For internal use only

Overview Keller Williams Family Reunion 2025 Vision Speech

Date: October 27, 2023

Analysis of Key Real Estate Market Trends and Predictions for 2025

"Family Reunion 2025 Vision Speech Slide Deck.pdf" (Keller Williams)

Overview:

This document summarizes the key data and trends presented in the Keller Williams Family Reunion 2025 Vision speech slide deck. The presentation covers the U.S. and Canadian real estate markets, the U.S. economy, recent industry news, and findings from the National Association of Realtors (NAR) 2024 Profile of Home Buyers and Sellers. The presentation offers a data-driven perspective on the current market and provides projections for 2025.

Key Themes & Findings:

I. U.S. Real Estate Market:

Home Sales: After a dip in 2023, annual home sales are projected to increase slightly in 2025, to 4.2 million.
Home Prices: Annual median home prices are predicted to continue rising, reaching $418,000 in 2025. The presentation notes that the price increase in 2024 was significantly "above trend" at 9.9%.
Total Market Volume: Market volume is expected to increase, reaching 2.33 Trillion USD in 2025.
Inventory: The annual months of supply of inventory remains low, projected at 3.7 months in 2024, well below the balanced mark of 6 months, indicating a seller's market.
Mortgage Rates: The 2025 mortgage rate projection is 6.50%, slightly lower than the 6.72% annual rate in 2024.
Affordability: Affordability, measured as P&I as a percentage of income, remains high at 32% in 2024.
Listing price drops: Increased from January '23 at 9% to 31% in January of '25.

II. Canadian Real Estate Market:

Home Sales: Total annual single-family home sales in Canada are projected to be 490,000 in 2024.
Home Prices: The average home price in Canada is projected to be $690,000 (Canadian dollars) in 2024.
Inventory: The Canadian market currently sits on the border of a Buyer's and Balanced market.
Mortgage Rates: The average annual mortgage rate (5-year fixed) in Canada is projected at 6.7% for 2024.
Affordability: Affordability is a significant challenge, with single-family homes consuming 64% of income for P&I, taxes and insurance. This is a 4% decrease from 2023, but still significantly above the historical average of 44%.

III. U.S. Economy:

GDP: Real GDP year-over-year change is projected to be 2.8% in 2024.
Unemployment: The unemployment rate is projected to be 4.0% in 2024.
Personal Savings Rate: The personal savings rate in 2024 is 3.8%, below the average since 1959 (7.9%) and since 2000.
Inflation: Inflation (CPI including energy and food) is projected to decrease to 2.1% in 2025.
Economic Risks in 2025: The presentation identifies "Unpredictable Policy – Trade, Immigration, Regulation, and Spending," "Natural Disasters," and "International Conflict" as key economic risks. It emphasizes the importance of "Price of Real Estate," "Cost of Money," and "Employment" to the real estate market.
Trade Policy: The presentation defines "tariff" and describes five reasons and two types of tariffs.
Wages vs. Corporate Tax Rate: Wages growth remains significantly below the corporate tax rate.

IV. U.S. Events:

Sides Per Agent: Projected to drop to 5.8 in 2025.
Volume Per Agent: Expected to drop to 2.93 million $USD in 2024.
TCPA Update: The "One-to-One Consent Rule" was successfully challenged in court, meaning: "Consumers can continue to give prior express written consent to receive calls and texts to more than one business at a time; one-to-one consent is not required. Lead generation forms that use a single consent for multiple businesses will still be effective."
Distressed Sales: Distressed sales remain low, indicating limited impact on the market.
Underwater Homes: The percentage of underwater homes remains low, below the historical average.
New Home Starts/Sales: New home construction is increasing to an estimated 1 million starts in 2025.
Challenges for Builders and Developers: The presentation identifies "Regulatory Burdens", "Skyrocketing Land Costs", "Volatile Material Prices", "Persistent Labor Shortages", and "Profitability Constraints and Project Feasibility" as challenges for builders and developers.
Student Loan Debt: Continues to rise.
Home Insurance: Home insurance costs are increasing.
Generational Wealth Transfer: "Boomers currently control $85T in assets, almost 50% of all assets in the U.S." "$19T is in real estate". There are multiple approaches to transferring wealth to the next generation.

