Although national trends get most of the headlines, Zillow Chief Economist Mischa Fisher said the real story is found in local metrics.
Those local trendlines are what actually inform how agents and their clients move through the market, from accurately pricing a listing, to figuring out what a competitive offer looks like or knowing whether to push through uncertainty — or, gasp — wait until more favorable tides arise.
Mischa Fisher
“If you’re thinking about a prospective buyer or a seller in the national market, there’s a lot of uncertainty, but there are much clearer stories at the local level,” he said. “But it’s not a passive narrative. It’s an active one. Agents play a really key role in getting people off the sidelines or helping them understand when the right time to make that big decision is.”
Ahead of his first Inman Connect appearance, Fisher sat down with Inman to chat about his session, the market statistics that matter most right now, private listings and the question that agents should keep top of mind when researching the role private listings play in the national and local market.
Inman: Nice to meet you, Mischa. Let’s get to it — this is your first Inman Connect. What are you most excited for? And what do you hope attendees will learn from your session?
Fisher: I think the thing I’m the most excited about is getting to be with a lot of folks in person at the same time, right? There’s a lot going on in the industry in terms of, obviously, both what’s happening in macro and what’s happening in housing and what we can expect from the rest of the economic cycle. That’s in addition, of course, to all the various discussions we’ll have about the overall industry shifts in listings and all those things.
And it’s nice to be with all of these different people in the same spot at the same time. And I think that that’s just such a unique thing that Inman offers. And so, as I approach my first year at Zillow, I’m excited to attend my first Inman [Connect].
Let’s talk about your session, ‘Your Market Isn’t The National Story.’ What’s the main takeaway you want agents to walk away with?
I think the number one thing I’d like agents to understand is that we tend to be really hyper-focused on what’s happening with interest rates. But right now, I think the bigger story is uncertainty. An economist can walk through what’s happening, help describe it and help pave a bit of a path in terms of what we think is going to happen and why we think that’s going to happen.
But it’s up to agents who have those close, immediate relationships with buyers and sellers to really get them to take that leap and next step.
So what are the other pain points that you think currently matter more than what’s happening with mortgage rates?
Well, I think inflation continues to be very uncertain as a general story. Consumers really get their backs up when inflation is elevated. And we’ve had, we’re coming out of a period with the most elevated inflation in 40 years right after the pandemic. And we’re not expecting the current run-up of inflation concerns to meet that level.
Of course, it is putting some upward pressure on mortgage rates. But there is still, I think, the story that affordability is still better than it was a few years ago. That’s not to say it’s easy, but it is improving in a way that I think it’s important for agents to communicate. Even though they might feel the pinch of higher gas prices, there’s still more opportunity for purchasing because inventory is up, home values are flat and incomes are higher.
This reminds me of a conversation I had with Windermere’s lead economist, Jeff Tucker, earlier this year. We discussed that it’s not just about the numbers, but about how people feel about them.
How can agents hit the right balance in these conversations with buyers and sellers?
I think it’s important to contextualize that some statistics do back up consumers’ anxiety. One of the statistics is the general affordability level relative to before the pandemic, right? It’s improved over the last three years, but it is still much worse than it was before the pandemic. So that’s a fair reason why I think consumers can feel pessimistic, alongside elevated inflation and the job market.
I think those are all fair reasons for consumers to feel some degree of pessimism. But at the same time, to get to your question about agents, look at the inventory. Look at their own personal situations. Are they actually pretty confident about the actual odds of them being laid off?
There are lots of reasons why people can still go out there, look at what’s available and what that next stage of life has in store for them. And also, recognize that if you purchase a house with a fixed-rate mortgage, that actually protects you a little bit from higher inflation in the future. And you can always refinance if rates come down with inflation.
So, there’s still a positive story to tell there as well.
There’s a lot of statistical information out there, which can be overwhelming. What reports or metrics should agents prioritize tracking?
In terms of which metrics, I actually think that varies by market. And I think that that’s actually a pretty important distinction. As a general rule, I think it’s still this issue around where listings appear. It’s pretty clear evidence that [private listings] will hurt both buyers and sellers. Obviously, we can send you more of our work on that if you’re curious.
I think that’s a universal thing that applies to all markets right now, in terms of making sure that you get broad exposure for listings, because that is what’s going to get your seller the best price, and it’s going to get your buyers the most choices.
But beyond that, in terms of macro statistics, it really varies by local market. It sort of depends on whether you’re in a market with slowing house price appreciation or rising prices, and on what’s happening with inventory levels. There’s a lot of variance around the country right now.
I’m glad you brought up private listings. There’s your research, which I’ve read. And there’s Compass’s research, which I’ve also read. What kind of role do you think private listings will play in the upcoming fall homebuying market? What will consumers choose? Are they even aware of a choice?
I mean, I think in the end, the best evidence will win out. In the long term, listings that are private versus public will sell for less. The economics on that are about as immutable as the laws of gravity.
There are very, very clear dynamics at play. Compass’s numbers aren’t showing, causally, what happens when you take a house and list it publicly versus privately. What they’re showing instead is that their choice of what houses they’re trying to sell publicly, and they’re unsuccessful at selling privately, are worth more, which is a completely different thing. I think it’s not very good economics to frame the dynamic that way.
I think most people aren’t following it closely because it’s a niche industry topic. But I expect that, as we continue to debate it further as an industry, the truth will win out.
When it comes to the push and pull between Zillow and Compass, and I hope this doesn’t sound crass, there are people who distrust anything either party publishes about this topic. With that said, where would you point agents who want to do independent research about private listings? What third-party studies should they read? And what guidance would you share about accurately reading those studies?
There’s actually an impartial third-party analysis from the Philadelphia Fed on the impact of private listings.
And it’s important for somebody to understand there’s a distinction between empirical economics when you’re looking at data and conclusion and theory. And for the most part, they align. What usually happens, though, is it sometimes takes a little while for the empirical data to catch up with theory, because empirical data can be harder to come by, whereas the theory is much more potentially straightforward.
The question to answer is: if you had a house and in one universe, you sold it publicly, and in a parallel universe, you sold it privately, what’s the difference in outcome? That’s the actual question that people care about.
