Thought of the Week: Hills pay the bills!
Questions to ask yourself/others about this thought: Success often requires doing hard things. What is something challenging that you need to embrace? What’s a hill you’ll be glad you climbed?
As you ponder the hills you are climbing, it might also be helpful to gain perspective on what hills buyers are facing today.
Luke Babich, the CEO at Clever Real Estate, writes about helping buyers understand the long-term impact of a real estate purchase instead of getting hung up on short-term market challenges. I found his article to be a helpful perspective on today’s marketing challenges and how best to address them with your clients.
How inflation is changing buyer behavior — and what agents can do
Stubborn inflation, high interest rates and other negative economic indicators have cooled many real estate markets. It’s a confusing landscape for prospective home buyers, many of whom have no idea if home prices and interest rates are heading up or down.
In an uncertain market, a real estate agent is a well-informed, responsible voice for buyers navigating an expensive home purchase. Here are some of the most common ways inflation is affecting buyer behavior and how agents can counsel them toward a decision that’s right for them.
Interest rates are still causing buyers to hesitate
Although mortgage rates have dropped over the past year, they are still nearly double the historically low rates buyers enjoyed during the pandemic. As a result, many prospective home shoppers are delaying their home search until rates come down.
To illustrate this effect, a recent Redfin report found that starter home sales are rapidly increasing, but only because many buyers are being forced to slash their budgets and look at lower-priced homes. As an agent, it’s important for you to clearly communicate market realities to your clients so they don’t waste their time or yours looking at properties they won’t be qualified to purchase.
Debunk the myth of low supply
There just aren’t enough homes on the market to meet demand, but housing supply has crept up over the past year as a wave of new builds has started to hit the market.
Many builders are highly motivated to sell their newly constructed homes, and they may offer financial incentives, such as closing-cost coverage or interest-rate buydowns. In a market that’s still somewhat slow, buyers may be able to bargain for more deals at the negotiating table.
Some buyers are waiting for a crash
With inflation pushing up home prices, some mainstream housing analysts have started to believe there may be a housing bubble. A few experts even predict a housing market crash on par with the 2008 crash. Then there’s the matter of securing financing. Lenders are spooked by crashes. In the aftermath of the 2008 crash, it was notoriously difficult to get a mortgage. Finally, a housing crash would have a dramatic ripple effect on the rest of the economy. What good are lower home prices if you’ve just been laid off?
Final thoughts
There’s a simple fact underlying all this advice: The best time to buy a house is yesterday, and the second-best time to buy a house is today. Although this might sound like a cliche, it reflects a solid economic reality.
When buyers get fixated on the short term — speculating on how rates or prices will fluctuate over the next few months — sometimes the most responsible thing an agent can do is redirect their attention to the bigger picture.
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