65k above list price. They also included in their offer that they would cover the appraisal gap if it came in low. We got the appraisal this week at sales price. 

Lastly, the reason I would sell now rather than waiting – recession fears. Whether you think a recession materializes or not, we certainly saw buyers freeze before the election. A recession could bring lower interest rates and drive up home prices, sure. But at first, it will cause some to pause their plans to buy. If you don’t need to sell the property, don’t. You can wait and see what a recession does to prices and then maybe sell then. If you need to sell in the near future, I personally wouldn’t wait for the recession because a. it’s not promised.  and b. at first, it might hurt buyer demand. 

Now before you start accusing me of just telling everyone to buy and sell now, I’m going to remind you again, I prefer the devil I know versus the one I don’t. So yes, if you are looking to buy – I also think you should do so now.

Because even if a recession brings lower interest rates, you can refinance. In a highly unlikely scenario, some kind of black swan event brings down home values, you don’t get kicked out on the street. You just keep making your payment and the value will eventually come back.

There. I did it. I had an opinion. Even though I’m only a mortgage lender.