Talk of a possible recession and the impending changes in business practices were the overarching themes of the opening session of the Keller Williams’ 2024 Mega Agent Camp, Tuesday morning.

Despite this harsh reality, Gary Keller, CEO and co-founder of the company, had a reassuring message to share with the more than 4,700 agents gathered for the event in Austin, Texas.

“It’s a little like when I got into real estate and thought, ‘There are so many homes being sold, so I can hit my goal – not everyone else will, but that’s not my problem.’ There are more than enough home sales in your market for any of you to hit your goals if you do the right things. Others may not hit their goals and the reason is because they haven’t done the work necessary. Just do your job,” Keller said, echoing a statement emblazoned on his black T-shirt.

According to Keller, in the current real estate market and the general industry environment, this means that brokers have to National Association of Real Estate Agents (NAR) – Changes to the firm’s nationwide commission litigation settlement practices are set to take effect Saturday, and the firm is making an effort to stay in touch with its past and current clients.

Keller Williams executives say this is especially important right now as the economy is at a turning point that presents both the very real possibility of an economy-wide recession and the The US Federal Reserve Reduction in interest rates.

“If you don’t maintain your outreach and lead generation over time, whether it’s good or bad, you’re always going to be behind when the market changes,” Keller said. “You can only stay ahead of change if you stay in relationships. If you sit there and do nothing until it gets really good, you’re going to be behind everyone who’s already talked and built trust and relationships.”

To foster these relationships, Keller said agents need to increase their training and stay up to date on economic trends and information.

“As professionals, our answers have to carry weight,” Keller said. “Everyone can read the news and get information, but do they understand what it means and what could happen? That’s what we’re paid to do as professionals.”

To help attendees expand their knowledge of current macroeconomic and housing market conditions, Keller and other brokerage firm executives walked brokers through some of the current trends. These trends include falling inflation, rising unemployment, and GDP growth that is fluctuating within the Fed’s desired range. Of course, this all points to the Fed cutting rates at its September meeting. And while this is good news for the housing industry, depending on how the economy performs from there, it could mean a great 2025 or a terrible one for brokers.

According to Ruben Gonzalez, chief economist at Keller Williams, the probability of a recession based on Treasury yields is currently at its highest since the 1980s. But Keller Williams executives have three possible scenarios for how the economy might play out, including one in which the Fed successfully executes the soft landing it is seeking.

In this scenario, Keller Williams assumes unemployment stays below 5% and interest rates fall gradual to around 6%, causing existing home sales, currently slower than they will be in 2023, to rise to 4.5 million in 2025.

“That’s a very likely scenario,” Keller said, bringing some optimism to the discussion. “At the moment, that’s the scenario that most market forecasts are predicting.”

The other, less likely scenarios Keller sees are a normal recession and a banking recession. In a normal recession, Keller said, unemployment would rise to 6-8%, interest rates would fall to 5%, and home sales would rise to 5 million by 2025.

“This is a very normal scenario,” Gonzalez said. “We always tend to lead the recession. We are already in our recession, it would be very normal for a recession to then start in the economy, then the Fed cuts rates and we start to improve before the rest of the economy does, and basically drive the economy out of recession. We are a growth engine and the Fed knows that.”

In the event of a banking recession, Keller Williams would expect unemployment to rise to 8 to 10 percent, interest rates to fall to 3 to 4 percent, and home sales to fall to 4 million or less in 2025 as banks tighten lending standards.

Keller called this situation a “wild card” and pointed out that the commercial real estate sector could put the economy in this situation.

“If there is a sudden default, there will be problems,” Keller said. “Banks have invested heavily in commercial real estate lending, so this could really shake up the banking sector.”

While agents are understandably concerned about the economic situation and changes in NAR’s business practices, Keller had good news for attendees.

“We’re already at rock bottom. What you’re experiencing right now is probably the worst there is. So if you’re feeling pretty good right now, congratulations,” Keller said. “We also want to remind you about buying methods. Look at that number — 89% are still using real estate agents. That’s the highest it’s ever been since they started tracking that number.”

“After two decades of change, the internet and all the people trying to come between us, we’re still the first choice, and as people look to the changes in the future, that’s probably not going to change,” said Jay Papasan, vice president of content strategy at KW.

“The graveyard is full of people predicting the demise of the real estate agent,” said Jason Abrams, director of industry and education at Keller Williams. “They have all greatly underestimated you.”

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