Key Takeaways from Gary Keller’s Market Update

Aug 14, 2018 2:58:22 PM

At Mega Camp 2018, Gary Keller, co-founder of Keller Williams, took the stage with Jay Papasan, vice president of KW Publishing, and Ruben Gonzalez, senior economist with KW Research, to present his annual Market Update. This is a one-of-a-kind, holistic view of where the market is and where it's going.

Here are five key takeaways from the presentation, coupled with resources to help you stay ahead of the competition and Gary Keller’s advice on how to create customers for life.

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Mortgage rates are increasing at an unsustainable rate.

GK: We saw a 1 percent increase in interest rates in a 12-month period.

JP: That’s equivalent to a 10 percent mortgage payment on a 30-year loan. There’s a point where buyers look up and say they’ve had enough. At some point, they get on the fence and wait. Everyone knows this isn’t sustainable.

We’re on the verge of a shift, largely due to low inventory.

JP: In the United States, inventory is increasing slightly, but houses aren’t selling as fast. Sales are down 2 percent this year. Once you see sales go down, that means the market is starting to shift. It’s time to start preparing for that. In our research, we’ve never seen a supply-driven shift.

RG: We’ve been in a seller’s market for a couple years now. This is what we think is holding back sales. Demand is VERY strong, but inventory isn’t there. In Seattle and Austin, inventory is below three months. For first-time home buyers, it’s below one month in a lot of places. It’s unsustainable.

For a comprehensive view of the U.S. and Canadian housing markets, download the Market Update slides. 

Download the Slides →

Market shifts are opportunities.

JP: Unemployment is nearly as low as it can get, and yet there are still affordability issues when it comes to housing. This may point to a potential correction on the horizon. In the event of a correction, the true business people in our industry will come out on top.

GK: Shifts can help you if you’re fully engaged. That means managing expenses so tightly that they squeak and being aggressive with customer service and acquisition.

JP: Keller Williams went into the last recession as number four and came out as number one. Everyone has the same opportunity. In the event another shift happens and you’re minding your business properly, you’ll gain market share, which research shows is rarely given back.

Learn how to stay ahead of the competition in a changing market. Read SHIFT: How Top Real Estate Agents Tackle Tough Times.

There’s never a wrong time to buy the right house.

GK: When I got into real estate in 1979, mortgage rates went from 10 percent to 18 percent. I was always asked the question, “Should I buy?” Which, I replied, “Do you have a good reason to? Just buy something you can afford. Whether it’s an investment property or a home, you need to be able to afford it. You may need to live in it for 8-10 years." We say that because economic cycles rarely last longer than that.

The good news is that the market comes back. I bought my first investment property for $54,000 and the value dropped to $18,000; but, because we could afford it, we held onto it. It cash-flowed every month and we ultimately sold it for $94,000. Now I’m looking it up and it’s worth $200,000.

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The investment side of real estate will help you create customers for life.

GK: When doing research for The Millionaire Real Estate Agent, we interviewed an agent who had a database of 350-400 contacts and was the top salesperson for her brokerage in the world. How? She sold homes and then started coaching her clients to invest in real estate. This was the catalyst to The Millionaire Real Estate Investor. Everyone who buys a home from us should be a customer for life. They should invest in as many houses as they can afford and represent four or five purchases during their lifetime.

In order to guide your clients through real estate investing, you have to have a hold on it yourself. Read The Millionaire Real Estate Investor to learn about the models, strategies, and fundamental truths millionaires use to become wealthy through real estate.

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