Editor’s Note: The Playbook is a new RISMedia weekly segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every Thursday for another addition to the series.
You’ve gotta have a J-O-B, if you wanna be with me.
Gwen Guthrie’s classic ‘80s pop anthem referred to relationships rather than real estate. But there’s no denying that people’s jobs, and the labor market more broadly, have a huge influence on the what, when, where and how of homebuying and selling. While the housing market hit the brakes hard in 2022, employment remains robust across the country, leaving an odd scenario for many of those considering entering the real estate market—hesitant about housing, but possibly flush with a new job, promotion or raise.
While economists parse out the possibilities of a recession, as a real estate professional, the questions are more practical. What questions will clients have about the local labor market and how it affects their real estate decisions? How can the hiring or firing decisions of companies bring more buyers or sellers to the area? And what can the long-term employment trends tell you about the trajectory of your market?
Not every question or strategy will be relevant to every market. But not knowing the opportunities—or at least the basic facts—about both the industry and the labor market in your area could lead to many missed opportunities.
Read the news
According to Wendy Dickinson, an agent affiliated with Coldwell Banker in the Charlotte, North Carolina, region, the first thing you can do is know the recent developments—big companies moving in, thriving industries and overall job market health—to help assure jittery buyers that their new home won’t crater in price or fail to sell when they decide to move again.
“The biggest thing that we’re seeing right now is consumer confidence,” she says. “At the end of last year, people who were glued to their TVs were a little hesitant about jumping into the market, and when interest rates went up, too, we felt the market level off because of that. Now that people are adjusting to the new rates, we start looking at Charlotte’s growth, and you can’t find a metric that doesn’t show us growing…it raises the confidence level in our market for sure.”
Helping elevate this news—whether it’s simply highlighting investments by a specific company or diving into more long-term topics like explaining how a certain industry will prop up home prices in an area—can do wonders for bolstering buyer confidence, Dickinson says. She notes that because “the whole economy is kind of built on jobs,” any financial conversation with someone looking to buy in a specific area will encompass those topics.
Amanda Snitker, an agent in Denver, Colorado, also affiliated with Coldwell Banker, says that first-time homebuyers in particular are concerned about the long-term value of their property, which makes up an outsized proportion of their net worth.
“Being able to look at the economy as a whole and how stable that is will help them understand how we can kind of project and estimate what their appreciation will be over five to 10 years,” she explains. “We historically have about a 7% annual appreciation in home values…when we look at it on a neighborhood level, there are a lot of different neighborhoods that respond differently.”
Snitker says she will help buyers estimate the future buyer pool of their home years or even a decade down the line based on the likely demand for that home—something that is often interrelated with job markets.
“How many people in the city of Denver make, say, $100,000 or more? We can kind of back calculate into what people can afford,” she says. “I can’t narrow down necessarily within a specific neighborhood, but—somebody who is going to buy this home, they want a 20-minute commute, or specific schools, or something based on the size of the home.”
The more foundational aspects of the local market can be very important for helping people understand the long-term value of homeownership, agrees Snitker. Denver has a highly educated population and doesn’t see much volatility in labor markets like some metros—facts that can be extremely comforting to a worried client.
Bringing ’em in
Dickinson says her company liaisons with various relocation organizations who pass on leads or clients who are bringing employees into the region. Those clients are extra valuable, she explains, because they can quickly snowball into a mountain of referrals within the same company or industry.
“I moved one senior-level person in from one company, and have now moved in 90% of the senior team because of referrals generated directly from one person,” Dickinson says. “Most of the larger companies work with a third-party relocation company…Coldwell Banker has a relationship with the third-party person and they filter through that way.”
But just getting to know people in various growing industries in your region can pay dividends. A former client who worked in HR for a big company “led to quite a bit of business” says Dickinson, as that person connected her with a number of other folks in their company.
“You build a relationship with somebody, it becomes a very easy transition,” she says. “Obviously they want you to help their teammates who are coming in.”
