Last week we reported on Redfin’s market slowdown report. What’s on everyone’s mind this week is how the surge in U.S. housing over the past two years has made a turnabout. Today, instead of bidding wars, agents are faced with uncertainty. Here’s a look at what this means for U.S. agents.
The U.S. housing market, which took off during the pandemic, was boosted even more by record-low interest rates. Now, those rates are escalating as inflation grips the country. Add to this buyer uncertainty, and you have a recipe for tough times ahead for many agents and for sellers. This slowdown is a snowball shoved into motion by rising mortgage rates. Now, the average rate on the 30-year fixed mortgage is about 6%, as opposed to around 3% previously. What this means is a giant boost in monthly payments for the average homebuyer.
Now we’re seeing two key indicators that tell us the coming months won’t be looking good. First, the supply of homes on the market is going up. Secondly, prices are falling accordingly. New listings are also down, meaning the overall uncertainty seems to permeate the market. With inventories still down compared to 2019, most sellers can expect their homes to stay on the market a lot longer. There are simply too few potential buyers out there now. And new home construction is way down. We seem to be in a housing recession already.
At the end of the day, it all boils down to affordability. Even though prices are falling, these fiscal policies are tacking on hundreds of extra dollars in mortgage payments. And this is happening at a time when the job market and other economic factors are uncertain. In a recent statement by Andy Walden, VP of enterprise research and strategy for Black Knight, it currently takes 35.1% of median income to pay monthly principal and interest. Walden went on to say the affordability aspect spells a continued downward price spiral.
What this all means for American real estate pros is pointedly obvious. The competition to list for sellers and the need for marketing and sales prowess to convert buyers will separate the wheat from the chaff in the coming months. Bottom line, agents and agencies without the network, reputations, tools, and strategies are going to suffer – hard.
We can already see some of the most professional agents taking to the digital airwaves in branding and marketing speak broadcast via industry media. However, many seem to be content to depend on past successes to power them through the coming tough times. This Hedges roundup of advice for the Hamptons shows some highly successful professionals paying lip service to marketing principles. They have great advice and a bit of branding expertise, but one look at their digital marketing efforts is telling. They leave a lot of opportunity for some “go-getter” snowballs to Eskimos guru. The infographic above from my dear friend, digital evangelist Brian Solis, will help some readers begin to grasp the real potential of digital marketing.
Now, with this in mind, the idea of some using this knowhow, let’s take a look at Berkshire Hathaway HomeServices New England Properties’ efforts. Right off the bat, you get a stunning website experience and clear digital media marketing prowess from Facebook (7,700 + followers) thru Instagram, Youtube, and CEO Candace Adams in traditional news. It’s all about having the edge. The difference between success and failure in a soft market grows more narrow. Those agents who turn over every conceivable rock and who get down and do the work are the ones who end up moving more homes. And every aspect of the marketing funnel has to be their concern. Leads can come from anywhere, but only diligent experts understand that conversions are cultivated.
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Finally, I just looped back around to a superstar in the industry named Matt Laricy in Chicago. And behold, he’s already commenting, giving advice, and shifting focus in reaction to the changing market, which he says is “inevitable.” Laricy is perhaps the best digital marketing guru among U.S. professionals, a model for all those who wish to swim while others sink. And no, he’s not sponsoring this news outlet or me. Frankly, I wish he were. But the truth is, there’s not a lot we can tech professionals like him. They get their share of “ink” because they lead instead of following. And about now, those anxious sellers out there are looking for “go-to” marketing and salespeople.
There’s the best lesson we have for this coming soft market.
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