Ups and downs are a natural part of the business cycle. Supply and demand can only be out of balance for so long before something must change. That’s where the real estate industry is today — in a shifting market. The boom of the past few years is slowing, and it’s transitioning to a more normal environment.
Is this another bubble?
Some worry the industry is approaching a housing bubble like 2008, all set for a similar burst and the subsequent fallout. At Long & Foster, we’re not. We’re in a markedly different situation for three primary reasons.
- Homeowners are experiencing the highest amount of equity in their homes than at any time in recent history.
- Most mortgage loans have been underwritten and approved using strict calculations for the ability to repay — a factor that wasn’t required prior to the 2008 housing bubble.
- Instead of the many exotic programs prevalent in the 2000s that allowed borrowers to buy now but required them to pay more in the future, most of today’s homeowners have low-risk fixed-rate mortgages.
Will your brokerage have to close next year?
Many experts also worry about real estate businesses being able to operate in a more normalized housing market, versus the robust market of the past couple of years, and rightfully so. The real estate industry is over a decade into an expansion — that’s double the time in which a correction usually occurs.
During this time, the housing industry has had many new entrants, often referred to as disruptors. These new players have struggled to prove viable even during the past couple of years. They have never operated in a more normalized market, let alone shown an ability to survive a downturn. That shift is happening now, and the real estate landscape is changing.
Gino Blefari, CEO of Berkshire Hathaway affiliate HomeServices of America, recently shared a statistic with me: In 2007, there were over 80,000 brokerages in the country, but after the 2008 downturn, less than 50,000 remained. I asked Blefari how the brokerages that haven’t made money even in the past few years would survive in 2023. The simple answer, he said, “they just can’t.”
“If you haven’t been managing your business properly and you’re a start-up type, you just run out of money,” Blefari said. His advice to agents at these brokerages: “You better be back at Long & Foster if you have any pending deals at the other company because they’ll just freeze everything.”
So what does it take for success in 2023 and beyond?
Operating in a fiscally responsible and disciplined manner — as Long & Foster has done throughout its history — is how a company stays strong, stable, and secure in the years ahead. In the more than 50 years that Long & Foster has been in business, we have learned how to survive and thrive in recessions and booms, in sellers’ markets, and in buyers’ markets.
At Long & Foster, we have done that through strategic planning and innovation — a prime example of which is our all-inclusive business model, a diversified approach to real estate that not only strengthens our business for the long-term but also enables our agents to better support their clients.
Working with Long & Foster agents, consumers have access to all the services needed to buy, sell, rent, own, and invest in properties — real estate, mortgage, title, insurance, property management, inspection, moving, and even vacation rentals. People want the convenience and simplicity of an all-in-one experience, and we make sure our agents can deliver. It’s one of the many ways we put our agents first, always.
In a shifting market like today, the strength and stability that a diversified and all-inclusive approach like Long & Foster brings truly stands out.
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