The Journal of Business hosted Scott Wetzel, chief development officer for Windermere Real Estate, for its most recent Elevating The Conversation podcast.

The conversation occurred a couple of weeks after the February home sales report from the Spokane Multiple Listing Service showed an increase in activity for the first time in 16 months and days after the National Association of Realtors agreed to a $418 million settlement of antitrust lawsuits.

The Elevating The Conversation podcast is available on Apple Podcasts, Amazon Music, Spotify, and elsewhere. Search for it on any of those platforms or the Journal's website to hear the entire conversation, but for now, here are five takeaways from the 30-minute episode.

1. A combination of circumstances led to the first uptick in home sales in 16 months. In February, there were a few factors at play.

For the Spokane-Coeur d'Alene market, we had a mild winter. That absolutely helped. Seasonal selling takes place and so does seasonal staying put, with the wind and the rain and the snow. Since it's been very mild, that helped drive an uptick in the business. 

I also think that it's been long enough now with the interest rates achieving what I'll call the new normal, where we've gone from the 2.5%-3% range to, at the worst case, the eights. And now we seem to have settled back into the low sevens, high sixes. I think there is this pent up demand and energy just waiting, almost staying on the sidelines. I think enough of the community has recognized that we're kind of back to where we thought we'd be for a while anyway, in the new normal.

And then there's the buyers' anxiety, if you will, of saying, 'OK, we have to get that house. Here's a house we've been looking at. It's still there, but how much longer are we going to see it?'

2. Mortgage rates should trend downward, then settle. I think people have to take a little bit more of a longer-term view to this in the coming months. You could take a quarterly view, or we like to take a look at rates over six months. 

The reality is this is what I would call a transition year in 2024. If you take a look at what the Federal Reserve is doing, you'll see they've still held firm, but they're going to start dropping rates.

There are going to be fewer drops than we originally had thought. You're also going to see them do it slower. The good news, though, is if you are tracking the rate, it should be going down.

To say that they've been as high as they will be for quite some time is probably a good crystal ball forecast. I have a hope of where they may settle in, but even if we were looking at securely below 6 1/2 going into the holidays, that would be a win for everybody concerned. I also believe that this time next year, in spring of '25, we'll see them really settle into the, say the high fives, low sixes. And then I think we're going to see them cemented in for quite a while in that regard.

3. Inventory is increasing as sellers come down from a pandemic high. When we went through this pandemic, it was something that, knock on wood, we'll never see again, at least in our lifetime. It was all unknown, right? And the unknown then spurred migration. We saw a huge influx of people moving into the Inland Empire area from the coastal areas, from the South that you couldn't have forecasted. And had it not been for the pandemic, we wouldn't have seen that volume of people coming in. With that volume, it literally becomes a 100% sellers' market.

Then fast forward, we're out of the pandemic. Interest rates start going back up. It starts correcting the market. And people who were thinking about selling, they were thinking they're going to make all this money for these very overpriced homes. Then, they were being told, 'yeah, I know you think you want to sell this for $600,000, but it's not worth more than five.' Or, 'I know you think you want to sell this for four and a quarter, but it's not worth more than $350,000.' And so that's what put the brakes on everything. 

I always like to say, be a bull or a bear, not a pig. And people became kind of piggish with their thoughts on what they could get for their homes. 

So, I think then what happened was, as things then started to cool off and go back to a normal market, the property owners started to get more realistic. Maybe that was partly what a good Realtor is talking to them about, but also just what the market was doing. They were seeing that homes that went on the market for sale weren't getting stacked up multiple offers at $50,000 to $100,000 over market price.

Today, it's almost switched back to more of a buyers' market. If you have the money and the ability to get the lending, you can control more of the narrative for the purchase of that home, because Mr. and Mrs. Smith know their home isn't flying off the shelf the way it did two years ago. 

4. Aging baby boomers are contributing to rise in inventory. During the pandemic, aging baby boomers just kind of held tight. Well now, you're starting to see things have lightened up. There isn't a concern for their health being in a larger facility to where they were more susceptible to the virus. And so, as a result, they're saying, 'Ok, we hit pause. Now we're hitting the play button again.' 

The one thing that always wins is father time, right? He's undefeated and batting a thousand. So, what's the plan for mom, dad, auntie, uncle to move forward? It's not going to be an option for the lion's share of this population to still live at home by themselves or with their spouse. And so there has to be a plan for that.

Now with that plan generally comes a migration of moving into facilities that have that environment set up for them. But then what that means is grandma, grandpa, auntie, uncle's house is now available. So that's one reason you're seeing more inventory come on the market. 

A lot of times, however, these homes have just historically not been kept up. They have deferred maintenance. They clearly haven't been kept up from an aesthetic perspective in today's Chip and Joanna Gaines shiplap world. So, the caveat is that family members handling the sale of their elderly relative's home have to recognize that and price it accordingly. 

5. The National Association of Realtors settlement shouldn't have a profound impact on the Inland Northwest. States that were pulled into this lawsuit had not done a very good job of establishing a good practice of buyer agency representation agreements. That's where the commission questions came into play. 

But then you have a whole other layer of states like Washington, Oregon, Idaho, and Montana that had buyer-rep agreements in place for years. If you take a look at the defendants, you're virtually getting no firms in the Northwest part of the country that are being named in the lawsuit.

There's just going to be more communication that now has to take place between the buyer and the seller's agent. Some of these things you've heard that housing prices are going to take a big drop because of this agreement. No, that's not going to happen. You also hear that Realtors are going to have to find other means for income. I would say, nope. Only the ones who have not been practicing the good, strong sales practices are going to be affected.