Last Cast Letter #26: Vibe Shift?

Are we moving toward a more balanced market?

February 28, 2025

Hi All - Happy Friday. It’s the last day of the month, which means it’s time for the Last Cast Letter.

Damn this month is short.

February always flies by. It felt like this year in particular wrapped up in the blink of an eye.

I had my sister’s wedding, son’s birthday party, two other sisters’ birthdays, my stepmom’s birthday, and one of my best friends in town for the full month.

Our newsletter and agency business are still growing in the direction I want them to. And we’ve been fairly active on the real estate front as well, which, is interesting after a couple of years of lifelessness and, quite frankly, frustration.

It’s this final point that I want to dive deeper into in this month’s edition. I’m asking myself this question: is there an almost undetectable “vibe-shift” unfolding when it comes to the real estate market at large?

I think, or maybe feel, that we might — just might — be moving towards a more balanced market. A market in which buyers are starting to reclaim some negotiating power.

Do I think we’re witnessing the first snowball of a massive avalanche and the rest of the cornice is about to come cascading down in spectacular fashion next month?

Eh, not really.

In this analogy, it might be more like the sun is just starting to hit the side of the mountain; it’s warming the snowpack, but we’re still waiting on that first clump of powder to tumble.

What I’m getting at is that I don’t think we’re about to witness major spillage, but I do think minor cracks are emerging.

Again, this is what I feel in my local area and asset class. And this might be a completely different sentiment from other regions and subsectors. Let’s take a look at some of the data, specifically as it relates to mortgage rates and housing inventory.

Driver #1: The “New Normal”

The first key driver of this potential vibe shift is the stabilization of mortgage rates. According to Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed mortgage rate last week stood at 6.85%.

While still elevated compared to the historic lows of 2020 and 2021 (when rates dipped below 3%), this figure represents a meaningful decline from the peak of 7.9% recorded in October 2023.

This drop, though modest, has started to ease the affordability crunch that sidelined many prospective buyers over the past two years.

This “stabilization” could also be thought of as maybe “normalization” or the fact that collectively, we as a society, have come to terms with the “new normal” of higher rates.

In their January outlook, Freddie Mac said mortgage rates may stay "higher for longer" in 2025, which could push more buyers onto the market since they aren't waiting for lower rates.

Driver #2: More “Active” Listings

The second pillar of this shift is the ongoing increase in active listings.

Lance Lambert from ResiClub summarized Realtor.com’s data succinctly, saying:

National active listings are on the rise (+24.6% between January 2024 and January 2025). This indicates that homebuyers have gained some leverage in many parts of the country over the past year, with some markets even feeling like balanced or buyers' markets on the ground.

However, nationally, we’re still below pre-pandemic active inventory levels (-25.3% below January 2019), and some resale markets still remain tight—but, that’s not the case anymore in many pockets of the Sun Belt and Mountain West.

Florida, in particular, is seeing state-wide softening. (Remember how I said that what I’m feeling could be based on where I’m located?)

When it comes to available inventory, it’s important to differentiate between “active” listings and “new” listings.

This is self-explanatory, but an "active listing" refers to any property currently on the market and available for viewing, while a "new listing" is a property that has just been added to the market, essentially a fresh listing that has recently become active on the MLS system.

Active listings are rising on an annual basis because demand is cooling and homes are taking longer to sell. From Homes.com:

“The number of days that single-family homes and condos are sitting on the market before being sold reached its highest level since before the pandemic began five years ago as mortgage rates refuse to go down..

… It took 41 days to sell a home in January, according to a monthly survey of listing agents by the National Association of Realtors. That’s a median figure, meaning half of all homes take longer to sell and half take less time. The number is up from 35 days in December, and 36 days in January last year.”

New listings remain relatively contained due to the lock-in effect or homeowners who are opting not to sell and buy something else because they have favorable rates/mortgages on their existing properties.

So, What Does This Mean for the Broader Market?

For the real estate sector as a whole, this trend could signal a departure from the seller’s market that defined 2020 through mid-2022 and even slightly into the higher interest rate zeitgeist.

During that period, ultra-low inventory and cheap borrowing costs fueled double-digit price growth and fierce competition, with homes often selling above asking price within days.

Now, with more homes available and borrowing costs stabilizing, buyers seem to have breathing room to make informed decisions rather than panic-driven offers.

Sellers, in turn, must adapt by pricing competitively and, in some cases, offering concessions like covering closing costs or making repairs—practices that were nearly unheard of two years ago.

This shift doesn’t mean a buyer’s market has fully arrived. Inventory remains below pre-pandemic levels, and high construction costs—lumber prices, for instance, which are still above 2019 levels in early 2025—continue to limit new home supply.

But the data suggests a cooling-off period where strategic pricing and negotiation are regaining importance.

So that’s what I have for you this month. Hopefully, I was able to articulate this inkling of a gut feeling I have based on my own experience. But I would love to hear what YOU think so please send me emails, thoughts, comments, etc. I’ll reply to every one of them.

In the meantime, if you’re interested in investing alongside us, click the button below and fill out our form.

— Brooks