Brian Buffini’s 2024 Bold Predictions: Lower Rates to Fuel Pent-Up Demand
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For nearly 30 years, Brian Buffini, the chairman and founder of Buffini & Company, has been one of the most trusted and respected names in real estate. In a recent biannual update, Buffini shared his predictions on future mortgage rates and projections for existing-home sales. He also offered a glimpse into the company’s new Do It N.O.W. campaign that is geared to helping real estate professionals take advantage of the anticipated rise in demand from both buyers and sellers.
Mortgage Rates Cut and Sales to Increase
Approximately 90% of homeowners currently have a mortgage rate below 6% while nearly 25% have a rate below 3%.
It’s important to remember, Buffini said, that those extremely low rates of the past few years were an anomaly and created in response to the pandemic-induced recession. It is highly unlikely the market will ever see rates in that range again.
When the Federal Reserve raised interest rates over the past year striving to corral inflation, many potential homebuyers delayed their plans for a new home due to rapidly rising mortgage rates, which eventually crested at 8%, Buffini said. Existing homeowners, who enjoyed their low rates (even if they were not in a home they loved) were reluctant to sell and move to another home.
“To go from 2.6% to 8%, that is a shock to the system,” Buffini said.
Buffini, as well as many other experts, predicts that the Fed is finally done raising rates now that inflation is trending downwards.
“I believe you’ll see cuts in mid-year of next year,” Buffini said. “I’d say about July, you’re going to see the Fed actually make the formal cuts. I believe we’ll finish the year below 6%.”
Many homebuilders have already been offering mortgage buy-downs at that rate, which has brought “buyers massively into the game,” he said.
Regarding existing-home sales, Buffini said that he does not agree with many analysts who project next year will be “the same as it is this year.”
“This will not be the case,” he said. “What you’re going to see is a tight first quarter, a loosening second quarter. Rates are going to drop in the third and fourth quarters and we’ll be off to the races.”
“There will be an extraordinarily strong finish to next year,” Buffini added. “I’m projecting around 4.6 million sales, about a 20% increase next year. I also believe that it’s going to boomerang and continue to horseshoe around into 2025. I think we’re going to have the biggest selling season in the spring of 2025 we’ve had in 10 years and we’re going to have a very, very solid 2025 with about another 15% growth.”
Pent-Up Demand from Potential Buyers
Currently, there are 72 million millennials in the United States. The average age of a person leaving the family home is 26. The average age of a first-time homebuyer is 35. This combined group — approximately 45.5 million — are anxiously waiting on the sidelines ready to jump into the market once rates drop.
But these millennials are not the only ones who are waiting. Other potential buyers — and sellers — are just as eager to make a move. Being closer to family is the number one reason people say they want to move.
The impact of rising rents has also added to the demand of buying a home, Buffini noted.
“Rents have been the single biggest contributor to inflation, not gas prices, not food prices — rents,” he added. “Now, they’ve stabilized, but rent is extremely high. The demand to buy has never been higher. People want to get in the game.”
Agents Must Prepare Now
The upcoming influx of transactions will be a welcome relief for real estate agents who have seen the market shift so much over the past two years. The one thing those agents must do now if they want to succeed when that happens, Buffini said, is to focus their efforts on becoming listing agents. By cultivating their database, they will help establish a strong foundation for when their clients are ready to list their homes.
To help support this goal, Buffini & Company has upgraded its monthly client marketing kit. This new kit is geared to help agents increase their income to $460,000 by defining, explaining and showing how to find and secure listings for the upcoming 2024 real estate market change. The content, based on the theme of Do It N.O.W. (No chaos, Own the listings, Win market share) will feature traditional and digital assets that agents can share with their clients. These resources are based on proprietary research that will help agents more efficiently target the specific groups of potential sellers. The company’s coaching clients will also receive four exclusive strategies designed to help them generate, secure and close listings.
The first quarter of 2024, no doubt, will be a challenging one for agents, Buffini said. But once rates start dropping it will be those agents who prepared ahead of time who will be seeing their hard work pay off.
“It’s important to sow the seeds and fertilize your database now if you want to have a healthy harvest,” he added.
To hear more predictions from Brian Buffini about the real state of real estate and what’s ahead for 2024, visit buffiniandcompany.com.
Eric
