Talk of a potential recession and the impending business practice changes were the overarching themes of the opening session of Keller Williams’ 2024 Mega Agent Camp Tuesday morning.
Despite these harsh realities, Gary Keller, the executive chairman and co-founder of the firm, still had a reassuring message to share with the over 4,700 agents who had gathered in Austin, Texas for the event.
“It is kind of like when I got into real estate and I looked up and thought, ‘There are so many homes being sold, so I can hit my goal — not everyone else will, but that’s not my problem.’ There are more than enough homes sales in your market for every one of you to hit your goals if you do the right things. Others might not hit their goals and the reason they didn’t is because they didn’t do the work. Just do the work,” Keller said, echoing a sentiment emblazoned on his black t-shirt.
According to Keller, in the current housing market and overall industry environment, this means making sure agents are prepared for the National Association of Realtors’ (NAR) nationwide commission lawsuit settlement agreement business practice changes set to go into effect on Saturday, and that they are doing the work of staying on contact with their past and current clients.
Keller Williams leaders say this is especially important right now as the economy sits at an inflection point that includes both the very real possibility of an economy-wide recession and the Federal Reserve bringing down interest rates.
“If you don’t do your contact and your lead gen throughout time, whether it is good or bad, when the market changes you are always behind,” Keller said. “The only way you can be ahead of change is if your stay in relationship. If you sit there and don’t do anything until it has gotten really good, you are behind everyone who has already been talking and building up rapport and relationships.”
In order to support these relationships, Keller said agents need to buckle down on education and stay on top of economic trends and information.
“As professionals there needs to be weight behind our answers,” Keller said. “Anybody can read the news and get information, but do they understand what it means and what could be coming? This is what we as professionals get paid to do.”
To help attendees increase their knowledge of current macroeconomic and housing market conditions, Keller and other brokerage firm leaders walked agents through some of the current trends. These trends, including cooling inflation, rising unemployment and GDP growth that is hovering within the range the Fed likes. This of course all points to the Fed lowering interest rates at their September meeting. And while that is good news for the housing industry, depending on where the economy goes from there, it could mean a great 2025 or a terrible 2025 for agents.
According to Ruben Gonzalez, Keller Williams’ chief economist, based off of yields on treasuries, the probability the economy has a recession is currently the highest it has been since the 1980s. However, Keller Williams’ leaders three possible scenarios for where the economy if heading, including one in which the Fed successfully executes the soft landing it has been aiming for.
In this scenario, Keller Williams sees unemployment remaining under 5% and interest rates falling in a bumpy manner to around 6%, resulting in existing home sales, which are currently slower than 2023, jumping to 4.5 million in 2025.
“That is a very likely scenario,” Keller said, injecting some optimism into the conversation. “Right now, that is the scenario most condition with projections in the marketplace.”
The other, less likely scenarios Keller sees are a normal recession and a banking recession. In a normal recession, Keller said unemployment would rise to 6-8%, interest rates would fall to 5% and home sales would jump to 5 million in 2025.
“That is a really normal scenario,” Gonzalez said. “We always tend to lead the recession. We are already in our recession, it would be very normal for then a recession to start in the economy, then the Fed drops rates, and we start to improve before the rest of the economy does basically driving the economy out of the recession. We are a growth engine and the Fed knows that.”
In a banking recession Keller Williams would anticipate unemployment rising to 8-10%, interest rates dropping to 3-4% and home sales falling to 4 million or less in 2025, as banks tighten lending standards.
Keller said this situation is a “wild card,” noting that the commercial real estate sector could drive the economy into this situation.
“If all of a sudden there is a default, there are problems,” Keller said. “The banks are heavily invested in lending on commercial real estate, so that could really disrupt the banking industry.”
While agents may understandably be concerned about the state of the economy, as well as the NAR settlement business practice changes, Keller did have good news for attendees.
“We are already at the bottom. What you are experience is probably is as bad as it gets, so if you are feeling pretty good about yourself right now, congratulations,” Keller said. “We also just want to remind you again about methods of purchase. Look at that number — 89% still use real estate agents. IT is the highest it has ever been since they’ve been tracking it.”
“Through two decades of change, the internet, all of the people who came in to try to step between us, we are still the number one choice and when people look ahead to there changes that is unlikely to change,” Jay Papasan, the vice president of content strategy at KW, said.
“The graveyard is filled with people predicting the demise of the real estate agent,” Jason Abrams, the head of industry and learning at Keller Williams, said. “They have greatly underestimated all of you.”
