In coaching my clients across the country, the common theme for the past few years has been the lack of inventory. Inventory; or homes available on the market currently listed for sale, continues to shrink and total days on market gets smaller.
In many areas of the country, this has been an ongoing battle for quite some time. In certain markets, inventory pressure goes back almost a decade! As we continue to see this happen, I have to ask a few questions that might not have simple answers, or answers that are the same in all markets. I ask the questions so you will think about the questions and maybe have a discussion about them.
Since real estate is really a hyper local situation, your ability to engage in this discussion with your Realtor® referral partners is very important, maybe even critical to you and your relationships.
So here we go:
- Are there fewer houses for sale this year compared to the same time last year?
- If so, have total days on market fallen, if so, by how much?
- Are you experiencing multiple offer situations, and are people offering significantly higher than list price on these homes?
- If offers are higher than list, are you having issues with appraisals?
- If you are, does the buyer pony up, the seller come down, or the deals falls apart?
- What is this doing to home prices in your market compared to national averages?
- Are higher interest rates slowing down the market?
These are all important questions, but I have one more to think about. What if this is now the new normal? What if the housing market is becoming more “real time supply chain” as other types of businesses? I ask this because despite the “lack of inventory” and higher rates, home sales are higher year over year. So people are still buying homes, even though there is less to see and it’s more expensive than it was just a few months ago.
What if we never go back to a three or six month supply of homes on the market? Could this be the new normal? If it is, how do we change in the way we do business to be in front of those opportunities in the future?
More and more I believe that the future of real estate and mortgage originations are dividing into two paths; the path of transaction sales; where you pay for and filter leads to try to convert them; or relational opportunities that present themselves to you because you have databased effectively and marketed your relationships with outstanding value month after month.
It’s an interesting conversation we need to engage in. I may be completely wrong, but all the math and logic says to me that the new normal isn’t completely out of the world of possibility! What do you think?
Questions or comments: Mike@IMTcoaching.com