There Is No Housing Market
When somebody tells me what “the housing market” is doing, my first question is simple: Which housing market?
The Headlines Are Not the Market
We talk about “the housing market” as though there is one market moving in one direction at one speed.
There isn’t.
Yes, there is a national housing market statistically. We can measure national sales, median prices, inventory, mortgage rates and days on market.
Those numbers matter.
But they don’t tell your client what is happening to the three-bedroom house they are thinking about buying in their neighborhood.
They don’t tell a seller how much leverage they have.
They don’t tell a first-time buyer whether waiting six months will improve their position.
And they certainly don’t tell us with certainty what happens next.
That is where the value of a real estate professional begins.
Look at what the numbers are telling us right now.
Existing-home sales declined in July, yet the national median sales price was still higher than it was a year ago.
First-time buyers made up only 29% of transactions, while cash buyers represented more than one-quarter of the market.
Price appreciation in the South was less than 1%, while prices in the Northeast were up more than 5%.
Those numbers aren’t contradictory.
They are telling us something important.
Different people are experiencing this housing market very differently.
A first-time buyer financing 95% of a purchase in Tennessee is not participating in the same market as an all-cash investor.
A California luxury-home seller is not experiencing the same market as a retired couple downsizing.
A move-up buyer sitting on substantial equity has a completely different set of choices than someone trying to buy their first home with limited cash.
And a buyer looking at new construction with a builder offering a mortgage-rate buydown may have an entirely different financial equation than someone purchasing a resale property down the street.
Same national statistics.
Very different markets.
Stop Asking Whether the Market Is Up or Down
One of the problems with our business is that we have trained people to think about real estate in overly simple terms.
Is it a buyer’s market?
Is it a seller’s market?
Are prices going up?
Are prices going down?
Are rates coming down?
Should I buy now?
Should I wait?
Everybody wants a clean answer.
Unfortunately, markets don’t owe us clean answers.
A much better question is:
What part of the market are we talking about?
I would look at at least five things:
- Price
- Inventory
- Velocity
- Affordability
- Buyer composition
Now we’re beginning to understand something.
A market can have slower sales and still have rising prices.
Inventory can increase without creating a buyer’s market.
Prices can decline slightly while monthly payments remain higher because interest rates changed.
One neighborhood can favor buyers while another neighborhood ten miles away still has multiple offers.
The same house can even exist in two different markets depending on its condition, price and financing options.
That’s why adjectives aren’t enough.
Your Client Doesn’t Buy the Median
Think about the way we sometimes talk to consumers.
“The median price is up 2%.”
Fine.
But your client isn’t buying the median.
They are buying a house.
A particular house.
In a particular neighborhood.
At a particular price.
With a particular amount of money down.
Using a particular loan.
At a particular interest rate.
At a particular moment in their life.
That’s the market that matters.
National numbers give us context.
Local knowledge gives those numbers meaning.
And understanding the client’s circumstances makes the information useful.
That distinction is becoming more important because affordability is now so payment-sensitive.
At a mortgage rate around 6.7%, principal and interest on a $400,000 30-year mortgage is approximately $2,580 per month.
At 6%, that payment falls to roughly $2,398.
That’s about $182 a month.
More than $2,100 a year.
The house didn’t change.
The price didn’t change.
But the buyer’s opportunity changed.
That’s why I believe agents need to become better at talking about payments, options and tradeoffs instead of simply talking about prices.
Don’t Predict. Help People Think.
A buyer tells you:
“I think I’m going to wait until prices drop.”
The easiest response is to argue.
Don’t.
They could be right.
Prices could decline.
The professional response is to help them think through what waiting actually means.
You might say:
“They could drop. But let’s make sure we’re separating price from total opportunity.”
Then look at several possibilities.
- What happens if prices decline 3%, but mortgage rates stay where they are?
- What happens if prices stay flat and mortgage rates fall?
- What happens if rates fall, more buyers come into the market and competition increases?
- What happens if both rates and prices stay relatively close to where they are today?
Then ask the question that matters:
Which of those outcomes would actually change whether owning this home makes sense for you?
Now we’re no longer trying to win an argument.
We’re helping someone make a decision.
There is a big difference.
And that difference is at the heart of professional sales.
Hesitation Is Not Always an Objection
There is another lesson here that goes beyond real estate.
When buyers hesitate, salespeople often label it an objection.
Sometimes it is.
Sometimes it isn’t.
People make large financial commitments when they feel reasonably confident about their employment, income, household stability and ability to handle the obligation.
When the economy is sending mixed signals, some hesitation is perfectly rational.
Our job isn’t to pressure someone out of legitimate concerns.
Our job is to understand those concerns.
Ask better questions.
Separate facts from fears.
Identify options.
Explain tradeoffs.
And help the client determine which risks matter to them.
That creates emotional safety.
And once people feel safe enough to tell us what they are really worried about, we can finally become useful.
Local Knowledge Is Becoming More Valuable, Not Less
There is an interesting irony happening in our business.
Consumers have access to more housing information than ever before.
- They can see listings.
- They can see estimated values.
- They can track mortgage rates.
- They can read national housing reports.
- They can ask artificial intelligence what the real estate market is doing.
Information is everywhere.
So simply possessing information is becoming less valuable.
Interpretation is becoming more valuable.
Anybody can tell a client that national home prices increased last month.
A professional should be able to say:
- “Here’s what we’re seeing in your price range.”
- “Here’s what’s happening with inventory in the neighborhoods you’re considering.”
- “Here’s how long properly priced homes are taking to sell.”
- “Here’s where buyers have leverage.”
- “Here’s where sellers still have leverage.”
- “Here’s what today’s mortgage payment looks like.”
- “And here’s how all of that applies to the decision you’re trying to make.”
That’s expertise.
Not predicting.
Not cheerleading.
Not frightening people.
Interpreting.
Try the Five-Number Market Drill
If you’re a real estate professional, here’s a simple exercise.
Choose the market you serve and know these five numbers:
- Median sales price.
- Active inventory.
- Months of supply.
- Median days on market.
- Change in closed sales from one year ago.
Then understand the current mortgage-rate environment.
Now try explaining your market to a client in two minutes.
But give yourself one rule.
You can’t say:
- “The market is crazy.”
- “It’s a buyer’s market.”
- “It’s a seller’s market.”
- “Now is a great time to buy.”
- “Prices are definitely going up.”
- “Rates are definitely coming down.”
Instead say:
- “Here is what we’re seeing.”
- “Here is where buyers have leverage.”
- “Here is where sellers have leverage.”
- “Here is how your situation fits into that.”
That’s considerably more useful than an adjective.
Expertise Makes the Data Useful
I don’t believe our value as real estate professionals comes from knowing what the national housing market did last month. Anybody can look that up.
Our value comes from knowing what those numbers mean for this person, this property, this neighborhood and this decision.
That requires us to become better students of our markets. It requires us to understand financing. It requires us to listen closely enough to understand what the client is really trying to accomplish.
And it requires the discipline to say “I don’t know” when we don’t know instead of pretending we can predict the future.
The best professionals aren’t fortune tellers. They’re interpreters.
They help people take complicated information and turn it into better decisions. That’s a skill worth mastering in any market.
Time Tested Mastery Principle: Data describes the market. Expertise makes the data personal enough to act on.