The 4 Biggest Questions Every Agent Needs to be Able to Answer This Summer
When the going gets tough and the market starts shifting, buyers, sellers and even agents tend to have one response: to fight or to flight.
But the real estate market is in a constant state of shifts and changes. Some of them are bigger or more impactful than others, but the truth remains the same: from pandemics to recessions to elections, we can never predict what’s going to happen.
You do, however, have control over how you manage your business through it and how you communicate what’s happening to your clients. Because no matter what is going on in the world, one thing will forever remain the same: people will always need a place to call home.
Before you hit the panic button, you need to cut through the noise and get your clients the answers they need to the biggest questions in real estate right now.
What’s happening with mortgage rates?
Rising mortgage rates are no doubt one of the biggest factors impacting the housing market right now.
But it’s important to remind your clients that the low rates of the last few years were an anomaly.
As inflation rises and mortgage rates climb, many may see their purchasing power shrink and their dream of homeownership fade.
However, it’s important to remember one big piece of economic wisdom: there is no better hedge against inflation than homeownership.
Historically, we have seen homeownership outperform inflation in most decades. So if there’s an asset to invest in, housing is one of the few tangible assets that tends to hold its value.
What will happen to real estate if we go into a recession?
Post-2008, nothing will strike fear into the hearts of buyers and sellers like the word “recession.”
But again, historical context is everything. Take a look at the chart below for some serious perspective.
In 4 out of the last 6 recessions, home prices have continued to appreciate. So, if a recession happens, it does not necessarily mean home prices will decline. This is one of the most important pieces of information you need to be getting out right now.
The other big takeaway if a recession happens: interest rates usually go up at the beginning of an economic decline, but in order to stimulate the economy, they will typically fall.
According to Fortune,
“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”
So, while the days of mortgage rates below 3% may be over, we also can’t say for sure they’re only going to go up from here. Making sure your clients know this is crucial to understanding what to anticipate from today’s shifting market.
What’s going to happen this year in real estate?
When we’re constantly being bombarded with different opinions and information, it’s easy to get lost in the noise.
Time and time again, agents will let this get the best of them and their business.
So while signs of a market shift become clearer each day, it’s important to remember that context is everything.
Yes, we are seeing a slowdown. However, we are really just heading back toward the market pace we saw pre-pandemic, and those were still great years for real estate.
Focus on the big picture, and that’s this: the housing market is still very strong, and previous projections are already outperforming what industry experts forecasted earlier this year.
For example, all major real estate institutions are forecasting at least 6 million homes sold in 2022.
Instead of getting caught up in headlines that do more to terrify than clarify what’s really happening in real estate, cut through the noise and focus your business on what carries the most weight: expert-backed data and insights.
Should I buy a home right now?
This is probably one of the biggest questions you’re getting asked right now, and it’s never been more important to have a good answer for it.
For all the reasons we mentioned above, the short answer to this question is yes.
Trying to time the housing market for that deal of a lifetime is like trying to win the lottery. And while purchasing a home today may not be as easy as it was a couple of years ago, the latest data shows that inventory levels are rising, which means more moderate price appreciation and more options for buyers.
This is the time to share those insights and bring back in any clients who may have put their search on pause.
We can’t control what’s going to happen with mortgage rates or price appreciation, but we can control what we prioritize. That way, in times of uncertainty, you see these factors less as stop signs and more as opportunities for growth and change.
Remember this: the key to success in any market is staying educated, acclimating to the current climate and making sure you’re keeping the most important thing the most important thing: helping your clients buy and sell homes.