2025 is officially here. 2024 was a disruptive year for relocation as the industry clamored to understand and respond to real estate industry changes in the wake of the NAR settlement. Now, we are midway through January 2025 and much of the industry chatter remains focused on the real estate industry, mortgage rates, and the new administration. Let's jump in:
Mortgage Rates: Mortgage rate predictions towards the end of 2024 were bullish with many forecasters suggesting 6% averages, but optimism waned towards the end of December and into January. Stubborn inflation coupled with December’s strong jobs report will likely cause the FED to hold off on cuts for now. Rates hovered around 6.75-7% for most of 2024. Today, 30-year fixed rates are just under 7%. While it’s possible we will see low 6% figures later in the year, Housing Wire suggests we’re in for a bumpy ride. There are too many unknowns today to make accurate predictions. Mobility professionals have been managing interest rates as high as 8% since 2022, which means policies and protocols should be in place to support talent.
Real Estate DOM and Inventory: According to Realtor.com®, the residential real estate market experienced its strongest seasonal slowdown in the past two years. In December, the average days on market increased from 62 to 70, when compared to the previous month. Further, inventory decreased by 8.6% from November. It’s important to note that seasonal slowdowns are to be expected. A bump in mortgage rates and the short window between Thanksgiving and common holiday celebrations likely led to a “let’s wait” mentality. The good news is that homes under contract increased more than 7% YOY. With inventory slowly increasing and home prices dropping (albeit, nominally), there is cautious optimism that activity will improve. It’s always important to note that real estate trends are highly localized. The South continues to lead in inventory growth and is nearly at pre-pandemic levels. The West is not far behind, although it still trails pre-pandemic levels by about 4 percent.
The NAR Settlement: The NAR Settlement received final approval on November 26th, 2024. This was not a surprise; however, DOJ comment indicates some uncertainty around buyer agency guidelines and the competitive challenges that could result. On January 13th, the Supreme Court denied NAR’s request to review the DOJ case. Today, more questions than answers remain. Appeals have already been filed. We expect litigious activity to continue in the coming year.
So far, the settlement impact on relocation has been subdued for two reasons: one, the relocation industry worked tirelessly in 2024 to understand the settlement terms and apply them to new processes and materials well before the August 17th deadline and, two, sellers continue to see marketing value in offering compensation support to buyers. Nevertheless, it is imperative that all stakeholders continue to monitor agency trends to ensure that all talent, including sellers and buyers, have the education and support they need to have meaningful conversations with Realtors that lead to positive transactions with minimal stress.
Migration Trends: United Van Lines 47th Annual Movers Study was released in January. According to the study results, which tracks the company’s exclusive data for customers’ state-to-state migration patterns in 2024, West Virginia was the state with the highest percentage of inbound migration (66%). The top motivations for moving to the state include wanting to be closer to family (35%) and a new job/company transfer (31%). However, for the seventh consecutive year, the study found that more residents moved out of New Jersey than any other state, as (67%) of New Jersey moves were outbound. The top motivation for moving out of the state was driven primarily from those looking to retire (22%) and wanting to be closer to family (20%).
In the Southeast region of the United States, several states – including South Carolina (62%), North Carolina (60%) and Arkansas (60%) – continue to increase in popularity with a high percentage of inbound moves in 2024. Conversely, in the Midwest and West region of the U.S., an outbound moving trend continues. Illinois (60%), Wyoming (57%) and Nebraska (56%) were all included among the top states with a high percentage of outbound moves in 2024.
The New Administration. While there is much chatter about the incoming administration and how it will impact the world, we resist speculation. We will, however, keep our eyes and ears firmly focused on some key areas for mobility, including:
· Visa and immigration (notably H1B and H-2 visa programs)
· The DOJs interest in real estate compensation structures
· Tariff impact on international trade and inflation
· Tax changes (Tax Cuts and Jobs Act of 2017 expires 2025)
Over the past four years, our community has not only proven resilient in the face of great challenges but it has also become stronger for it. Look no further than the 2024 Global Workforce Symposium, which was buzzing with honest and transparent dialogue, collaboration, appreciation, and creativity. All of us at XONEX wholeheartedly embrace this energy. We look forward to continuing great conversations with all of our partners in 2025.
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