Across the globe, everybody is watching one thing today: What will happen to the U.S. economy?
Friday’s July jobs report intensified fears of a possible recession in the U.S. Investors are also concerned that the Federal Reserve should have cut interest rates last week to stimulate the economy rather than holding them at their highest level in two decades.
On Monday, Japan’s Nikkei Stock Average plunged by 12.4%—marking its worst day since 1987—and U.S. stocks fell sharply as markets opened.
But, how will this news affect the housing market?
On today’s Hot Sheet, BAM co-founder Byron Lazine discussed Friday’s employment report and subsequent market reactions, how it could impact the U.S. housing market, and how real estate agents can talk to consumers about today’s headlines.
If you’re not aware, Lazine breaks down the biggest housing market and economic news every Monday-Thursday on the Hot Sheet, the industry’s only live news show airing four days a week. Subscribe now so you never miss a show, and tune in the rest of the week to stay up to date on what’s happening.
Today’s Opportunities in the Housing Market
With increased fears about a recession, it’s critical for real estate agents to educate consumers about what’s happening in their local market and where the opportunities lie.
As Lazine said on today’s show, there are many unknowns. But there are also opportunities for those ready to buy or sell real estate.
“We don’t know if there’s going to be a recession coming. We don’t know if these rates—the 10-year and the 30-year—are going to snap back like we’ve seen multiple times in the last two years.
“We know we have a moment in time right now that if you’re in the market, you could certainly take advantage of this particular opportunity.”
On Friday, mortgage rates dropped to 6.4% and have already dropped lower today. While most will see today’s headlines about U.S. stock markets, not everyone will be aware of how this is impacting mortgage rates. As an agent, you need to get that information out to both buyers and sellers.
The reason is clear for home buyers: lower mortgage rates mean monthly housing payments will be more affordable.
It’s also important to discuss this with home sellers about what this means for their timeline. There may be a burst of buyer activity right now, as home buyers who were holding off re-enter the market to secure lower mortgage rates. And if the economy does go into recession, many markets will likely see a decrease in home buyers at that point, making now an opportunity for those who are ready to sell.
How to Talk to Consumers About Housing and Mortgage Rates
With 30-year fixed mortgage rates dropping to their lowest point all year, real estate just become a bit more affordable.
While this is welcomed news for those actively searching for a home, Lazine reminded everyone what agents should not do: send a mass email or text message with one of today’s headlines.
Instead, spend all day on the phone. Talk to your local, trusted mortgage lenders to find out:
- What mortgage rates they have been able to secure today
- Options for buyers who want to lock in mortgage rates
In addition, share different scenarios (depending on the buyers you are working with), to determine what a drop in mortgage rates means for their monthly payments.
Once you’ve done the math and spoken with a lender, contact active buyers individually. Explain to them what a drop in mortgage rates really means in terms of a monthly payment compared to last month or last year.
It’s also important to reach out to prospective buyers—anyone who’s had thoughts about buying over the past 24 months. Tom Toole, team leader of the #1 team in Pennsylvania, shared some simple scripts about how to discuss dropping mortgage rates with BAM. Download these scripts to help start conversations or reengage with consumers in your pipeline.
The more you can educate and inform—while staying away from fear-inducing headlines, the more consumers will trust you. Focus on the opportunities and solutions available to empower your clients to make informed decisions and establish yourself as the knowledge broker.
