Keller Williams Realty State of the Market 2025 - Brian Tercero by Brian Tercero

Brian Tercero | KW Santa Fe

When you get into a trough like this, it takes typically 3 or 4 years to get out

Expect 2025 and 2026 to be similar

The economy is healthy but real estate is in a recession

“You might be buying at the top of the moment, but you ’ re never buying at the top of the market”

For those who haven't seen this slide or my notes in previous years: Blue line is the 4% Appreciation Annually Trend Line

The real estate market has appreciated by 4% annually since prices/values were first tracked

Appreciation is the confluence of GDP, Inflation, Wages, Unemployment and the Cost of Goods to rebuild a house

Replacement costs are increasing

All the pieces that go into a home are getting more expensive

We are currently 9.9% above the 4% trend line

If we had no appreciation for the next two years - we would be back on the trend line

Our perspective every year is that home prices are too high but if you went back 15 years and had the ability to buy every home in the neighborhood - who wouldn’t do that? Will the same story be said 15 years from now? History shows us YES every single time

“Don’t wait for the perfect time to buy real estate, buy real estate and always give it time”

Brian Tercero | KW Santa Fe

2.HOME PRICES - Annual Appreciation

2023: .9% appreciation increase

2024: 4.5% appreciation increase

2025 projection: 2.5% expected

All bets are off if interest rates drop

The Fed has no motivation to drop rates however

2024: Thirds best year EVER in recorded history

Fewer transactions occurring (4.1M) but third best year ever for total volume

We’re paid on volume

If no previous slides were shown, you would think we ’ re in one of the greatest real estate markets ever for a profession

Who’s winning right now?

Agent’s that have been practicing lead generation consistently are getting their unfair advantage.

Brian Tercero | KW Santa Fe

60% of agents did not sell anything last year

We’re in a slow climb

6.9% today - historically average Perspective: It’s our jobs as professionals to bring perspective and give our clients facts: rates were abnormally low for a very long time - something we’ll never see again. As we adjust to being in the 6's for the foreseeable future, consumers will adjust Would you tell a young person to buy real estate right now?

The math will always work MOHPIR idea: Refinance for free

Brian Tercero | KW Santa Fe

3 out of 4 mortgages have a rate below 5%

Only 26% have rates above 5%

That will grow moving forward

38% of homeowners are mortgage free 75% have 50% equity or more

Make a difference:

Coach your clients how to use that equity MREI

Expected 36% - we are at 32%

People are overindexing on expereinces over appreciable assets

Brian Tercero | KW Santa Fe

At the end of the day, you have to live below your means in order to survive the surprise disasters that happen in life

Build up basic assets like real estate to bail you out when you need it

The average first time homebuyer is 38 years old - the oldest average ever

Do you want to be broke now or broke later?

Many millennials are counting on their Baby Boomer parents

Boomers control 50% of the wealth in the USA

Short term projections are never perfect but...

You can always bet your life on the long-term numbers

Brian Tercero | KW Santa Fe

ECONOMIC UPDATE

PART ONE: US REAL ESTATE MARKET

PART TWO: US ECONOMY

PART THREE: US REAL ESTATE STATISTICS

PART FOUR: 2023 BUYER AND SELLER PROFILES

GDP: This is spending

An economy spending: Doing Well

An economy not spending: Not Doing Well

Notes from last years Market Update: We are looking to hit 2 (3, 4, 5: The economy heats up and is on fire by 5)

The new sweet spot may be 2.5, maybe even 3 GDP is currently very healthy ... people are spending money at healrthy levels

This slide is all good news

Unemployment spiking a little bit

Non political statement but, if DOGE accomplishes what they want to, they would put 2.2M out of work and drive unemployment to 5.7%

Jobless claims rising in DC

Brian Tercero | KW Santa Fe

2024: 3.8% of income

In 2020: 1.5% : Nobody was saving anything

Then in 2021, 11.1% which as the second highest ever

People are saving less than ever, if everyone saved 10% of their income, all of the problems of the economy would be solved within 12 months

2024: 2.9%

Above 6%: The Fed jumps in

Brian Tercero | KW Santa Fe

1.Unpredictable Policy

This is not political, just stating facts and what your clients are seeing daily in the news. You have to know whats going on...

Trade, immigration, regulation, spending

In Texas alone, 25% of construction workers are undocumented

If something were to happen, there is no replacement at those prices

We are moving into a “economically risky” period in America

Lots of uncertainty

The world likes things to be predictable

People tend not to invest when things are unpredictable

2.Natural Disasters

1.47 trillion in home values to be wiped off by disaster by 2055 - predictions

3.International Conflict

There’s usually 80 hot conflicts in the world at any time

Right now there are over 200

We tend to focus on them when they affect these three things:

Brian Tercero | KW Santa Fe

This must be discussed because it’s in the news every day

There are 5 reasons for Tariffs:

1 Revenue

2 Protecting ‘Infant Industries”

3 Protecting Established Industries and Punishing Unfair Trade Practices

4 National Security

5 Political Leverage

2 types of Tariffs:

