In a new episode of the “Real Estate Insiders Unfiltered” podcast, John Campbell — managing director at Stephens Inc. and an equity research analyst — joins hosts James Dwiggins and Keith Robinson to chat about last month’s major changes for the real estate industry.
The trio discuss the major companies that are thriving in the post-Aug. 17 market and those that still face challenges. The conversation also explores how portals can help navigate agent commission changes while shifting to buyer representation agreements before showings.
The conversation starts with Dwiggins and Robinson posing a question about the current state of the housing market amid economic turmoil. Campbell says that global equity markets are focused on interest rates more so than any other worldly factors. He also makes note of a common interest rate system in which negative economic events would cause interest rates to drop, but now a positive global picture would lower rates instead.
Robinson points out the volatility of that system, to which Campbell agrees by pointing out how difficult it is for the average American to afford a home. But he follows up by highlighting the recent increase in housing affordability due to decreasing inflation rates.
Segueing from the market conversation, Dwiggins asks Campbell to share more insights into his expectations of a Federal Reserve rate cut. Campbell anticipates an interest rate cut of 50 basis points once enough job losses arrive. And as long as the job market continues to cool, rates may go down even further in the next few months.
“A recession is good for housing,” Campbell says. “The Feds going back out and buying Treasurys is going to bring the rates even lower. Unemployment, job losses and foreclosures are going to drive new listings, more listings, lower prices, and more buyers come to bat.”
Next, Dwiggins and Robinson ask Campbell to categorize companies as winners or losers in the new real estate market following the implementation of the business practice changes mandated by the National Association of Realtors‘ commission lawsuit settlement agreement.
The first company on Campbell’s winners list is Zillow, which has recently seen its stock soar by more than 20%. Campbell highlights the company’s significant investments in its Super App model, which integrates other products that generate more profit. Robinson chimes in and mentions Zillow’s uptick in mortgage originations in markets like Atlanta, Phoenix and Charlotte.
Campbell also identifies Redfin as another winner due to its Redfin Next initiative, which combines a traditional W-2 employment model with higher commission splits. This initiative aims to attract and retain more agents with better compensation as agents can establish their price points and maintain benefits.
eXp Realty is also on Campbell’s winners list after the brokerage removed unproductive and inactive agents from its ranks to boost earnings.
Following that point, Dwiggins brings up potential agent attrition in the industry. Campbell predicts a 50% agent attrition rate, although he points out that most of these agents will be part-timers who close few deals, so full-time agents may not be affected much.
To end the episode, Campbell explores a few companies that may see negative effects from the industry’s recent changes. These include RE/MAX and Realtor.com, two firms that wrestle with rigid business models and debt that shackles them from performing. He also loops in Compass, CoStar and a few other companies that will be under scrutiny from Wall Street analysts in the coming months.
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