😲 2 major developments impacted the real estate market recently…

…but you probably only heard about one.

Hi, it’s Eva Lin, #1 Realtor for Pasadena Homes Sold in 2021 & 2022.

In this monthly market update for November, I have a lot to cover!

I’m breaking down:

1) What’s happening with interest rates

2) What’s happening with Pasadena real estate as 2023 winds down, AND

3) My thoughts on the big commission lawsuits making national headlines.

First up, let’s talk about interest rates.

📉 Earlier this month, mortgage rates had their biggest 1-week drop in over a year.

That’s because of how the recent Fed meeting unfolded.

The Fed did not raise interest rates and…

…favorable economic data put downward pressure on existing mortgage rates.

As far as December and January go, rate hikes appear unlikely in those months too!

What’s more, credit swap forecasting shows a good chance that…

🔮…the Fed will start lowering rates in mid-2024.

That’s a long way off and a lot can change before then.

But, the main thing to know is mortgage rates have dropped from around 8%…

…down to the mid 7’s.

It’s possible we’ll see them dip even lower before the year ends.

That would be great news for home sellers and here’s why:

📈 Rates climbed rapidly from early September to late October.

During that time, they went from 7% to 8% (approximately).

This steady rise slowed home buyer activity for houses listed for sale in the last 45 days.

After all, as mortgage rates rise, house affordability drops…

…and so does the number of buyers who are making strong offers.

🎁 With rates now falling, home sellers are receiving an early Christmas present.

And if they continue to fall as the year ends, we could see an uncommonly active holiday season for real estate sales.

Overall, far fewer houses have sold this year vs. last year…

…but I’ve been helping as many families as ever!

In the last 3 weeks alone, I helped 5 families.

4 were selling and 1 was buying.

Just a few days ago my client, Hatsumi…

…sold her beautiful Mid-Century at 3785 Ranch Top in Pasadena.

Her house sold for $2.3M which was more than $300K over asking.

🥳 She was so happy with the outcome!

Then there was Michael, who sold his house at 1955 Endicott in San Marino for $2M…

…which was $200K over asking.

Scott & Madison’s home at 1130 Daveric in Pasadena sold for $100K over asking at $1.3M.

And my clients at 1700 Diamond in South Pas sold their house for $150K over asking at $2.35M.

All of these homes received multiple offers and sold quickly.

Delivering those great results came down to:

✅ Strategic pricing

✅ Powerful marketing, and

✅ Expert negotiating.

But, to be fair, one more important factor was timing.

All those homes were listed in September.

Many homes listed in October are taking longer to sell because…

…rates quickly jumped about 1% and buyer confidence fell.

But, with rates now coming down off their peak, sellers will start seeing more buyer activity.

Let’s shift gears and talk about the BIG real estate commission lawsuits…

…that have been all over the news.

A lot of folks have been asking my opinion on this recently!

Frankly, I’m not surprised that change is afoot for how real estate commissions work.

🤨 I’ve always found it strange that buyer agent and seller agent commissions are still co-mingled.

An arrangement like the following seems more transparent and appropriate:

-A home seller hires a listing agent and the two parties agree on a fee for the listing agent’s services.

-A home buyer hires a buyer’s agent and the two parties agree on a fee for the buyer agent’s services.

So, why does the current practice dictate that the home seller and listing agent agree on both commissions?

🔎 Let’s look into the past to find the answer.

Before websites like Zillow, Redfin, and came along…

…home buyers had a very difficult time learning which houses were listed for sale.

That’s because this information was only available to real estate agents via exclusive access to the Multiple Listing Service (“MLS”).

Since it was nearly impossible for home buyers to know which houses were for sale (aside from looking in the newspaper or trying to find “For Sale” signs)…

…home sellers had to offer a commission to buyer agents.

This commission incentivized the buyer agents to reveal the home seller’s house to their home-buying clients.

👍 But, nowadays, the Multiple Listing Service is accessible to anybody with an internet connection!

Thanks to online alerts, today’s home buyer usually knows about new houses going up for sale even before their agent does!

So, it’s always seemed to me that the co-mingling of commissions is a very outdated practice (albeit a deeply entrenched one).

Even more concerning is that many real estate brokerages do not allow their listing agents to list a home for sale…

…unless a minimum of 2.5% commission is being offered to the buyer agent.

If that’s not price fixing, I don’t know what is!

To be clear, I believe a great buyer agent is worth their weight in gold.

I personally represent 20+ home buyers per year, and I give my all to protect their interests, provide expert guidance,…

…and deliver an overall WOW!-worthy experience.

❤️ There are plenty of outstanding, hardworking buyer agents out there who I have tremendous respect for.

But, the obvious question is:

Why should an unqualified, unprofessional buyer’s agent automatically be entitled to the same commission as an excellent buyer’s agent?

Certainly, that arrangement benefits the agent’s brokerage because they keep a percentage of the sales commission.

It also benefits any agents with a limited skillset because they’re automatically entitled to a larger fee than they could otherwise command.

But it harms the client who is paying a potentially inflated, fixed commission that was decided without their input…

…and without the competitive forces of the free market.

As a result of these monumental recent lawsuits, it looks like major change is coming to how you will pay your real estate agent in the future.

😀 I believe these changes will benefit home buyers, home sellers, and those agents who provide true value for their clients.

So, now you’re caught up on the latest developments in the real estate market…

…both here in Pasadena and nationwide.

If there’s anything I can do to support you with your upcoming home sale or purchase, I invite you to reach out to me.

Thank you so much!

Schedule your no-pressure consult with Eva Lin.

Learn how I work, deliver outstanding outcomes, and treat your interests as my own every step of the way.

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