Economic forecasters just a few months ago were predicting that mortgage rates would moderate to 5.8% by the end of 2024, raising hopes that we would see increasing home sales and refinance orders as the year progressed.
But now both Fannie Mae and Freddie Mac are backpedaling on those predictions, releasing more sobering predictions in March positioning interest rates nearer 6.4% by year’s end.
“Strong headline jobs numbers and hotter-than-expected inflation data had led financial markets to price in a less aggressive rate-cutting path by the Federal Reserve, and while the ESR Group notes that labor market indicators are mixed and disinflation will likely resume, it also believes that recent data are unlikely to provide the Fed with the ‘greater confidence’ it needs to begin easing monetary policy in the near term,” Fannie Mae said in its March release.
If this is the new normal, how can a title agency best adapt to what appears to be a long-term stretch of muted refinance business as well as more modest home sales?
Most trend lines are pointing upward when it comes to new and existing homes sales in 2024, which means we have already hit bottom, i.e., Q4 2023 sales, and are expected to trend up modestly throughout the year. Freddie Mac recently forecasted sales will hit 5 million in 2024, so properties most certainly will be changing hands this year.
Rather than focusing on what business has been curtailed because of interest rates agents must stay focused on what is trending in their area and how to capture those deals most effectively.
If you want to capture more business this year, begin by paying attention to what is happening in your market. Get to know the real estate agents who are bringing in the business. Attend real estate association meetings and keep your ear to the ground about buying and selling trends in your market area.
Revisit your business plan for the coming year, but also think about the long-range outlook for your area and the market in general.
For instance, forecasters are already contemplating what they are characterizing as the Silver Tsunami, when Baby Boomers will start the big sell-off of their homes to downsize into properties that require far less maintenance. Keep your eye on this coming shift in your area so you can position your agency at the apex of this movement.
This is also a great time to do a complete analysis of your processes and technology. The title insurance, escrow and closing processes can get unwieldy and dysfunctional if there is not a constant effort to review, adjust or upgrade. This is especially true as we adopt a variety of interconnecting technologies and software to try to streamline those processes.
The real estate market will always be in flux, but as always happens, things will eventually pick up both in the refinance and home purchase verticals and you will want to be prepared for that eventuality so that you can hit the ground running.
At NTS, our flexible solutions give you the freedom to streamline and simplify your operations. Contact us today to learn more about our à la carte or bundled service offerings.
