What the Housing Crunch Means for Real Estate AgentsPDH Staff
Is a housing crunch on the horizon? Are we in for a slump as far as housing is concerned? Signs indicate that this may be the case looming in the future. Could the drop in housing permits lead to a change in your business as a real estate agent? Are things looking better for the future? In this guide, we will walk through it. As a real estate agent, you may actually have more power than you think.
Building Permits Falling
Between January and February of 2017, permits issued to home builders fell 6.2 percent. While this is still higher by 4.4 percent than the permits issued in February of 2016, real estate agents are alarmed. Houses simply are not being built at the rate that real estate agents typically expect. With fewer houses being built, fewer may be sold.
This means that in the coming months, we are likely to see the fewer homes completed than in recent months. Home buyers will not have as many options to choose from, and real estate agents will find themselves showing fewer newer homes. They may have to rely on older homes being put up for sale, which may alienate buyers who have very specific desires in mind. Of course, this is no real estate agent’s dream.
The truth is that distribution of building permits is not equal. We are likely to see the biggest decrease in permits for the construction of large buildings meant to house at least five families. This means that condos, co-ops, and apartments are on the decline. Depending on where you work as a real estate agent, this could mean that your clients are facing higher costs associated with buying a home. This is a challenge that real estate agents are going to have to face head-on.
Single-family homes may actually see decent numbers this year. The same applies to luxury homes. If you live in an area with recent developments in single-family neighborhoods, you may find that this slump appears to pass right on by. Could now be the time to develop a niche that will help you move forward in the world of real estate?
Of course, building permits are not the same across the board in terms of location either. The Midwest is actually seeing a spike in home building. There was a slight increase in the southern United States as well, but certainly not as much. Different parts of the world experience a slump differently, especially as far as different types of houses are concerned.
What does this tell us? For starters, it tells us that no two places are going to be exactly alike. A California real estate agent’s experience may be very different from the experience of a real estate professional in Indiana. A real estate agent who specializes in multi-family housing may have a different experience than an associate geared toward environmentally friendly housing.
The Consequences for Consumers
It may be that manufacturers are reporting higher priced raw materials, but prices may not be increasing as much as you think. The biggest detractor for buyers and sellers could be the rising inflation, which could decrease purchases across the country. Depending on what happens with the economy, buyers may ultimately decide to hold off until they have more confidence in the market.
Of course, this means that there are consequences for real estate agents as well. Real estate professionals who spend hours showing homes and hosting open houses may find that buyers back out at the last moment or opt to wait another year or so to “see what happens” with pricing and availability. It can be easy to feel held back by all of this.
The good news is that with a strong labor market, young people may be looking to buy houses sooner than you think. Recovery is possible if we find ways to boost opportunities for employment. While there may not be much you can do as a real estate agent, understanding the needs of the community can help you determine your approach.
What Can Real Estate Agents Do in a Slump?
There are still several ways you can sell homes when there is a shortage. Your first step is to sweeten the pot as much as possible. How can you do this? One way is to stay on top of trends and to stay actively involved in the real estate community by visiting open houses and keep track of which types of houses are selling at the moment. If single-family homes are still being built at a quick pace, focus your energy here. If you have noticed an increase in multi-family units available at great rates, emphasize that these units may not be available so often in the coming years.
Flexibility may be the key to keeping clients on the line. What do you have to offer to your clients that other agents do not? When you can work together with your clients to find a deal that works out well for everybody, compromise is not so scary. As a mediator, it is often up to you to showcase compromise.
During this time, motivated sellers may be your best bet. Is the seller willing to cover closing costs? Will the seller throw in appliances? These are questions to ask when you have a buyer on the line. Motivated sellers are often those who have already moved out of the house and those who have already reduced the price. Noticing these signs early on could be the difference between making your sale and heading back out to search for leads.
One way real estate agents can combat a slump is to stay educated. You already have to take continuing education courses to renew your license, but did you know that these courses can help you stay on top of your game as well? Contact us for more information about staying ahead of the pack with real estate education.