It’s that time of year again. I just returned from our annual conference in Las Vegas called Family Reunion. Every year the chairman and founder of Keller Williams, Gary Keller, gives what he calls “The Vision Speech” of real estate to about 20,000 of us who have gathered at the Mandalay Bay Resort. The slides are from Keller Williams’ own research as the largest real estate company in the world, plus slides from the National Association of Realtors. The slides are so good and present such a realistic picture of the market/real estate industry, I share them every year with all of you when I get back. Some slides need no explanation and others I will provide some commentary, so let’s get started.
This first slide shows homes sales for 2024. We thought the number of sales would be flat from 2023 to 2024 and they were correct, as the graph shows. We are projecting only a very modest gain in 2025 to 4.2m homes sold.
This next slide is the one that affects everyone and that is home prices. The historical trend line is always at 4% but you’ll see in the last year we were almost 10% above the trend line. As many of you know, in Kona and the resorts we hit 12% appreciation in both residential and condos. Prices look to go up even further in 2025.
In the next two slides, total market volume across the U.S. rose ever so slightly and inventory continues to remain historically low (which is driving up the home prices), but did rise a little bit in 2024.
Mortgage rates will be a big indicator of how the real estate market does in 2025. Right now, as I write this, we are sitting at about 6.9% for a 30-year fixed. Projections for 2025 are that interest rates will fall only to 6.5%. Energy and inflation will be the determining factors. If both of those go down, so will interest rates.
This is the primary reason why there are not more homes on the market. Seventy-four percent of all mortgages in the U.S. are below a 5% interest rate. It makes no sense to trade up or trade down to a home with rates of 6.5% or higher.
Unemployment ticked up a little in 2024 but remains low. We’ll have to see how government layoffs affect the economy.
Inflation sat between 3.2% and 2.9% in 2024. Many believe we will be close to the 2.0% goal in 2025 or early 2026.
The number of transactions each agent is doing has dropped well below the historical trend line of nine deals per year. Right now, the average agent in the U.S. is only helping people buy and sell about six homes per year. Once again giving credence to the adage that a few agents do the majority of the business. On Hawai`i Island I tell people it’s 95/5 – 5% of the agents do 95% of the transactions.
For all those investors or bargain hunters looking for a distressed sale, stop looking. This graph shows those are for all intents and purposes at zero.
New construction is still not keeping up with the market. You would need to double the number of new home starts to even begin to fill in the gap in demand.
Home insurance is a problem not just for Hawai`i but for all of the country. See below:
Now more than ever people want to put their money in real estate. Look at the percentage compared at the last three years.
People started their real estate search online, but most people still find a realtor very valuable.
Here is what people care most about when viewing real estate websites.
Every year this graph shows how important real estate agents still are in purchasing real estate.
People use referrals as their number one source of finding a realtor and people seem to be very satisfied with the service they receive.
Here’s what buyers and sellers said mattered most to them in finding a real estate agent.
And finally, with all the disruption in the real estate industry, 90% of people still found it valuable to sell their home using a real estate agent.
I hope you found this valuable. As your realtor of choice here on the Big Island I always try to bring you the latest and most accurate market insight. If you would like to discuss any of these slides, the market or your wants and needs here in Hawai`i it would be a privilege to speak with you. Just call me on my cell phone 808-987-3306. Mahalo and aloha
.-Dan