V. Luxury Market:

The World's Wealthy: The global population of high net worth individuals (HNWI) continues to grow.
Allocation of Financial Investments: Increased percentage of investment in Real Estate in 2024 to 19%.
Luxury: Days on Market: Luxury properties generally stay on the market longer than non-luxury properties.

VI. Commercial Market:

Commercial Trends: There is a "Record-high vacancy rate of 20.4%" in the office sector. Retail is proving more resilient. Multifamily is experiencing rent declines due to new supply. Industrial rent growth is minimal but positive.
Multifamily Units Started: Increasing, at 418 units started in '24, above the historical average.
Loan Delinquency Rates: Remains below the historical average.

VII. NAR 2024 Profile of Home Buyers and Sellers:

First-Time Home Buyers: Down to 24% in 2024.
Primary Reason for Purchasing a Home: The "Desire to own a home" remains the top reason, though it has declined in recent years.
Weeks in Home Search: Averages 10 weeks.
First Step in Buying Process: "Looked online for properties for sale" is the leading first step (43%).
Information Sources Buyers Use: "Real estate agent" remains a key source, but "Mobile or tablet search device" is rapidly growing (69%).
Where Buyers Found the Home They Purchased: "Internet" remains the primary source.
Value of Website Features: "Detailed property info" and "Property photos" are considered most valuable.
Method of Home Purchase: "Agent or Broker" use remains dominant, at 88% in 2024.
What Buyers Want From Their Agent: The top priority is to "Help finding the right home to purchase" (49%).
How Buyers Found Their Agent: "Referred by (or is) a friend, neighbor, or relative" is the top method (40%).
Buyers Interview: Most buyers interview only one agent (75%).
Most Important Factors for Buyers: The most important factor was listed as "Experience" with "Honest and trustworthy" at a close second.
Home as a Financial Investment: 80% of respondents believe real estate is a good financial investment.
Buyer: Repeats and Referrals: 88% would definitely or probably use their agent again.
Buyer and Seller Satisfaction: Satisfaction among both groups remains very high.
How Sellers Found Their Agent: "Referred by (or is) a friend, neighbor, or relative" is the top method (38%).
Seller Interviews: Most sellers interview only one agent (81%).
What Sellers Want From Their Agent: The top priority is to "Help seller market home to potential buyers" (22%) and "Help price the home competitively" (20%).
Seller: Repeats and Referrals: 87% would definitely or probably use their agent again.
Method Used to Sell Home: "Sold home using an agent or broker" remains dominant, at 90% in 2024.
Incentives Offered to Attract Buyers: Most sellers are not offering incentives to attract buyers.

VIII. Industry News:

CoStar acquires Matterport.
Zillow partners with First Street to provide climate-risk data.
Realtor sues CoStar for accessing sensitive information.
Redfin signs a $100 million deal with Zillow for multifamily rental listings.
Tech providers are leveraging AI to enhance efficiency.

Implications:

The housing market is still projected to be a strong seller's market despite affordability challenges.
The slide deck data provides a mixed outlook, highlighting both opportunities and potential challenges for real estate professionals in 2025.
Agents need to focus on providing expert guidance and demonstrating value to buyers and sellers navigating a complex market.
Technology continues to play an increasingly important role in the home buying and selling process.

Disclaimer:

The presentation includes a data disclaimer: "Any data KW shares with you (the “Data”) is provided on an “as is” basis and KW makes no representation or warranty, and disclaims all warranties, expressed or implied, of any kind with respect to the Data. You should consult your own legal, financial, or tax advisor and verify all Data to your satisfaction prior to taking any action."

This briefing document is for informational purposes only and should not be considered financial or legal advice.

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