1.Targeted Tariffs: There is a schedule of goods which are taxed at a specific rate. This is the most common form of tariff

2.Blanket Tariffs: All goods from a country are taxed at the same rate. These are essentially unprecedented in the US outside of full embargoes

Accelerates after 5

If I’m an importer and I buy stuff for $100, and pay $20 in tax

Historically, the tax has always been passed on to the consumer Tariffs are a source of government revenue (next page)

Brian Tercero | KW Santa Fe

1770 to 1860: Government was funded by tariffs and land sales

Early 1900s: US was not selling land as much

1913: Needed $6 Billion

Income tax begins

More efficient to place a small tax on more people

What other viable way is there to finance a country - highways and military

Now: Social Security and Medicare is the second highest

Will Housing be Affected?

Lumber, oil, drywall, concrete will all increase in price

Will Housing be Affected?

Every generation needs an economic event to reset prices on assets that allow them to get in on a lower floor

When you don’t have a reset - you have a problem

The confluence of tariffs plus mass deportation could create a massive storm

Things will be more expensive and the workers that are helping keep prices in check will be gone ... would create massive inflation

We could end up with abundant housing supply and expensive real estate for home building

Brian Tercero | KW Santa Fe

ECONOMIC UPDATE

PART ONE: US REAL ESTATE MARKET

PART TWO: US ECONOMY

PART THREE: US REAL ESTATE TRENDS

PART FOUR: 2023 BUYER AND SELLER PROFILES

1)Sides Per Agent

2)Volume Per Agent

3)Listings with Price Drops

4)New Listings

5)Distressed Sales

6)Credit Conditions

7)New Homes

8)Challenges for Builders and Developers

9)Home Insurance

10)Generational Wealth Transfer

1.

No real increase

Only 56,000 agents left the business

60% don’t sell anything, yet they’re counted in this statistic What’s the average on those who lead generate vs those who don’t?

Brian Tercero | KW Santa Fe

4th highest all time

Look at the % of January each year

Is the floor for the entire upcoming year

Jan 23: 9% increased to 28%

Jan 24: 24% increased to 35%

January 25: 31% ... expect this number to continue to rise ahead this year

Anytime you see listings with price drops increase - you see more expireds on the backend

This is a SKILLS BASED MARKET KNOWLEDGE and SKILLS ARE REQUIRED

Brian Tercero | KW Santa Fe

406,000 January 2025

January is the floor for the upcoming months

Jan 23: 301,000

Jan 24: 325,000

Jan 25: 406,000

Expect inventory to rise a bit

FOCUS: Lead generating for listings Price drops will increase

2%: Essentially non existent

2023 Price Reductions In the colder months you don’t see as many price drops because there’s a lot fewer homes that come on the market = Less Competition Low inventory with low demand shows up like this. Not as big of drops when it’s cold.

Brian Tercero | KW Santa Fe

There was a spike in 2020, now it’s going pretty steady

About

11 years behind

the trend line

Currently: we ’ re not below the trend line but we ’ re not making up any ground caused from 2008 to 2019

We are missing 2.5M - 3M homes from that time period which would make more balanced supply

Reasonably priced new construction is hard to find nationally

Brian Tercero | KW Santa Fe

It’s burdensome to build in the United States

Materials are up 50% in the last decade

Land is up 250% in the last decade

Shortage of supply for land

Renewal Rates

Brian Tercero | KW Santa Fe

Baby Boomers: Control 50% of the wealth in the USA

19 Trillion of the 85 Trillion total is in real estate Millennials are coming into their peak spending years

11,500 people turn 65 every day

73% of people over 55 will give all of their estates to their children

OPPORTUNITY: Estate Planning - Seminar for people who have adult children

Gift tax ceiling changes after 2025

Brian Tercero | KW Santa Fe

Brian Tercero

ECONOMIC UPDATE

PART ONE: US REAL ESTATE MARKET

PART TWO: US ECONOMY

PART THREE: US REAL ESTATE STATISTICS

PART FOUR: 2024 BUYER AND SELLER PROFILES

1 out of every 4 buyer in 2024 was a FTHB - lowest percentage ever First time home buyers are older than ever Is there a FTHB celebrity in Philadelphia? Can you become that?

Desire to Buy a Home is at an all time low Do you have a MOPHIR for each of these?

Brian Tercero | KW Santa Fe

10 weeks is a benchmark - average

Looked online 43%

Doesn’t differentiate which website

Every agent should have a website they’re driving traffic to

Brian Tercero | KW Santa Fe

No real changes in these slides YoY Buyers want info: Photos Floor plans

Brian Tercero | KW Santa Fe

Keep reinforcing these needs

Reinforce and market

2023 Price Reductions

In the colder months you don’t se e as many price drops becaus e there’s a lot fewer homes tha t come on the market = Les s Competition Low inventory with low deman sdhos up like this. Not as big o fdrops when it’s cold.

Brian Tercero | KW Santa Fe