Chris Kelly, President & CEO, Ebby Halliday Companies, North Texas; Broker Relations Liaison, the National Association of REALTORS®: Beset with a global pandemic and its fiscal responses, buyer competition for a scarcity of properties, rising inflation, supply-chain issues and, most recently, the Russian invasion of Ukraine, brokers have had to adapt and prosper amid historic uncertainty. What are the issues we face today, how do we read the customer climate and what are we looking for down the road in today’s less-than-stable environment?
Martha Mosier, President, Berkshire Hathaway HomeServices California Properties, San Diego, California: In our Southern California region, we’ve seen a year-over-year price gain of 12.6%, and in high-end areas, an average sales price of $1.7 million as opposed to $1.3 million in 2021—a gain of 23% in the midst of historically low inventory—and the variables continue in light of supply-chain issues, state building restrictions and a scarcity of land to build on. Yet despite all the FUD (fear, uncertainty and doubt) arising out of all this geopolitical and economic pressure, plenty of people are on the move, and our agents are busier than ever.
Daniel Dennis, President, Illustrated Properties, Palm Beach, Florida: People are certainly on the move to Florida. Between the ever-busy Northeast pipeline and the steady flow to our beaches from all over the country, we’ve got a Goldilocks market—a kind of ideal reality that is keeping our agents super busy. Yes, we’ve seen a bit of economic uncertainty, but Wall Street dollars continue to flow in, boosting the luxury market. In South Florida, we had 100 sales over $10 million in 2019, but over 400 in 2021.
Bess Freedman, CEO, Brown Harris Stevens, New York, New York: The New York City market and surroundings are thriving, especially now as rents are skyrocketing and buying becomes a more viable option. We’ve been plagued by a lack of supply in the midst of all this global strain and uncertainty, but the fact is, people at the high end are less affected by high gas prices and the like, and in terms of discretionary spending. The momentum is slowing a bit—it had to start returning to a more normal pace—but in all, our agents are busy and very productive.
CK: Fannie Mae Chief Economist Doug Duncan noted recently that a slowing economy and decades-high inflation, capped by Russia’s invasion of Ukraine, are weighing on the health of the U.S. economy, and that disruptions in energy and other commodities are putting upward pressure on inflation. That is certainly behind rising interest rates, and as NAR’s Lawrence Yun pointed out, some people who had qualified at a 3% mortgage rate are no longer able to buy at the 4% rate—or higher, as more rate hikes are anticipated. What does that suggest for the coming months?
MM: It suggests the gradual slowing we anticipate after the high, pandemic-induced peak we’ve experienced. But people who are buying homes at $5 million or more are less affected by almost anything, and in San Diego, there are some 10,000 building permits pulled for 2022, with about 75% earmarked for high-density construction.
DD: People continue to hear concerns from a 24-hour news cycle, but that is not impacting our predominantly cash market. Competition is keen in Florida, and agent morale is high. We’re looking at a robust spring market.
BF: As are we. There may still be a bit of a wait-and-see mindset, but our greatest problem is lack of supply. Spring in New York is an inspiration. Our agents are busy and happy.
CK: Speaking of happy agents, perhaps a word on how the past 24 months have impacted your view of space allocation…
DD: Agents, for the most part, are happy to be back in the office—and we want to accommodate them.
BF: Our agents want nice spaces where they can meet clients. We have no space reduction plans.
MM: As brokers, we will provide whatever it takes to maintain a thriving environment.
The Power Broker Roundtable is brought to you by the National Association of Realtors® (NAR) and Chris Kelly, NAR’s Broker Relations Liaison. Watch for this column each month, where we address broker issues, concerns and milestones.