Welcome and good morning to Mike Ferry TV. The week of June 23rd. Everybody is asking the same question what happened to the real estate market? Are we in a recession or are we in a depression? You know what is going on and what’s causing, you know, the market to be the way it is? And of course, the challenge that we face is some parts of us and Canada, the market is still very strong. Most of the US and Canada, the market is weakened a little bit. Certainly not 2008, nine and ten, but it has weakened a little bit. And I get asked all the time, what are the causes that are that are causing the changes in the market? And I’ve listed 5 or 6 things here that I want you to think about, because if you’re working with buyers, they should have they should have the right to know this information. If you’re working with sellers, it’s an impactful part that you can add to your presentation.

1) Higher than normal interest rates

So, the first thought we have of course higher than normal interest rates. Now what’s fun. And you’ve heard me say this in the past. You know, in seven I almost said 1700. In 1970 we had interest rates at 17 and 18% for a 30-year fixed loan. So, when it got down to 3%, 2.7%, you know, the world went aha. And of course that was post-Covid. And of course, the big challenge we face today is a lot of people have those two and a half and 3% interest rates, whether it was purchasing a home or refinancing. And now of course, they want to move up, move down, move out, move around. And they’re stuck because the interest rates are six 5 to 6 seven, depending on where you are. And in some parts of North America, 7%, which when you think about it, is not a high interest rate. It’s a fair interest rate, but compared to 3%, it is a financial disaster for the people. See, what happens is a person that wants to sell a 3%, talks to a great realtor like you about buying, and they’re going to pay a little bit more for the home, obviously, than what they were selling it for. And so, their mortgage would increase. And then they have 3% rate jump to 6.5. They simply cannot financially do it. Yes, some can, but the major portion cannot do it or will not do it. So, what we’re facing is probably six more months. December, January, February of 2026 of these kinds of interest rates.

2) Higher than normal inflation

But we also have at the same time something very different, which is higher than normal inflation, having high inflation and high interest rates do not go hand in hand. That that this. This is a little confusing to me. And I’m sure it’s confusing to a lot of people also. But a lot of people want to take advantage of those that inflation by selling their home that do not have a 3%. It’s almost like you want to prospect and say, tell me your current interest rate. If they say 3%, you smile and say, good luck and go to the next one, because that’s the challenge that you face with inflation.

3) Inventory increasing on the rise virtually all-over North America

But the third factor, which is unusual. We went from not having enough homes for sale to inventory increasing on the rise virtually all-over North America. Um, here in Las Vegas, the inventory is almost doubled, probably almost tripled in the last six months. And I hear that no matter where I go, I travel a lot for this business I’m involved in, And I hear the same story. You know, the inventory is on the rise. So now we have more homes for sale and high inflation, and then we have high interest rates.

4) Listings increasing

But the fourth factor is that the days on market for listings is increasing. And the days of the. And yet there’s still parts of North America where you can list a property and have 2 or 3 offers in 10 or 15 days. That is the exception to the rule. That is not the rule. So, if you understand the fact that with days on market extending, more listings coming on the market higher than normal inflation, which the sellers want to take advantage of that inflation by getting more for their home than it probably is worth. And then you have the interest rate problem. You can see why there’s a lot of Confusion in the market.

5) The pool of strong listing agents is not getting bigger but the results they’re getting is 

But there’s something else going on which I’ve been talking about at the seminars over the last couple of weeks, and that is the fact that the the pool of strong listing agents, which I’m hoping some of you categorize as a strong listing agent, which means you’re taking 3 to 4 or more listings per month. That is a very good listing agent. That pool of people is not getting bigger, but the results they’re getting is in. Boy, it is gigantically improving. So, what we see is a group of people, maybe ten, 15% of the agents listing 75% of the properties and their market share is increasing within the boundaries of that group, which means the majority of the agents are doing less and less and less. Ten days ago, approximately, there was a report and, you know, you read some of these reports and you wonder, could they possibly be true? In this report they were saying NAB our national body, the governing body of real estate in the US, NAB was saying that 70%, 77% of all the agents in the United States had not done a deal this year so far. Well, I mean, how do you be in real estate for coming up on six months and not have a listing or a sale? Well, part of the problem is this group that does control the listings are building small teams, and they have 3 or 4 buyer’s agents or more on their team. And as a result of that type of activity, they’re picking up all the sign calls, all the ad calls, all the marketing calls. So that large body of people that work with buyers, they’re not even getting a chance because this group over here is listing the property, putting the signs up, getting the showings, getting the offerings, getting the sign calls, doing their marketing of the event of the property, and capitalizing on it virtually 100%.

6) High level of uncertainty the American public feels about the economy

But the last factor I want to bring up that is causing this to take place is the the high level of uncertainty that at least the American public feels about the economy. When there’s a high level of uncertainty, the buying process slows down that that is, you can see that in the history of the ups and downs, in the economy and in the real estate market. And there is a lot of uncertainty in terms of the economy today. First time homebuyers are being challenged by high interest rates, high inflation. Um, you know, it’s very hard for them to make a decision. And first-time homebuyers represent in most markets a pretty good percentage of the total transactions. So, for years and you’ve heard me say this, I’ve said listings are the name of the game. And then a year ago I changed that. And I said listings are how you stay in the game. Listings are how you stay in the game. And then I changed it again a few months ago to listings are the game. I mean, if you’re going to play in the real estate business, you need to work on your listing skills. But then last week I said to a group, so now I have a fourth version of that. Price reductions are the name of the game, you know. Go online to Mike Ferry dot com. Go to the area where we have our scripts, download the price reduction scripts and start using them whether you have one listing or ten, because the inventory is rising and rising and growing. And most of those properties are overpriced because we don’t have the wherewithal to take ten listings. In three months, we were satisfied with one. And that one is overpriced, which means you and the seller are sitting. So, let’s see. We, I think, have a 4th of July coming up in the US, a national holiday. I don’t know what day of the week that falls on, but if I don’t see you before, we wish you a happy holiday, get your price reductions in play, and then understand that that small percentage that are taking the listings, there’s room for you to be part of that. Talk to you next week.