110: Center for REALTOR® Development: 2025 National & Local Market Outlook with Dr. Jessica Lautz from NAR: Part 1

Welcome, friends to the Center for REALTOR® Development podcast from the National Association of REALTORS®. I am so glad you are joining me and today's guest, Dr. Jessica Lautz from NAR.

Dr. Lautz is the Deputy Chief Economist and Vice President of Research at the National Association of REALTORS®. I love, love, love my data friends and I always learn things to help me and my clients. These trends are so huge when talking with our clients and preparing ourselves, as well as just getting in the nitty gritty because our clients are looking at that national market but we're also in the local market.

I'm so excited to talk today about how we put those two things together.

We are releasing this interview in two episodes. This is Part 1.

[1:16] Welcome, Jessica! What are the hot topics you are seeing that are important and different? Let's give our listeners a preview of what we're going to discuss in these two episodes, 110 and 111.

[1:36] Jessica says the real estate market is divided into two markets. We have an all-time high of all cash home buyers with cash from housing equity. At the same time, we have an all-time low of first-time home buyers.

[1:58] Everybody's demographics are changing and buyers are adapting to the real estate market at hand. We're going to go over fundamentals and dig into some demographics, too.

[2:18] Did anybody expect these demographic changes? Some unexpected things are going on in the world.

[2:27] When we look at the real estate market, we know it is a tough market. Inventory is still extremely limited, even though it's jumping and we're seeing rises in housing inventory. We're still under February of 2020 when the housing market went bananas! We know that it's a difficult market to get into.

[2:55] Home sales in 2023, 2024, and the first quarter of 2025 have been the lowest since 1995. This is striking because we have 75 million more people in this country than we did in 1995. Home sales volume being at the same level as in 1995 doesn't make a lot of sense.

[4:06] We have more family units that tend to be smaller. We need more homes. We have seen young adults doubling up with parents and older relatives doubling up with their adult children. We know we have a lot of pent-up demand in the housing market from those young adults trying to leave the nest.

[4:39] We're going to talk a lot more about them and the first-time home buyer option in our second episode, look at the demographics, and some possible solutions for young adult home buyers.

[4:50] With the low number of transactions, we don't see the number of real estate agents shrinking. That's unexpected. It's an incredibly competitive and dynamic industry. You have to show your value, and what you can do for a client seller, or buyer. It's very difficult and it's growing.

[5:30] Dr. Lautz was in three cities last week, talking to REALTORS® in Lansing, MI, Nashville, TN, and Orlando, FL, three very different real estate markets. In each hotel, the person at the desk or a person in line told her they wanted to study for their real estate license. It's an attractive career path.

[6:14] Monica told someone that the number of actual sales is down, but it is the kind of market where anybody willing to be creative and hustle can still get in. Dr. Lautz agrees. Everyone has a different business model Everybody has the niche market they develop over time.

[6:46] Monica was an agent in 2008. There were a lot of foreclosures, so foreclosure agents were getting a disproportionate amount of business. Monica took on some side work to stay in the business. The whole country was economically challenged. It felt so different to Monica than right now.

[7:22] Jobs are at a good level. Unemployment is at reasonable levels. Dr. Lautz says jobs are important for home sale activity. Interest rates have been stable recently in the mid-6% range. Mortgage delinquencies are low because people need to have good finances to get a mortgage loan.

[9:17] Even someone in an unfortunate situation where they are forced to sell will probably get some cash out of their house.

[9:40] Dr. Lautz says that in more than four-fifths of the markets, home prices keep going up. They are going up by double digits in some markets. It's a result of the lack of available inventory. Nationwide existing home sale prices are higher for each month than the NAR has ever seen in previous years.

[10:20] Prices differ in markets around the country. In some markets, people bid up home prices during the pandemic and there has been an easing of prices in some of those areas. In Austin, home prices went up 45% year-over-year. There has been an easing there. Homeowners are in a winning situation.

