New: 🧠 Market Minds Issue #080

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Why a Recession May Be the Best Thing for Your Next Deal

The Mood of the Market Is Changing

In Q1 2025, nearly two-thirds of prospective homebuyers expect a recession within the next year (the third-highest concern level since 2019, trailing only the pandemic and the Fed’s rate hike chaos of 2022–23). This is a flashing indicator on the dashboard of the U.S. economy, triggered by tariff tremors and the fog surrounding Fed policy.

Recession as Opportunity, Not Obstacle

Here’s the twist: 30% of buyers say a recession makes them more likely to purchase. Why? Because lower rates follow the economic rain. If the Fed is forced into rate cuts to stimulate activity, we’re looking at a window where affordability gets oxygen again. In a market gasping under high rates, that’s the opening for buyers to strike. Especially those ready with cash or pre-approvals while others hit pause.

Inventory: Still the Missing Piece

Yes, listings are up year-over-year. But don’t pop the champagne. Active inventory is still down 16.3% from the 2017–2019 norm. The biggest barrier to buying isn’t rate speculation or election-year jitters, it’s the lack of homes that actually meet buyer needs. The result? A market that’s thawing but far from fluid.

Credit Tightens as Fear Widens

The recession drumbeat isn’t just shifting buyer sentiment, it’s also hardening lender behavior. Concerns about credit scores and qualification are rising. Lenders are preparing for volatility, tightening standards in anticipation. Buyers with thin credit files or marginal DTI ratios are feeling the squeeze. Add in the 9 million student loan borrowers seeing credit score drops this year, and we’ve got a cocktail that makes underwriting even more conservative.

The Fade of Frenzy: Bidding Wars Are Cooling

Only 7.7% of buyers are worried about overbidding—a sharp drop from 10.4% a year ago. That means one thing: The fight is coming out of the market. More days on market, fewer jaw-dropping offers, and less pressure to make instant decisions. This doesn’t mean prices are collapsing; it means velocity is down. And that can be a strategic advantage, especially if you’re advising clients to move with precision instead of panic.

Why the Smartest Agents Are Rewriting the Rules

Top Performers Are Voting With Their Feet

Nearly 7,000 agents switched brokerages in Q1 2025. And the heaviest movers weren’t rookies or volume-light agents; it was the top 25% who drove 67% of total production, with a median book north of $1.7 million. If they’re leaving, it’s not for marginal gains. It’s for a sharper edge.

Not All Markets Are Playing the Same Game

Regional splits in agent migration tell the real story. The Mid-Atlantic saw volume drop per agent despite a 186% spike in moves. The Southeast? Fewer defections, but a 54% surge in productivity per agent. In other words, movement alone means nothing without context. You’ve got to understand the local velocity behind every contract written and every team member lost (or gained).

Flat-Fee and Tech-Enabled Models: Built for Speed, Not Stickiness

Capped Revenue Share and Flat-Fee shops are hotbeds for churn. High agent intake, high exit rates. Some are netting talent gains, but others are treading water. These models are optimized for attraction but not retention. Without deeper roots—leadership, culture, direction—the door keeps swinging both ways. Volume alone can’t fix a leaky bucket.

Money Talks, But Alignment Closes

The top drivers of agent decisions now go way beyond splits and bonuses. The eight core levers—Direction, De-risking, Development, Differentiation, Dynamics, Digital, Dollars, and Dissatisfaction—reveal the anatomy of a move. The smartest players are tuning their recruiting pitch to hit all eight. Not with slogans. With actual infrastructure.

Why AI Can’t Replace Trust: What Tech Gets Wrong About Real Estate

Transactions Are Infrequent, But Expectations Are High

Unlike hailing a ride or booking a flight, buying or selling a home isn’t habitual. It’s rare and deeply personal. That’s why technology hasn’t disintermediated real estate the way it has in other sectors. Consumers aren’t trying to upend the industry. They just want to get through the process without regret. This gives you leverage (if you understand what to do with it).

Tech Isn’t the Threat, Unmet Expectations Are

The biggest gap in the market isn’t AI, chatbots, or commission disruption. It’s clarity. Almost half of consumers don’t even know how to choose an agent. Not because they don’t value the service, but because they don’t know what to evaluate. That’s an opening to lead by defining your value before they have to guess at it.

The Emotional Center of the Deal Is Still Human

Most clients walk into a transaction confused, stressed, and uncertain. They may not know what to ask, but they know how they feel. That means logic won’t win the deal, but empathy and reassurance will. The best agents shape how clients think by anchoring them emotionally first, then guiding them with confident precision.

Durability Isn’t a Moat Without Responsiveness

Yes, the industry is resilient. Commission lawsuits haven’t flattened the fee structure. Portals haven’t made agents obsolete. But resilience can breed complacency. The smart move? Don’t just rely on the industry’s track record. Outperform it. Anticipate confusion, clarify value, and take control of the narrative before someone, or something, else does.

A Piece of Papal History:

This Dolton, IL home was purchased last May for $66k, then re-listed at $199k, but taken down on the day Pope Leo was elected.

As his childhood home, this property will now be auctioned off later next month. What’s your guess on what the winning bid will be?

Check it out 👇

TL;DR (Too Long; Didn’t Read)

Despite growing recession fears, 30% of buyers say economic turbulence makes them more likely to purchase—betting on the rate cuts that typically follow downturns. But that optimism hits a wall: inventory remains 16% below pre-pandemic norms, and lenders are tightening credit, especially for borrowers with thinner profiles or post-student-loan credit hits. Meanwhile, top-producing agents are ditching old broker models in droves—not chasing better splits, but better alignment, infrastructure, and support. And as tech races ahead, it still can’t replicate the one thing that truly closes: trust. Infrequent, emotional transactions give you an edge—if you’re clear, human, and ruthlessly focused on creating certainty in a foggy market.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team