Agents who are looking for new customers in 2012 have to redefine their base, restructure their marketing strategies, and reassess how to build new relationships.
For at least the next year, home prices will likely bump along the bottom before a sustained upward trend emerges. The recovery we’re witnessing is textbook, more or less, which means the lower prices won’t be around indefinitely.
The window will narrow on this unprecedented buyer’s market, and one key group is going to be taking full advantage of it this year: investors.
According to the recently released NAR Profile of Buyers and Sellers, nearly 20 percent of homebuyers own two or more homes—a percentage that, prior to the downturn, was typically around 11 or 12 percent. But the recession has prompted people to think more about building long-term wealth and stability, and they’re realizing real estate is a strong option.
The investor we’re talking about doesn’t necessarily have a portfolio of a dozen properties. More and more of the folks next door are taking steps to secure one or two rental properties or a vacation home in their favorite location in hopes of adding to their nest egg.
Opportunity in the U.S. housing market is no secret around the world, and it has drawn heavy interest from investors abroad, too.
In 2011, international buyers purchased more than $82 billion in U.S. real estate. And 73 percent of those buyers came from Canada, Mexico, China, India and the U.K. The average price they paid was $315,000 compared to $215,000 paid by domestic buyers.
These emerging groups, along with the more traditional investors, will make a few things happen in the coming year: They’ll contribute to clearing REO inventory and rebuilding communities; they’ll rehab many of these properties and turn them into homes that displaced families can rent as they rebuild their lives after a foreclosure or short sale; and their growing activity will create more demand and send a signal to buyers who are waiting in the wings that it’s time to make a move.
There’s pent-up demand in the market from millennials, people ages 16 to 32, who are either heading into college, graduating from college or entering their prime household-building years. Millennials are 74 million strong, and they rival the 80 million baby boomers who’ve had a significant effect on the economy over the past 65 years. Millennials will have a similar effect and, as more of them graduate from college, their real estate activity will increase.
Household formations overall are going to pick up as the population continues to grow and shift with immigration. Over the next 30 years, for example, the Asian population in the U.S. is expected to increase by 79 percent, and the Hispanic population will more than double.
In the near term, international and domestic investors will drive recovery, so it’s important to take immediate action to accommodate this key set of buyers. This may mean getting more training, such as the Certified Investor Agent Specialist designation or the National Real Estate Investors Association’s Certified Agent for Real Estate Investors designation.
By keeping your eye on the pulse of the country as a whole and the influence of various groups on the real estate industry specifically, you’ll find your way no matter how the trends shift.
Margaret Kelly (CRB) is chief executive officer of RE/MAX.
For more information, visit www.remax.com.