Affordability is on the tip of everybody's tongues right now.

Why is affordability so important?

Well, it's a measurement of how affordable it is for the average person in America to own a home.

NAR has studied this every single month and they gave us a Home Affordability Graph. And you might expect this, but home affordability has actually been going up because of something substantial, which is interest rates going down.

As interest rates go down, affordability goes up.

That's despite the fact that we've had actually super fast rising prices, right? Prices starting to go into double digit territory across the country. And then we see interest rates going down, which pushes affordability up.

But because home prices have gotten so high recently, that's actually starting to level off and come back down. But we recently had another upswing. So we're measuring a few things when we look at affordability.

When NAR looks at...

Something super exciting happened in the last month that we haven't seen in the last 15 years:

Home prices on existing homes exceeded home prices for new homes.

Think about what I just said:

Existing home prices exceeded new home construction. So it was actually cheaper to go buy a brand new house nobody had ever lived in than buying an existing home. Absolutely amazing.

Lots of reasons behind that. But one of the reasons is normally when you're buying new construction, you're locking in a price six months earlier. And then they complete the new construction and you move in.

Well, the market has super accelerated in those last 6 months. And guess what's also happened:

Now, if you were to try to pull that off, what's happened with all kinds of lumber, supplies, and even appliances?

Prices have gone up.

So this will probably not be repeated anytime soon because now prices on new construction are beginning to rise again.

But what...

What percentage of Americans would you guess paid off their home?

Think about that for a second: Completely own their home, free and clear.

In other words, when you're driving down the street in your neighborhood, out of 10 homes, how many people have paid their home off and outright own it?

Would it be 2 homes, 3 homes, 4 homes?

The answer is 38% of Americans have paid off their home in full, which is absolutely amazing.

The equity for homes in America is off the charts. It's incredible. So that's good.

Now, why do I bring this up?

The reason I bring it up is because people that have equity in their home actually have a huge, powerful advantage when it comes to moving up to their dream home.

And here's why:

They can actually do something that a lot of sellers can't. They could go buy a home and finance their second home (what they're going to buy next). And they won't have two mortgages.

So they have no pressure on themselves when it...

Sometimes a seller will say to you, "Well, just sell it to a cash buyer. I don't want to deal with financing."

Have you heard that? We all have from time to time. When you have a seller say that to you, you need to arm yourself with good information so you counter that. And help them understand that the market isn't comprised of a ton of cash buyers.

The good news is that there are more cash buyers that there has been. We've seen a huge uptake in cash buyers. But the current number as of today, in all across the country, is that 25% of the sales done in the country are now cash buyers.

But what's the reverse of that number? The reverse of that number is 75% of the sales are not cash sales. So they're involving some level of financing. Which means that when we list a property, we have to sell it four times in order to create a sale.

We have to sell it to the market, to get them excited about that listing. That's creating that...

We've just had some excellent news about where homeowners' heads are regarding selling their home.

The latest study shows that 67% of homeowners believe today is a good time to sell, which is one of the record highs we've seen with this kind of thought process.

But when we go deeper into those numbers, according to Realtor.com, it shows this:

1 in 10 homeowners plan to sell this year. 1 in 10!

Think about that when you're driving home tonight and you're driving through your neighborhoods. 1 in 10 of these homes that you're driving by is going to be listed in the next year!

But here's something that's even more exciting:

63% of those are going to be listing their home in the next six months.

The only question is... Who are they going to list with? Is it going to be with you or your competitor?

And if it's your competitor, why did they get the listing when you missed out? The reason is they did one thing that you didn't do:...

You'd think by now everybody that was going to refinance their home would have already done it.

Interest rates have been at record lows for months, right? But the answer is, that's not true.

There are 5 million homeowners in America that could benefit from refinancing. And here's how it breaks down, which is crazy:

450,000 of those loans have interest rates above 6.17%. Isn't that amazing In this day and age?

A million of those loans have interest rates above 4.39%.

And 3.6 million have interest rates above 4.21%.

So when we look at that, that's a huge opportunity for you to educate the market in your local area about the power of refinancing. Try partnering with a lender in your local market. And you guys could talk about that through a video or email — really reaching out and doing a good job with communication.

Now what's more powerful about this?

Did you know that when you refi a house, you don't get quite the best rate. You know...

Should your buyer float their interest rate or lock now?

Interesting question. Some of you really gotta be working with your lender to have that conversation with them. But let me give you a little bit of what's been happening to date in January through roughly March 2021:

Let's look at the numbers and dig into them that I got from one of my lenders — who is an incredible rockstar in the lending world. His name is Brian Case and his team at Guild Mortgage gave me these numbers:

For the entire year of 2021 so far, a floating borrower — or somebody that took the gamble and threw the dice to see if they can get a better rate tomorrow than
they can get today — would've won 41% of the time. And they would have lost 58% of the time.

Because 48% of the time rates went down and 58% of the time they went up. So it's a gamble that may not be paying off.

Overall interest rates have gone up about a half percent since January....

You learn something new every day in real estate. Even after 31 years in this business, I'm still learning.

I learned something fascinating this morning based on a study from Zillow:

In the last half of 2020, the number of listings taken week by week were about even with 2019.

There's a sense that there's a lot less listings in the market as a result of of us not taking as many listings, but it's just not true.

In the last half of 2020, we've taken as many listings as a nation as we did in 2019. But it doesn't feel like that.

So why doesn't it feel like that?

It's like if you own a grocery store and had a delivery guy come every Friday to fill your shelves with the same order. But what has changed is the number of buyers walking into your grocery store and how many products they're buying each time they come in.

If more buyers are coming into your store and buying more products from your shelves, it's going to seem like there's not as much on the shelves...

One thing we're all challenged with right now is the speed of the market — or how fast listings sell as soon as they hit the market.

When you listed a house in a traditional market, you would have 90 or 180 days of market time. During that market time you'd able to be able to put out just listed cards, call and farm neighborhoods, host multiple open houses, and receive sign calls from your marketing. And with all that marketing, you would be able to convert those interested people into more buyers and sellers.

So every listing could easily lead to five or six more opportunities for more buyers and sellers.

But today things have changed. Every time you put a house in the market, it's generally selling within a few days with multiple offers. So you're getting robbed of that extra marketing opportunity.

But you can change that by using what I call a Marketing Sequence.

A marketing sequence simply means that you have a strategy about how you...

My friend and superstar REALTOR Adam McGrew recently shared a unique concept that he uses when talking commissions with sellers. He focuses his script around what the competition is offering and how the seller can be more competitive in the market.

His first step is to print a map of the area along with a list of properties that are currently for sale near the new listing. He then researches the compensation offered to buyers agents and highlights this information in his presentation. Next he asks the seller a simple question "So, you do want to be competitive, right?"

Not only do most sellers want to match the current compensation offered to buyers agents in the market, many want to incentivize buyers agents and encourage more showings by offering a higher compensation percentage.

Watch the video for more details...