There is one thing we know for sure, the market changes & goes through fits & spurts, it goes through subtle changes & not subtle at all. The economy & interest rates, they ebb & flow. And we change, business changes, how we need to coach our clients & how we need to coach ourselves, it changes.
The obvious shift, of late, is how we're all talking about the economy & interest rates. Most of us have felt a little slow-down in our markets. Even in red hot Austin, TX, not everything is selling with multiple offers in the first weekend. But Tesla & Samsung keep doing their billion $ things in central TX so we're not worried. We are, however, concerned about schools, infrastructure, property taxes, & the wait at Taco Deli. Houston has seen a touch of a slow-down but the oil industry is ramping up, hiring again, so it may be a wash. The Austin conversation is different than the Houston conversation but both require that we stay on our toes.
I think the real question for us Realtors is this ... actually 3 questions:
Am I staying current?
How do I need to shift my conversations with my clients?
Do I need to shift my business?
Am I staying current?
We have an enormous responsibility in this industry to stay current. And in times when things are shifting swiftly, like now, the importance of this increases dramatically! Recession, bear market, bubble? Not yet, not yet, and not yet are the answers to these questions in Austin, for now. What can you do to stay current?
Read, read, read, & read ... local business reports, your Board reports, title company stats & communications ... if not every day, at least every week ... what is going on & what do the experts say?
8am: Here's a tip ... 8am every day read one article or thread on the market.
Agent discussions - Who is your agent village (your brokerage, online, social media etc) and what are they saying? Engage in these discussions.
Economic Update - We are not economists but are often in armchair economist discussions. Most of us have the opportunity to listen to a local real estate economist a couple of times a year. I have attended 3 lately and I'll attend as many as I can in this swift & complex environment we're in. If you have not been in one lately, find one stat! Check with your local title companies or real estate organizations (boards, WCR, YPN, etc), they tend to be the ones lining these up.
How do I need to shift my conversations with my clients?
I find ongoing Realtor conversations & online chats helpful with this ... a helpful insight into what others are encountering in the market, the questions their clients are asking, & the group chat around the topic. When an agent posts about a perceived new market dynamic ("My open house was slow this weekend ... anyone else experience that?") & asks for agent input, that qualified as research. It's the proverbial keep your ear to the ground ... and in this case, the ground is what are other Realtors saying or experiencing? This impacts how we talk to our clients.
What impacts even more how we talk to our clients has to do with the Economic Update point above. Our clients & many Realtors can walk around with all sorts of bad information or opinion not based on fact. We are all susceptible to this. Your friends & clients may ask you about recession and bubble ... mine are ... so I looked up a couple of definitions.
Recession - a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. So, chart below ... no, not in a recession. But everyone seems cautious. I recently listened to David Tandy, President of Texas National Title ... recent as in a few months ago which was pre-Ukraine and pre- interest rate escalation. Tandy said that confidence shifts rapidly when interest rates go up. Consumers still have pent up cash … buying has not (yet) decreased. When confidence AND spending goes down, then we have a risk of recession.
Bubble - First, what is it? From BankRate.com, a housing bubble "occurs when the price of housing rises at a rapid pace, driven by an increase in demand, limited supply and emotional buying. Once speculators recognize that housing prices are on the rise, they enter the market, further driving up demand. The phenomenon is called a bubble because at some point it will burst."
One of the main things happening, at least in TX (and I think this applies to the majority of the country), is that the demand is not speculator driven ... the demand is consumers truly needing a place to live and the available inventory is low, and continues to be low. Which leads to the next question.
What are your local economists saying? The Austin real estate economists are pretty consistent right now that we are not in a bubble. If you look at past bubbles (circa CA & Phoenix & Vegas 2007), they were largely speculator / investor driven ... prices rise, speculators jump in driving prices even higher. In Austin the past two years, everyone & their brother is moving to this TX mecca of jobs & culture & tacos &, if you're from CA, affordable housing.
Do I need to shift my business?
Realtors are already shifting, the smartest Realtors are fluid with this. For example, over the past two years it has been challenging to work with buyers, compete, be the first in the door, win multiple offers way over asking price ... it's been quite the hustle to get your buyers in a winning position and has involved a tremendous amount of coaching. We can look at "do I need to shift my business" from both a short-term & long-term or micro & macro perspective.
Short-term / Micro - The most immediate shift we are all making quickly involves the conversations we are having with our clients, sphere, prospective clients. Effective immediately, we are having these conversations:
Understanding what the interest rate increases do to buying power, qualifying, & monthly payments.
Helping buyers understand what a competitive offer is today vs 30 days ago ... and this is micro-market specific.
Helping sellers price reasonably & have reasonable expectations regarding how many over-asking offers to expect (or not) in the first weekend.
Having to have a good answer to "are we in a bubble?" or "when will the bubble burst?" or "should be buy?" or "I think we missed the market." How do you answer these questions right now?
Long-term / Macro - What is my overall strategy for my business this year & next year? If I specialize in investors, is that business increasing or decreasing (or going away)? If I specialize in first-time buyers, how am I helping them understand interest rates & buying power? If I specialize in luxury, how is that market impacted by the stock market? If I specialize in bank-owned properties, is that going to increase? If if specialize in land development, what if the economy puts the brakes on that because of interest rates & fear of recession?
Always having a plan, always looking forward, being fluid, having multiple sources of income ... all of these things will help you shift.
So back to the 3 questions ...
Am I staying current?
How do I need to shift my conversations with my clients?
Do I need to shift my business?
And I'll throw in the bonus question that I always like to throw in, with everything ...
4. Am I having fun?
Because question #4 is probably the most important Oh, shift! questions in our lives and our businesses ... but I guess that's another article.