VP of Sales, Trusted Rate, Inc. Passionate about helping people lead financially abundant lives through real estate.
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Some people are worried about an upcoming housing crash in the United States.
According to April 2022 data from the S&P CoreLogic Case-Shiller Indices, “home prices continue to increase across the U.S.” In fact, there was a “20.4% annual gain in April, down from 20.6% in the previous month.”
Current Real Estate Market Conditions: Not A Repeat Of 2008
Zillow found in its June Market Report that while the market today is “more balanced” in comparison to “the pandemic-fueled rush on real estate in 2021,” the market “is still less buyer-friendly than the pre-pandemic norm in most of the country,” with monthly mortgage payments increasing “another 4.5% in June.”
However, I believe that while the industry is facing challenges, it’s not a one-to-one comparison with what happened in 2008. One reason? According to June 2022 reporting by CNBC, there “are currently 2.5 million adjustable-rate mortgages, or ARMs, outstanding today”—the “lowest volume on record.” By comparison, “just before the housing market crash, there were 13.1 million ARMs.” In those days, CNBC points out, “the underwriting on those types of loans was sketchy” however, “new regulations following the housing crash changed the rules.”
Surviving These Market Conditions Requires Innovation
Of course, conditions will vary across the country and will change day by day. This isn’t a repeat of 2008, but it doesn’t mean the housing market is in tip-top shape by any means. These conditions have created challenges for U.S. homeowners and buyers, and they’ve also created challenges for residential real estate agents. But the reality is that demand still exists, and innovative strategies will help real estate agents close sales for those homebuyers.
For example, right now, we’re returning to a time where sellers are more willing to work with buyers to win out over the competition. Instead of opting for the par-for-the-course route of a price reduction on properties, real estate agents should consider proposing a different approach, one where the seller puts money toward a bit of the buyer’s interest so both parties can walk away happy. Say a seller has a home on the market for $500,000. Instead of suggesting a price drop for the buyer, the real estate agent can suggest the seller earmark a specified amount and “buy” the buyer a lower interest rate.
Another creative approach involves looking at non-traditional ways buyers can secure mortgage loans. Looking into non-bank mortgage lenders, special profession-based mortgage loan opportunities and 401(k) borrowing are just a few strategies that go beyond the traditional methods we see a lot of in the industry.
Continued Professional Growth Is Key
However, it’s not enough for real estate agents to rattle off a few fresh approaches to their clients and call it a day. Consistent innovation depends on consistent knowledge and skills refreshes.
I’ve been a mortgage professional for 18 years. I’ve advertised, cold-called, branded myself on social media, you name it—but what’s helped me the most is a dedication to continued growth. My advice for all real estate agents and mortgage professionals is to stay on top of the industry. Read a variety of real estate publications, attend conferences and seminars, join professional associations and connect with your peers. Have conversations about the latest industry happenings with your peers and people in your community who are looking to buy and sell. By taking these professional development steps, you can help buyers and sellers alike more and more with each passing day—which will pay off in the long run. Appraisal and real estate education provider McKissock surveyed over 1,000 real estate professionals in the United States and found that the highest-performing real estate agents get the majority of their business sources from past clients (48%) and referrals (42%).
The housing market has natural ebbs and flows. Don’t depend on market stability to stay in business. Depend on yourself.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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