The Ralph Bivins Project – Podcast Guest Shae Cottar

HOUSTON – (Realty News Report) – RALPH BIVINS: This is Ralph Bivins with the Ralph Bivins Project. We are here with Shae Cottar. He is with eXp Realty and does a lot of residential sales in the Houston area. He is also chairman-elect of the Houston Association of Realtors, one of the largest associations in America with a vast website readership at HAR.com. HAR was one of the first associations – maybe the first association –that put listings online. We just received the 2023 annual results. We see that in 2023, compared to 2022, single family home sales in Houston dropped 12 percent. Tell us about this, Shae.

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SHAE COTTAR: I really think that 2023, like a lot of things these days, deserves the context of about a two- or three-year stretch. Everything became this sort of perfect storm for what happened between 2022 and 2023. The quick rise of prices for homes coupled with the really, really, unprecedented low interest rates – and everyone was stuck at home – and they realized how frustrated they were because they were stuck in their homes.

In 2022 and 2023 – especially the last half of 2023 — we saw something that we needed – a gentle and more organic balancing of the market. Home prices started to come down and home sales did drop. The drop was really a national thing. This kind of thing is unique to Houston because Houston, typically — and I’m sure you’ve seen it – is kind of resilient to what is going on in the national market, what with the Energy Corridor and the petrochemical industry. The fact that we saw a drop was kind of a mix. It’s something not familiar to us here, but in the national context, it kind of made sense.

RALPH BIVINS: The high interest rates are also a huge part of that.

SHAE COTTAR: Absolutely.

RALPH BIVINS: In 2023, interest rates got up there past 7 percent at one point in the year. When you own a home with a 3 percent mortgage, you ask yourself, “Why would I want to sell?”

SHAE COTTAR: The first home I bought was in 1999 and the interest rate was 7.5 percent. That kind of brings a little bit more historical perspective. I really don’t think we’ll ever see 2.5 percent interest rates again – or 3 percent.

RALPH BIVINS: I’m glad some people who bought or refinanced got a good deal.

SHAE COTTAR: It was a once in a lifetime deal.

RALPH BIVINS: That was part of the price increase we were seeing 12 to 18 months ago. People didn’t want to move as much, and the housing inventory was low.

SHAE COTTAR: Here in Houston, we typically have three to 3 ½ months of inventory. During ’22 and ’23, there were times when it got down to one month of inventory and that was insane. I have never personally seen inventory that low. But the good news now, with the sort of correction we are beginning to see, is that Houston is back up to about 3.3 months of inventory which is in the normal range. Rentals are coming in at about 3.5 months of inventory. I think that plus what we are seeing with the interest rates is really shaping ’24 to be a much healthier year – much more balanced.

RALPH BIVINS: So, now we are here in January. We’ve got a lot of ’24 ahead of us on the runway. What’s going to happen? You talk to a lot of Realtors. What is your feeling?

SHAE COTTAR: Yes, I do, in my position with eXp where I’m a managing broker, I talk to agents all over the state. We’ve (eXp Realty) got about 3,500 right here in Houston, about 9,000 around the state. One of the things I’m seeing over and over again when I talk to those agents is – and it is not just with eXp but with any broker – that Number 1, activity is picking up. Number 2, buyers are able to be a lot more picky. I’m seeing a lot of contract disputes where people are negotiating a little harder. People are not just sort of acquiescing to the sellers because the sellers have all the cards. That’s because the sellers don’t have all the cards anymore. Inventory is back up. It’s not as scarce as it was. The uptick in inventory coupled with the downtick in interest rates plus that slight downtick in pricing really put a lot of leverage back in buyers’ hands. Buyers are getting a lot more excited about the market.

Obviously that consumer confidence in the market has been kind of lower over the last couple of years with all the things that are happening and especially during the last six months of last year when we saw the interest rates rising so much. That confidence seems to be coming back. People seem to be getting excited about the prospects of where the market is heading now. I really do believe that home sales will have a significant uptick. But right now, it really hinges on what the Federal Reserve will do.

RALPH BIVINS: The general consensus that I have heard is that there will be three interest cuts, beginning with one in March. I hear that narrative a lot. Who knows if that’s right. What do you think?

SHAE COTTAR: It would be really nice if we had a crystal ball. As to what you said, Ralph, I would love that to happen. I do hear a lot of that same conversation. In the past, these conversations have kind of proven to be accurate. We’ll have to wait and see, obviously. I think these are topics that are helping to pique the interest of buyers which has an impact on consumer confidence. One of the things we are really leveraging now is communication. Consumers want to know all that they can know. No one wants to go into what is one of the largest, if not the largest, transaction they’ll make without knowing all they can know. I do think there is that light ahead.

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Shae Cottar biography

“My goal has always been to create the best agent experience possible and to serve my industry and community with excellence, efficiency and trust as I work to be the most knowledgeable and relevant real estate professional possible,” said Shae Cottar, managing broker for Texas with eXp Realty. He is also the chairman-elect of the Houston Association of Realtors. Regional VP for Texas Realtors and an activist for social causes, he and his wife, Jess, have three children.

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