New: 🧠 Market Minds Issue #144

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The U.S. housing market has achieved something that looks like progress. In 2022, sellers were listing homes around $450,000 while buyers were browsing closer to $410,000. Today, both numbers are roughly $430,000.

Sellers have become more realistic. But buyers haven't necessarily become more capable. Some have just stopped looking.

Since 2021, the share of online home-shopping traffic going to starter homes — properties below $370,000 — has fallen 11.4%, to 42.6%.

Historically, starter homes received substantially more views per property than homes priced above $1 million. That advantage has nearly disappeared. Luxury shoppers are still shopping; price-sensitive households increasingly aren't.

Entry-level inventory is lower than it was in 2019. Normally, scarcity would produce more competition for every affordable listing.

Instead, engagement with lower-priced homes has fallen to its lowest level since 2019. The constraint may no longer be finding an affordable home. It's being able to afford the affordable home.

At the other end, luxury inventory has grown significantly since 2019, supported by buyers with enough financial capacity to remain active.

Pending sales are falling, builders remain reluctant to meaningfully expand supply, and 60% of consumers expect inflation to outpace their income growth.

Lower mortgage rates or moderating prices could bring sidelined buyers back; potential demand at lower price points remains sizable. But that's still potential demand.

For now, the market looks more balanced partly because buyers and sellers are getting closer together — and partly because some of the buyers furthest from the asking price have left the room.

Real estate agents have a transaction-fee problem. Their brokerages don’t seem to.

These flat charges are added to a client’s closing costs on top of commission. Agents say they create friction with clients and, when clients refuse to pay, can end up coming out of the agent’s commission.

Despite that, only 2% of leaders at brokerages charging transaction fees are seriously considering eliminating them. Meanwhile, 10% of brokerage leaders overall are considering adding one.

Brokerages generally say the fees cover administrative and compliance costs. But some leaders are more explicit about the economics: 27% at fee-charging firms call them a necessary revenue stream as commission margins tighten.

Another 7% say the fees help brokerages maintain competitive agent splits and caps.

Brokerages can protect their economics without making their agent compensation package look worse. The client gets another charge, and the agent gets the conversation.

A lawsuit over Compass Florida’s $475 transaction fee was withdrawn in August. Even while litigation was hanging over the practice, most brokerages weren’t preparing to retreat.

At firms charging the fees, 58% of leaders said the litigation prompted no internal discussion. Another 18% discussed it but changed nothing.

The main concession was transparency: 9% changed how or when they disclose the fee. Just 2% reduced it or limited its use.

At firms that charge transaction fees, only 11% call them “junk fees.” At firms that don’t, 64% do.

Agents have a more immediate problem. More than half of those at fee-charging brokerages have absorbed the fee for a client at least once, and many report that it strains the client relationship.

Still, there’s little evidence agents are leaving brokerages because of it.

The fee is unpopular, but apparently not unpopular enough to change behavior — which gives brokerages little reason to surrender the revenue.

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Most agents approach a for-sale-by-owner with one objective: convince the seller they need an agent. That’s a difficult sale. The owner has already decided they don’t.

A better play is to offer to run the open house — for free — and treat the property as a platform for meeting buyers and homeowners nearby. The FSBO listing isn’t necessarily the prize. The traffic around it is.

Four days before: Build demand. Run Facebook and Instagram ads through a landing page or chat funnel you control, so inquiries enter your database. Then knock 20–30 nearby doors and circle dial the neighbors you miss.

The neighbor pitch has two hooks: invite them to a private preview 30 minutes before the public opening, and offer a one-page equity report explaining what the eventual sale could mean for their home’s value. Neighbors also tend to know who else on the street is considering a move.

Day of: Email your database with the property’s strongest features, but hold back the address. Ask interested people to reply “OPEN HOUSE” for the details. Push the promotional content again through your channels and require real registration from everyone who visits — not the ceremonial clipboard where half the neighborhood suddenly becomes John Smith.

One day after: This is where the activity becomes pipeline. Book second showings with serious buyers. Text the lukewarm visitors. Follow up with neighbors about anyone else considering a move. Re-engage buyers and agents who previously showed interest but didn’t attend.

Running a few ads and opening the door for two hours isn’t the strategy. The value comes from creating enough conversations before and during the event that there’s something meaningful to follow up on afterward.

The seller gets additional exposure and a record of visitors without paying for the service. The agent gets buyer relationships, neighborhood conversations, and potential future listings.

Sometimes the FSBO owner eventually decides to list with you. Great. But that’s upside, not the thesis.

FSBOs can still be tougher prospects than expired listings. An expired seller has already accepted the value of using an agent; a FSBO owner has explicitly rejected it.

So don’t build the strategy around changing their mind. Build the same marketing and follow-up machine you would for a signed listing and use the open house to create opportunities around the property.

The shift is small but important: stop trying to win one skeptical seller and start working the entire market surrounding them.

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The housing market looks more balanced, but partly for the wrong reason: listing prices and buyer interest have converged around $430,000 while price-sensitive shoppers retreat, with starter-home engagement falling to its lowest level since 2019. Meanwhile, transaction fees remain unpopular with agents — more than half at fee-charging brokerages have absorbed one for a client — yet only 2% of brokerage leaders who charge them are seriously considering eliminating them, while 10% of leaders overall are considering adding one. For agents, FSBOs may offer an opportunity without ever winning the listing: a 4-1-1 open-house system uses the four days before, the event itself, and the day after to turn buyers, neighbors, and follow-up into a lead pipeline.

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

Cheers 🍻

-Market Minds Team

The content of Market Minds is provided for informational purposes only and reflects personal opinions based on sources believed to be reliable. It does not constitute financial, investment, legal, or professional advice. Each reader is solely responsible for their own decisions.