Beginning in 2009 and for the ensuing decade, mortgage interest rates remained in the sub-5 percent range, until rates surged back in 2022 in the wake of the Federal Reserve’s attempts to stem the rise of inflation.
In the decade prior to 2009, however, interest rates hovered in the 6-8% range, which was considered normal and acceptable after coming off the 1980s market which saw interest rates peak at 16%.
The inevitable happened in the real estate market. While buyers stayed out of the high interest rate market, they surged back as interest rates began to decline, even if that decline put them at a 7 or 8% mortgage interest rate, which is exactly where we find ourselves today.
The point is this, buyers eventually adjust to the new normal and while buyers and sellers are sitting on the sidelines right now, professionals in the real estate space – whether real estate agents, lenders or title agents – should keep their eye on the trend lines and be prepared to embrace the opportunities of an emerging market.
Current trends
On Feb. 22, the National Association of Realtors reported that existing home sales were up 3.1% from December, though down over 1% from January 2023. NAR Chief Economist Lawrence Yun noted an increase in listings and a slight drop in mortgage rates contributed to the increase.
Most industry pundits are cautiously optimistic that this trend will continue throughout 2024, albeit the market will come back slowly and in tandem with decisions made by the Federal Reserve.
The Mortgage Bankers Association is predicting interest rates will drift downward to 6.1% by year’s end and drop into the 5.5-5.9% range for 2025.
If this should indeed be the trend line for the next two years, look for both buyers and sellers to push the market back to 5 million transactions, vs. the 4 million in 2023.
Preparing for the future
Although the market is unlikely to experience a dramatic surge, business owners should avoid sitting on the sidelines waiting to see what might happen but would be wise to prepare now to meet increasing demand in the market.
One obvious way to prepare for an increase in volume is to carefully evaluate your tech stack in relationship to your processes to see if there are additional solutions you could incorporate to moderate the time staff must invest in each transaction. This will prepare your existing staff to seamlessly incorporate additional volume in the future.
To understand what some of those pain points are in your processes, survey your staff for some suggestions of specific problem areas, and then work with your IT team to explore technology that may be useful in curtail some of the more time-consuming aspects of a transaction – those processes that can be automated.
Doing this kind of analysis now and getting new technology up and running before the new wave of transactions begins to surge will put you in a prime position to manage the growth in business.
Of course, revenue is down for many right now. But that doesn’t mean you can’t assess, plan and even selectively attack your worst pain points. Consider, for example, your fee estimate and CD/LE process. Is it a chokepoint in your typical transaction? When you consider that the volume that comes back later this year will likely be heavily purchase (with the exception of a possible refi mini-spike), now would be a great time to attack your workflow in ways that improve the experience for REALTORS, lenders, buyers and sellers alike!
At VizionX, we are here to help you streamline your business processes to prepare you for future market growth. We have designed our VisionX Fees to integrate tightly with popular platforms in the title and mortgage industries, making incorporating VizionX Fees into your workflows easy and seamless. Call us today to learn more.
