Adapting to a Changing Market: WFG’s Patrick Stone Charts a Path Forward for 2025
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Tuesday, December 10, 2024
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WFG National Title Insurance Company recently hosted its Q4 2024 Economic Outlook webinar, featuring WFG Chairman and Founder Patrick Stone alongside economist Bill Conerly. Held on December 3, the event took place amid a complex real estate landscape marked by affordability pressures, constrained inventory, steady but higher-than-ideal interest rates, and persistent geopolitical uncertainties. In his opening commentary and subsequent Q&A, Stone acknowledged these challenges while outlining strategic opportunities for industry professionals to prepare for a promising—if still uncertain—future. 
Facing Unprecedented Complexity
Stone set the tone by candidly admitting the unusual difficulty of interpreting today’s market conditions. “I probably have never been in a situation where I am as confused as I am right now,” he said. Unlike previous cycles, where cause-and-effect relationships were clearer, today’s environment is defined by conflicting signals. “There’s good news and bad news,” Stone explained, noting the durable consumer desire for homeownership on one hand and a myriad of economic and geopolitical cross-currents on the other.
On the positive side, Stone observed that the intrinsic need and desire for homeownership remain strong. “The need and desire for home ownership is still there,” he emphasized. He also highlighted more normalized home price appreciation, modestly improving inventory levels, and the absence of any looming foreclosure crisis, stating, “I don’t see any threat of a foreclosure crisis or any sort of collapse in residential real estate at all.”
Affordability, Inventory, and the Power of Sub-6% Mortgage Rates
Despite these positive indicators, affordability remains a central concern. Stone acknowledged that elevated interest rates and home prices continue to price out many potential buyers. “Affordability continues to be a problem,” he said, while also noting that any downward trend in mortgage rates could be a game-changer. “If they get under six, ‘Katie bar the door,’ because that will dramatically increase activity,” Stone stated, pointing out that even a fractional rate improvement may spark a surge in home sales.
He elaborated further, recalling historical precedent. “The biggest year for home resale was 2005 at 7.2 million. The average mortgage rate that year was 5.67%. So anything under six is very, very attractive.” With under-6% rates potentially on the horizon, Stone projected a significant uptick in transaction volumes.
Inventory levels, while still not abundant, have begun to stabilize. “We’re looking at about 32% more [single family inventory] this year at this time than there were last year,” Stone said. He also noted that homeowner tenure, which peaked at 13.4 years in 2020, had fallen back to around 11 years. “I think it’ll continue to come down a little bit more,” he added, pointing to a gradual return toward historical norms.
Commercial Real Estate: Charting a Path to Stability Amid Lingering Headwinds
Commercial real estate, a segment that many predicted would falter, has proven more resilient than expected. Stone expressed relief at this development. “I am absolutely relieved and happy to see that commercial real estate didn’t go down the toilet like everybody said it was going to,” he said. While office vacancies remain elevated, other sectors—such as retail, industrial, and multifamily—are stabilizing. “Everything else seems to be coming back into line pretty well,” Stone explained.
However, Stone did raise a cautionary flag about impending regulations and their potential impact on lending practices. “This is going to require banks to have more reserves,” he said, referring to the Basel III requirements. He speculated that banks might fund private equity firms as a workaround, creating new pockets of risk. “Watch that one because that could be a problem if it gets out of hand,” he cautioned.
Regulatory Uncertainty and the Role of Title Insurance
Stone returned to a topic that has garnered increasing attention: the federal government’s potential move to reduce or eliminate the requirement for lenders’ title insurance on certain transactions. “One of the problems here, just to be really candid with you, is virtually everybody's lack of understanding of title insurance,” Stone said.
He warned that alternative title products and attempts to bypass traditional title insurance could lead to elevated risk. “I think there’ll be tremendous losses if they’re misused,” he stated, pointing specifically to the rise in fraud and forgery. “About 33% of all the losses in our industry now are fraud and forgery,” Stone noted. Without the protective framework that traditional title insurers provide, Stone feared a spike in claims and complications down the line.
National Debt, Immigration, and Broader Economic Headwinds
Beyond the real estate-specific concerns, Stone touched on broader macroeconomic issues that could shape the market. He cited the ballooning national debt as a significant worry. “1981…national debt passed $1 trillion. In 2020, $26.9 trillion. Today it’s $36 trillion,” he stated, lamenting the explosion of federal indebtedness. With interest payments projected to keep rising, Stone argued, “We are seeing a little pressure on interest rates because of the debt.”