[11:13] In the pandemic, we borrowed buyers from the future. During the pandemic, people suddenly and unexpectedly decided to move while mortgage interest rates were lower. A lot of people either don't have a home mortgage or are in a low-interest-rate mortgage. They have no intention of moving.

[12:19] There are a lot of people who are just trying to make it work, even though they would be in a better situation if they moved.

[12:32] Mortgage interest rates in the high sixes are a full percentage point below the historical average since 1971. Some people are sitting on enough equity that if they used it for a down payment, they could be in a better financial situation.

[13:06] If agents called all of their past clients to discuss the situation, and those clients talked to their mortgage lender to find out what their options are, people would find out they have more options than they realized.

[13:44] Do people in their first home understand the trade that can be made now? Do they understand the equity that they're sitting on? The housing equity gains we've had in the last few years are very unusual.

[13:56] From 2020 to 2024, we saw a 50% increase in price appreciation, nationally. In some states, it's topping 70%. These homeowners are sitting on a lot of cash. Many of them could be in a better situation if they made that move. Monica points out there are more options than people think.

[14:55] Dr. Lautz speaks of the many all-cash buyers in this market, for more than two years, now, topping more than a quarter of the market. There are a lot of people who can make these housing trades or put down extremely sizable down payments because of the housing equity they earn.

[15:13] Half of older Baby Boomers and nearly 40% of younger Boomers in their 60s are putting down all cash. They know the value of home ownership and they're making housing trades. [15:29] Monica's message to the younger people: If you can get the house, get the house. Who knows where you're going to be in 10 years? Over time, even if there's a little bit of a down payment, the value keeps going up.

[15:46] Dr. Lautz hopes that wages will go up also, but that's guesswork.

[16:03] Monica discusses the U.S. credit rating downgrade of May 2025. When the U.S. credit rating goes down, stuff happens in the bond market, and then that affects the interest rate.

[16:33] Dr. Lautz says NAR is reporting that there have been a lot of investors in the bond market who have decided not to invest but to sell or move money into something else. That means that the 10-year Treasury goes up. Mortgage interest rates are closely aligned with the 10-year Treasury.

[17:11] We have had about a 2% added interest rate. If the 10-year Treasury is at 5%, the 30-year fixed would go to 7%. The NAR forecast is that the 30-year fixed will be in the 6% range. It could touch 7% for a few days and then come back down into the 6% range. They probably won't go down by much.

[18:20] Be sure that any buyer you are working with is in close contact with their mortgage broker. The broker will lock in the best rate they can get on that day. They will be watching rates more closely than a buyer has time to. Working with that expert is incredibly important.

[18:55] Dr. Lautz notes that the use of FHA and VA loans has gone down. How many people are aware of these low-down-payment options that are out there for buyers? They do have a different interest rate than what you could see for a conventional loan product. You need a smaller down payment.

[19:36] Something that goes under the radar is the low-down-payment options in your community for teachers, nurses, first responders, and just first-time home buyers overall. Many buyers and potential buyers nothing about these programs that can help first-time home buyers to get into the market easier.

[20:24] Monica advises agents not to make assumptions about buyers and not to assume the lender is making all the options available to your first-time home buyer. If inventory is not moving, sellers want to see offers.

[20:53] Dr. Lautz says now is a good opportunity for first-time buyers, because of the recent 6% rate range, more housing inventory coming onto the market, and the lock-in effect of repeat buyers. First time home buyers stand a chance because they're not overwhelmed by repeat buyers.

[21:14] Being able to come into the market, see several homes in their price range, look at the homes for more than 15 minutes, and have a conversation with the seller through their agents.

[21:35] Homes are selling quickly but there are four months of inventory on the market. Dr. Lautz says most homes are selling in under a month. Buyers generally have a few days to make up their minds. We could not say that a couple of years ago!

