Nick Bailey, president and CEO of RE/MAX, joined Cheddar News to discuss his outlook for the housing market amid the Fed's decision to raise rates.

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RE/MAX CEO Discusses Outlook for Housing Market Amid Rate Hikes

Let's switch gears 2022 was a down year for the U. S. Housing market as rising home prices and mortgage rates priced out would be homebuyers now, according to real estate company Remax home sales in december were down a whopping 38% from a year before. While the number of homes for sales jumped nearly 70% now despite the headwinds in this higher rate environment, Remax has hope that the Market will rebound in 2023. I am joined now by Nick Bailey Ceo of Remax next welcome to the show. Thanks for having me. So you've had to recalibrate your expectations after last year. Tell me what you're looking at, what we're really seeing is a rebalance. We had one of the most extreme seller's markets that we've had ever in our history and included over 125 months of consecutive run up in pricing. So it was just an unheard of a couple of years for many reasons. And so what we're experiencing right now, especially with the Fed's changing the rates is a rebalance where it's not gonna be swung just for sellers nor buyers? It's more where there's a balance and good for both. You just took over ceo in january, Congratulations. What are your top priorities for this company? Thanks. Yeah, it's been, it's been a year already. It's quick but uh you know what, This is a pretty special year for Remax, we're celebrating 50 years since the company was founded in 1973 in Denver colorado and 50 years later, this organization is over 100 and 44,000 agents spanning over 110 countries And over 9000 offices and so to continue to drive that growth for this company and make sure that we're driving to where the modern transaction is going is definitely important to speaking of the modern transaction, we've seen consumers opt for renting amid these challenges. Do you think the desire to buy a home is fading a bit. Absoluteing not. The dream of homeownership is alive and real. And when people look at it, they talk a lot about the timing of real estate. We have to time the market. And I think for most people, if you're considering buying and selling real estate is about timing, but it's not via the headlines and what people think it is really about the timing for the individual Really, of people that purchase a home, they do it because of a life event, they get married, they have Children, divorce, move for a job or to care for maybe a family member. Those are the things that really drive home ownership. And so regardless of race, regardless of inflation, people buy and sell houses every year. You know this better than I do. But during the pandemic, a lot of people left big cities like New York, they moved to the burbs, are there any specific markets or areas where home buying seems to be recovering a little bit faster or more swiftly than other areas. Well that's a great question because when I talk about the rebalance some of what's happening in some of these markets is absolutely showing that we're not even quite rebalanced yet, We're still in the process. So here's an example bozeman Montana, Coeur d'alene Idaho for the last couple of years. They were off the charts on price appreciation. Well, you look at now the markets that have the highest months supply of inventory, bozeman Montana back on the list. We're looking at the full screen quarter lane, you've got Nashville in there and then there's also something happening in the northeast. The number of new listings coming on is up year over year by around 45% Dover. Delaware is leading the way right now. Uh And in a close 2nd and 3rd is Washington, D. C. And philadelphia. And Nashville is also on that list. And so we're seeing some some pockets of where it was really, really hot. But we are getting back into the the middle of the country having low single digit price appreciation. And there is somewhat of a movement of people going back into metropolitan area. What do you attribute these pockets to? I think it's, we're getting back into what real estate has historically been in a balanced market, you're always gonna have your hotspots on the coastline. So you think of your san Francisco and L. A. And. And florida. And speaking of florida by the way, the highest price increase farming to new Mexico is leading the way with over 20% year over year price values. But that's an anomaly. But you've got Sarasota and brampton Naples florida. Those are number two and three on the list with Myrtle beach and Greensboro north Carolina Being four and five. Those are over 15, price increases from last year. What that tells us is the demand is still out there. What other trends are you seeing in the housing market? Well, what we're seeing which is the hottest topic is interest rates, what's happening with them? And for most buyers and sellers, some don't realize that when the Fed makes a change in these rates, the mortgage rates are not directly tied. They have been indirectly but mortgage rates are based on the 10 year treasury. And so in some cases the Fed has increased the short term rate. And actually mortgage rates have come down a bit. But the reality is it's more about the timing for the individual. Do I have enough for the down payment? Can I afford, can I afford the monthly payment? And we have a saying that I like to use in this industry. Okay, we're going through a market right now where people are marrying the house and dating the rate. And so in many cases we are building a refined pipeline again. Say that again for me, marry the house date the rate. I love that. I'm gonna remember that. Thank you so much. Dick Baillie, Ceo of Remax. Always a pleasure. Thank you so much. Thank you.