What I call “disruption fatigue” set in for me a couple of years ago, and now disruption has arrived. The number of people who want to sell their home has declined, and the number of people who want to buy homes has increased —creating a record-breaking shortage of homes for sale.
The shortage of homes for sale is having a bigger impact on my business than anything else.
I have clients who want to sell their homes, but it’s hard for them because their dream houses don’t seem to be for sale right now. Last year, I actually had clients who sold their homes and rented until we found the right home.
What’s the solution?
Maybe I need more technology. I feel so disrupted; this market is so different. It didn’t happen overnight either. Current trends are at least four years old, yet I don’t feel prepared, and I wonder if it will get worse before it gets better.
Right now, in the Minneapolis and St. Paul areas, we are breaking records for the lowest inventory of homes on the market since 1999. Each week, there are fewer homes for sale.
We have plenty of jobs and low unemployment. Wages have gone up but not nearly as quickly as the cost of housing.
Homes are being listed, but on a given day, more homes are coming off of the market than are going on. Most homes sell quickly, and some come on the market with offers on them already.
The math doesn’t work too well. The market is way out of balance. It reminds me of the Great Recession and the housing market crash. Each week, more houses came on the market while at the same time home sales declined.
It was a strong buyer’s market. There were people who wanted to sell, but they could not afford to. Things felt backward as sellers brought money to the closing, and buyers sometimes walked away with a check.
In the current housing market, prices keep going up because of the short supply, and some buyers, or maybe many buyers, are being priced out of the market, yet there are still more buyers than there are homes for sale.
Rents are also increasing, and there are people who are priced out of the housing market. And even though they have jobs, they are living with roommates or relatives just like so many did during the Great Recession.
The glut of inexpensive real estate that was on the market sold. That shadow inventory that so many of us were worried about never really materialized, or maybe it sold so fast we never noticed it.
The strong seller’s market is not healthy, and home prices are probably not sustainable. It cannot last forever and eventually, people will need to sell. Maybe there will be affordable new construction.
Feeling the pinch
Real estate companies do not have as many listings as they had last year. Some must be struggling to pay their bills.
It isn’t unusual for a company with 20 full-time agents to have less than half a dozen listings right now. It’s listings that drive our businesses.
The increase in home prices might mean higher commissions, maybe they are high enough to make up for a decrease in home sales.
Locally, I feel a kind of shift in the market. I have not experienced a market like the one we have today and cannot find anyone who has.
There are homebuyers who are making offers before they see the home and without an inspection contingency. I hate to see people buy homes that way, especially first-time homebuyers.
Is it possible that some agents will drop out because of the inventory shortage? Will real estate companies have to cut overhead, or can they still pay their bills if home sales fall this year?
Real estate agents and companies support many other companies and cottage industries. There is less of a need for stagers, photographers and even for property flyers, buyer leads and for-sale signs. Someone must be feeling the pinch.
Stick to the basics
Some have suggested we all need to reach out and convince people that now is the time to sell, and if we do that, we will have more business. We all need to sell our way out of this.
My approach has been to target my marketing toward people who might want to move. There are always “life stage” movers.
People who are divorcing may want to split their assets and sell off their property. Those who need to move into a nursing home or assisted-living apartment may have a home to sell.
People who are remarrying may want to sell a home or even two. People die, and their families may want to sell off the real estate they owned.
As we search for homesellers, it’s hard not to trip over first-time homebuyers and others who want to buy homes right now. There isn’t any need to spend money on buyer leads.
For me, in-person networking and showing up at local events with a lot of business cards pretty much beats any kind of technology I can use. The goal is to talk to the prospective seller before my competitors start the longer dripping, calling and capturing process.
Even if I had a CRM full of iBuyers using bitcoin, it would be a struggle to find something to sell them.
Is this disruption? Is there more to come?
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul. She is also the founder of StPaulRealEstateBlog.com.