Plenty of regions don’t have huge movements in the job market, at least from large companies. But whether you’re serving 20 relocating buyers or two, Dickinson says it’s helpful to understand that someone moving for work is often looking for a different kind of service and experience from their agent.
“I think sometimes the mindset is a little bit more specific, knowing that this isn’t their permanent home,” she says. “Our relocation business clients, most of them have already moved several times, and so they’re kind of looking for a home that is more generic and going to appeal to the masses—that they know they can sell when they leave…they kind of already know the drill.”
And understanding the expectations and the emotions—or lack thereof—can help you better serve a relocating, job-oriented client.
“I think the purchase and sale becomes a little less emotional and a little more transactional, because it’s not their choice to either be coming or leaving,” says Dickinson. “There’s a lot of professional things going on with the left hand, and so the right hand is really dependent on you, as a real estate professional in the market, to make sure everything is getting done and their needs are being met. There’s a little bit more of a disconnect than for someone who is local.”
Teach and understand
Snitker says one of the important questions related to jobs from both buyers and sellers—but particularly first-time buyers—is about how a home purchase fits into their broader financial plans. To answer that, you have to have knowledge of the industry as well as local labor markets.
“If you have a 5% annual appreciation on this home and you live here for five years, what does that allow you to do with the equity when you’re ready to move or make different changes in your lifestyle?” she asks. “That’s really important, I think, to first-time homebuyers who are just starting to learn and understand how real estate can impact their larger financial portfolio as they’re getting started.”
First-time homebuyers are also more likely to have tighter margins on their monthly expenses, Snitker adds, and so even smaller fluctuations in a labor market will have an outsized effect on the decisions around buying or selling. While a real estate agent might not be the first person they go to for advice about their careers, an agent can certainly generate a lot of value and trust by providing some expertise around the intersection of career, budget and house.
Dickinson says most people have already “done a lot of digging” when they’re asking about the labor market, and don’t necessarily want or need an agent to tell them about jobs in the area or local industries. Instead, her clients want to get into the specifics of translating what they already know about employment conditions into specific takeaways about housing.
Dickinson uses the example of a local manufacturing plant closing down, something that happened in her area recently. A handful of people called her almost as soon as the news broke, wondering where (or if) home values would crater.
“I knew from some people who had worked at the plant, who I was relocating to a different area, who told me that there was a new facility that was going in right down the street, which was going to absorb the labor force from the other plant,” Dickinson explains. “Having that information to give to somebody was great. It was like, ‘Okay yeah, you don’t have to worry about it. This isn’t going to be super disruptive.’”
One question Snitker gets all the time is about whether the job market is dictating the direction of the housing market, or visa versa. Would a downturn in real estate depress the local labor market, or would a significant layoff or pullback from a major company sink home values?
Of course there is no simple answer to that, as both are interrelated to some degree. What Snitker says most people are trying to understand is whether or not their home value is at risk, assuming a major disruption in labor. Those conversations are often emotionally based, but require a knowledge of at least the broad labor market conditions that characterized the most recent housing market crash compared to the current employment environment.
“I think what has come out of Covid and the run-up of home values is that people want to make sure they retain value in their property,” she says. “The recession of 2008 impacted home values so much, and a lot of it was because we had a really high unemployment rate at the time. Relating it directly to employment, knowing what our employment levels are kind of helps us predict whether we will see foreclosures, which are going to be the most impactful for driving down home values in a particular neighborhood…we do kind of have PTSD from 2008.”
5 key takeaways
- Keep up with the big labor-related news in your region, both to answer questions or even use in marketing.
- Understand longer term trends in labor conditions, with the ability to cite how they affect (or don’t affect) housing.
- Nurture relationships with clients who relocate for work, as these can quickly generate a large number of valuable referrals.
- Understand that a client who relocates for work has different needs and expectations for their agent.
- Be able to juxtapose the labor conditions of previous housing crashes with current local conditions.
