Commentary by Margaret Kelly
RISMEDIA, April 8, 2008-It wasn’t that long ago that being experts on local real estate was enough to propel many great agents to the head of the pack. But these days, that simply isn’t enough. You also have to understand-and be able to explain-broader economic realities.
In the current buyers’ market, you are likely encountering prospective homeowners who won’t budge from their spot on the sidelines. The decline in the U.S. homeownership rate to 67.8%, as recorded in the fourth quarter of 2007, represents the largest annual decline ever seen, according to the U.S. Census Bureau. The homeownership rate, which peaked at 69.2% in the second quarter of 2004, has been edging down ever since.
But the desire to own a home is as strong as ever. The problem is that many would-be buyers want to wait until the market hits bottom. They are waiting for the lowest interest rates to intersect with the lowest home prices. Unfortunately, many will wait too long and jump into the game after the market begins to rebound. The reality is that there are bargains out there for buyers right now.
Your job is to convince them of that-which you can do with the right facts. By keeping pace with analysis and statistics for the nation, your region and local market, you can form a realistic strategy for helping buyers understand today’s market.
Unlike the early 1980s buyers’ market, which was caused primarily by high mortgage rates and crippling unemployment, today’s market is the result of several converging events. Marginal economic growth, questionable lending practices, subprime mortgage shenanigans and tight credit have combined to create the market conditions through which you currently navigate.
But people are still buying homes. According to the National Association of Realtors, existing-home sales are projected to reach 5.4 million in 2008 and around 5.6 million in 2009.
To better understand today’s potential buyers, you might try finding a homeowner or investor-not a flipper-who purchased a house during the early 1980s. See what his or her perspective is looking back on that choice today, and share that viewpoint with your current buyers.
Explain to your clients the risk of trying to time when prices or interest rates will hit rock bottom. With your understanding of market conditions from a long-term perspective-looking forward and back-you can share pertinent knowledge with hesitant buyers. Take charge of your business and see the results quickly.
Margaret Kelly, CRB, is chief executive officer of RE/MAX International.
For more information, visit remax.com.