Understanding and leveraging consumer trends can be the difference between thriving and falling by the wayside as the housing market transforms.
We saw it during the pandemic as millions of people helped shape trends—such as remote work—that allowed agents and brokers to thrive during unprecedented times.
The same applies to today’s shifting market, as mounting consumer trends will present opportunities to win as they manifest in the medium and long term.
“The COVID-19 pandemic and economic uncertainty of the past two years have led to some key changes in preferences that will be important for agents and brokers to pay attention to as they seek to serve their clients and grow their businesses,” says Dr. Lisa Sturtevant, chief economist at Bright MLS.
She adds, “Agents and brokers can be an invaluable resource to consumers by being an expert on local housing-market conditions and by offering guidance and ‘out-of-the-box’ thinking on how to move when inventory is still low. Real estate professionals will also need to reeducate consumers who have only been watching the market the last couple of years about what a ‘typical’ housing market looks like to help them reset expectations.”
Over the next 12 to 24 months, Sturtevant stressed that buyers and sellers would be navigating a “complicated housing market,” which will lead to several trends impacting agents.
Some of those trends include:
Millennials are driving demand and have a car seat in the back. While many face significant hurdles—higher mortgage rates, affordability challenges and student debt—there is tremendous pent-up demand for homeownership among millennials. Between the ages of 26 and 41, Sturtevant says that these young adults will be looking for affordable neighborhoods, good schools, low crime rates and a sense of community.
People will be calculating commute times again. The shift in the work-life paradigm has changed for good due to the pandemic. But despite that shift, many businesses will require employees to be back in the office at least a couple of days per week.
Even being at the office two or three days per week means that homebuyers will consider commute times more carefully than they did over the past couple of years. The so-called “Zoom Towns,” exurbs and vacation communities that were a draw during the pandemic, will lose out to more traditional closer-in suburban neighborhoods with easy access to employment centers.
Boomers are in charge of inventory, and they aren’t going anywhere. The inventory shortages of today and tomorrow are primarily due to younger baby boomers—those between the ages of 58 and 73. As they opt to stay in their homes and the workforce longer, Sturtevant says many are putting off downsizing partially because they face limited options.
Many boomers are also staying put because they locked in a sub-3% home loan when mortgage rates hit historic lows in 2020 and 2021. With rates now double that and likely to remain elevated well into 2023, Sturtevant cautions agents not to expect many of those boomers to be enticed to put their homes on the market.
Another essential trait that boomers share is their access to funding, especially given the equity they’ve earned in the last two years. While many have opted to age in place for the reasons above, Jessica Lautz, deputy chief economist and vice president of research at the National Association of REALTORS®, believes that this is a generation to keep tabs on.
“In the next year, look to your baby boomers who may be looking to relocate to be near the grandkids,” she says. “Don’t count them out when it comes to technology and great home features. We often think of those hand-in-hand with young adults, but it’s seniors who are embracing them as well.”
Lautz believes that the agents who will thrive in the changing market are those who can become the local experts that consumers of all demographics need.
“If you’re that expert that consumers can go and talk to about the contractors or other vendors they should chat with, that can go a long way toward shoring up your business,” she says.
Successfully Navigating Clients
Navigating consumers through current and future market shifts is an essential strategy—and training point—for agents looking to keep their businesses thriving in the coming months.
More specifically, managing seller expectations will be a significant area to cover. This is one point that Anthony Lamacchia, CEO of Lamacchia Realty, is imparting on his agents while teaching and training them on how to deal with “grumpy sellers.”
“The fact of the matter is, no one’s house is going to sell for as much as it would have six months ago,” says Lamacchia. “The number of grumpy sellers is increasing because they don’t understand what’s happening.”
That confusion poses a potential opportunity for agents willing and able to reorient seller expectations heading into the new normal of the housing market.
But what does that look like?
Lamacchia stresses that communication between agents and their clients needs to be better, especially as market shifts and headlines concern and confuse consumers.
“We’ve been in a world for the last two years where you could literally overprice a home by 5% to 10% and it would still sell,” says Lamacchia. “That’s over, or it’s coming to an end.
“Homes have to be priced correctly, or they aren’t going to sell. And that’s only going to increase, so REALTORS® have to go back to being experts and doing things the right way,” he adds.
Putting Things Back Into Perspective
A bit of perspective can go a long way as agents align client expectations with the reality of the market. For many, the days of the hot seller’s market we experienced in 2020 and 2021 are stuck in their heads, which leaves them feeling unsettled when it comes to how shifting conditions are affecting their position in the market today.
Guiding clients through a changing market will take tact, but agents armed with the necessary tools to educate consumers will find that they can mitigate confusion and help their clients achieve their goals.
As agents work with buyers and sellers in any market—high or low—they’ll want to have these resources at their disposal:
- Facts and statistics about the homes in your market
- Accurate market research and data (e.g., price ranges, types of homes, number of days on the market)
- Significant shifts and benefits of the past couple of years (e.g., the equity built up over the last 24 months)
- The latest forecasts for key metrics like prices and mortgage rates
Foundations of Providing a Top Client Experience
A significant aspect of any agent’s value proposition is the experience they provide while working with clients.
Attention to detail and showing that you care about more than just collecting a commission can go a long way toward building and cultivating a relationship that will pay dividends for years to come.
That’s a mantra that John Manning, managing broker at RE/MAX Gateway in Seattle, continually relays to agents.
“When an agent is serving a client, the reward is not the commission check,” he says. “The reward is the multiple referrals that will come during the lifecycle of that relationship from that satisfied client.
“That is the fundamental underpinning of a successful real estate career,” Manning continues. “If I serve a client, I’m serving that client intending to secure 11 referrals from that person over the course of my career.”
When it comes to providing a client experience that produces a career-long relationship and exudes your value proposition to clients and referrals, Manning boils it down to four key elements:
- Relativeness. If I’m not relating to the consumer, where they are and how they want to be communicated with, it’s very hard to build a sustainable business.
- “The promise of a relationship with trust.” Every single action you take online and offline as an agent or broker is scrutinized through the lens of whether you’re trustworthy. Put another way, are you just looking for a commission or to serve your client? That’s what every client wants to know.
- Professional credibility. A real estate agent should realize that every consumer fears that the person they choose for a transaction might not be qualified. Consumers ought to be able to differentiate between career professionals.
- Clarity of outcome. If you cannot paint a picture for your consumer in a way that creates a possibility where none existed before, then there’s work needed. Part of the real estate buying experience involves helping consumers through that learning curve. That’s where setting a clear outcome is very important.