[22:23] Dr. Lautz explains capital gains on home equity. This will be one of the top issues of the REALTORS®' Legislative Meeting. The advocacy team, led by Shannon McGann is in talks with legislators to adjust the capital gains limit with inflation above where it has been stuck for decades.

[23:39] The public doesn't understand the current capital gains deduction and needs to be educated by agents about it.

[23:59] Thinking of people who are aging in place, is their home working for them? Are they able to stay in that home with 14 stairs in the long run? For a lot of people, the answer is no. But they may be limiting themselves as they think their tax bill to sell will be too high. It may not be as much as they think.

[24:32] Making sure that you're talking to the tax experts who know all of that is incredibly important. Sellers need to understand what they are going to be taxed on.

[24:47] So many great topics for our agents to take and talk to their sphere about! Newsletter fodder! All kinds of great things to help educate the public about!

[24:58] This has been a great conversation with Dr. Jessica Lautz. Thank you so much! We're going to do another episode, so check back in when that's released.

[25:07] For my listeners, I want to remind you of all the learning opportunities at Learning.REALTOR. You can access so many courses there and each month, there are specials if you want to get a deal. We hope you'll join us for Part 2 with Dr. Jessica Lautz from NAR.

[25:24] I'm Monica Neubauer for NAR's Center for REALTOR® Development. Thank you so much, Dr. Lautz.

[25:31] All right, folks! Now, go out there and sell some more houses! Find them if you need to! We'll see you soon!

Tweetables:

"When we look at the real estate market, we know it is a tough market. Inventory is still extremely limited, even though it's jumping, even though we're seeing rises in housing inventory. We know that we're still under February of 2020 when the housing market went bananas!" — Dr. Jessica Lautz

"What we have seen is that we have a large number of people who are doubling up, young adults with parents. We also have a large number of older relatives who are doubling up, too, with their adult children." — Dr. Jessica Lautz

"You have to show your value. You have to be out there showing what you can do for a client to make sure that you can get the listing or you can work with that buyer. And it is very difficult." — Dr. Jessica Lautz

"There are a lot of people who are just trying to make it work, even though they would be in a better situation if they moved." — Dr. Jessica Lautz

"When we look at FHA and VA loans, the use has gone down, unfortunately. I wonder how many people are aware of these low-down-payment options that are out there. They do have a different interest rate than what you could see for a conventional loan product." — Dr. Jessica Lautz

Guest Links:

Dr. Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of REALTORS®.

NAR Resource Links

ABR® Accredited Buyer's Representative

Additional Links:

Crdpodcast@nar.realtor

Crdpodcast.REALTOR

Learning.REALTOR — for NAR Online Education

CRD.REALTOR — List of all courses offered

Host Information:

Monica Neubauer

Speaker/Podcaster/REALTOR®

Monica@MonicaNeubauer.com

MonicaNeubauer.com

FranklinTNBlog.com

Monica's Facebook Page: Facebook.com/Monica.Neubauer

Instagram: Instagram.com/MonicaNeubauerSpeaks

Guest Bio

Dr. Jessica Lautz is the Deputy Chief Economist and Vice President of Research at the National Association of REALTORS®. She has been with NAR since 2007.

The core of her research focuses on analyzing trends for both NAR members and housing consumers. She is in demand as a speaker and by major media outlets to provide commentary on the real estate market. She has testified before Congress on behalf of NAR.

She also volunteers at Nottingham Trent University as an industry fellow mentoring real estate graduate students, is a committee chair at the National Association of Business Economics, bakes birthday cakes for underserved youth with Cake4Kids, and sits on the board of the Food Recovery Network.

Dr. Lautz has been recognized by Housing Wire's Women of Influence and RISMedia's Newsmaker award.

Jessica received her Doctorate in Real Estate from Nottingham Trent University in the United Kingdom. She also holds a Master's in Public Policy from American University and undergraduate degrees in Political Science and Law and Justice from Central Washington University.