Immigration policy also surfaced as a key factor influencing housing, construction labor, and agricultural work. Stone cautioned that without stable immigration flows, labor shortages might worsen, ultimately slowing the pace of new construction and contributing to affordability challenges. “We are going to go negative on internal population growth in the year 2039 if we have no immigration,” he reminded attendees, underscoring the long-term implications.
Positioning for a Better 2025
Stone sounded an optimistic note when looking ahead. He predicted that a normalization in rates—dipping below 6%—could usher in a period of expansion. “I see home sales going up about 9% next year,” he said, referencing a likely bump in 2025 transaction volumes. While not a return to the red-hot markets of recent history, a 9% increase represents a meaningful recovery from current lows. “If we get mortgage rates under 6% in the first quarter, it’ll go up even more than that,” he added, underscoring the sensitivity of the market to even small interest rate declines.
He also foresees improved conditions in the commercial space. “I think commercial real estate will pick up,” Stone said, acknowledging the trillions in commercial real estate loans coming due over the next few years. He maintained that as the economy and consumer sentiment adapt to the new interest rate environment, both residential and commercial segments could benefit.
Adopting Technology and Embracing Efficiency
Like in previous quarters, Stone urged professionals to embrace technology-driven efficiencies. “If you’re not using technology, you’re going to fall behind,” he warned. With tightening margins and the prospect of a slow, step-by-step recovery, adopting advanced tools, automation, and artificial intelligence can help real estate and title professionals streamline operations and improve client experiences.
“This is the time to be efficient,” Stone stated. “Embrace and implement technology. Don’t go out and make guesses. Talk to somebody that knows.” He highlighted MyHome, a Williston Financial Group company's Marketing Technology Directors as a resource for navigating the complex landscape of emerging solutions and best practices.
Wealth Transfer and the Role of Intergenerational Support
Stone also discussed the massive intergenerational transfer of wealth underway, noting that this phenomenon provides a critical backstop for the housing market. “There’s an estimated $78 trillion worth of wealth in baby boomers and about $39 trillion in Gen X. I mean that just blows me away,” he said, observing how parents’ and grandparents’ wealth often supports younger buyers with down payments. Such family-based financial support can mitigate affordability challenges and sustain transaction volumes, even in the face of higher rates and tighter lending standards.
Looking Ahead: Balancing Caution with Confidence
While uncertainties remain—ranging from tax policies, tariffs, and deportation concerns to geopolitical flashpoints—Stone expressed confidence in the underlying strength and resilience of the U.S. real estate market. “Unless something bad happens, I firmly believe that we are going to have increases in real estate activity,” he said. The core message: A pragmatic, well-informed approach can position industry participants for success in 2025 and beyond.
Stone concluded by reinforcing his faith in the long-term outlook. “What gives me the most hope for 2025?” he asked. “I think if you really step back and look at the economy, you look at the country, you look at the amount of wealth, you look at the overall financial health…the demand is there and we have sufficient supply out there now.”
By understanding current headwinds, adapting operational strategies, leveraging technology, and anticipating lower interest rates, industry professionals can confidently navigate today’s complexities and prepare for future growth. As Stone emphasized, “You’re going to have to work at it. You’re going to have to be efficient, you’re going to have to pay attention.”
To watch the video replay of WFG’s Q4 2024 Economic Outlook webinar or download the full transcript or a talking point summary, click here.
About Patrick Stone
Patrick Stone is Chairman and Founder of Williston Financial Group, the Portland, Oregon-based parent company of several national title insurance and settlement services providers, including WFG Lender Services and WFG National Title Insurance Company. Stone’s lengthy career in real estate and related services includes C-level positions with three public companies and serving as a director on two Fortune 500 boards. His senior executive management positions include nine years as president and COO of the nation’s largest title insurance company, chairman and co-CEO of a software company, and CEO of a real estate data and information company. Stone also served as vice-chairman of Metrocities Mortgage, a 2005 top-20 mortgage lender, and as chairman of The Stone Group, an Austin, Texas-based tenant-represented brokerage company. In 2013 Pat was named one of the “100 Most Influential People in Real Estate” by Inman News and as one of the “Top 101 Real Estate Industry Doers” in 2015 and again in 2021. Other accolades include receiving HousingWire’s coveted “Vanguard Award” in 2019 and again in 2021, Progress in Lending’s “Lending Luminary Award” in 2019, 2020, 2023 and 2024, Inman’s “Best of Finance” award in 2023 and 2024, and October Research’s annual “Leadership Award” in 2020.
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