Bernice Ross

As the real estate industry continues to struggle with the fallout from the commission lawsuits, increased mortgage rates and a significant decline in the number of transactions, Patrick Stone, chairman and founder on Williston Financial, is optimistic about what’s ahead as we wrap up 2024 and move forward into 2025 and 2026.

For almost two decades at Real Estate Connect, I’ve always enjoyed hearing Patrick Stone’s take on what’s ahead for the real estate industry, because he’s usually right. I recently interviewed Stone to discuss what’s ahead, where he sees the industry heading as we move into 2024 and his current concerns about the industry.

 Concerns About the ‘NAR Dynamic’

Stone shared his concerns about the National Association of Realtors commission lawsuits settlement (what he called “the NAR dynamic”) and its impact.

“I’m not advocating for this, but it does appear to me that the NAR dynamic could result in a lessening of commissions for Realtors and a significant reduction in the number of Realtors.” Stone said.

“If in fact that happens and you see a meaningful reduction in the number of Realtors, there will be a corollary reduction in some of the entities that service the process, such as title companies, mortgage companies and so forth. If there are less Realtors, they will use fewer vendors, regardless of the amount of business,” he added.

In terms of how this impacts mortgage and title services in particular, Stone said, the title industry “is very used to adjusting personnel costs based on volume.”

Mortgage lenders, especially the smaller ones, may be less prepared. However, “large mortgage players have also seen this movie before,” he said.

When I asked about how far the number of Realtors might drop by 2026, he replied, “This is just a guess, but maybe down to a million” from the 1.6 million the association claimed in 2022.

Worries About Automated GSE Appraisals

When I asked Stone about whether the 2024 drop in sales volume to about 3.91 million would impact the number of appraisers, he explained why he felt there would be no change.

“Appraisers got so stretched out during the pandemic that it could take up to 10 times longer to get an appraisal. The appraisal requires a commitment to learning a skill set and developing relationships. It’s not easy to get in or out of being an appraiser, so the number of appraisers won’t change,” Stone said.

However, the “government-supported enterprises” Fannie Mae and Freddie Mac – the GSEs – and some federal housing and mortgage regulators are starting to encourage the use of automated valuations.

“I’m going to be straight up with you. I worry about that,” he said. “Just for fun, run an AVM for your home on Redfin and run an AVM on Zillow. You’ll be stunned at the difference. So, there’s a lot of variation in AVMs, and I worry a little bit about relying too heavily on them at this point.”

What to Expect from the Election

Stone has been tracking the impact of presidential elections for many years.

“If you look at it historically, presidential elections normally have no impact on the number of residential real estate sales. Instead, residential real estate is really a function of need, desire and affordability,” Stone said.

“The presidential election creates lots of background noise. It has pertinence in the sense that it can and will impact interest rates, but historically the presidential election itself has no correlation.”

When I asked Stone about possible differences between a Harris versus a Trump administration might be, he said, “I just don’t see a meaningful impact on the residential real estate market right away.”

When I queried him further about both candidates talking about getting more new homes built his response was, “You know that’s talked about in every election, isn’t it?”

Stone’s final takeaway was, “I encourage everybody to pay attention to everything going on. Ask questions, talk to people, be prepared to do whatever you need to do.”

Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.