‘We’re in the most stressful real estate market ever’ … here’s why
Arizona real estate agents convened in Mesa on July 15 for RE/MAX’s Coaches Corner to gain a better understanding of current real estate market conditions from Nick Bailey, president of RE/MAX and Wayne Fredrick, owner of See The Field Consulting.
“We’re in probably the most stressful real estate market ever — worse than the downturn of 2008 to 2011. That market was bad for certain segments of the market, but now it’s stressful for buyers, sellers, listing agents, buyer’s agents, lenders, appraisers and inspectors because there’s so little inventory nationwide,” Fredrick explains. He believes these trying circumstances are here to stay for 18 to 24 months, adding that the strategies that worked a year ago aren’t effective anymore, so successful agents must constantly update their game plan.
“If you’re a listing agent, you have to sort through 30 or 40 contracts with a client and find out which is best, and it’s not always because of sale price. On the buyer side, you have to figure out what can give your buyer a leg up in the negotiation deal,” Fredrick says. “We’ve never had to do this before.”
Agents must be proactive to stand out in this competitive marketplace. One strategy shared during the event was for agents to reach out to residents after a sale in the neighborhood to let them know a property nearby sold for a particular price to stimulate interest. Bailey mentions that a survey conducted in May found that 78% of owners have considered selling their homes.
“We’ll have a continuation of a seller’s market for the remainder of this year and all of next as well,” explains Bailey. “Though we can’t ride the coattails of that forever. Buyer activity is going to slow and days on market are going to come up. But we still have millennials, who are the No. 1 home purchasing generation, and pent-up household formation in the U.S. that new construction can’t keep up with fast enough. ”
The difficulty of the job, especially in current market conditions, means a vast majority of agents choose to leave the industry all together. “The barriers to entry are low because it’s easy to get a real estate license. But the barriers to success are high. What’s happening is that 87% of people who get a real estate license don’t have it five years later because they don’t sell enough houses,” Bailey remarks, adding that many enter the business thinking they can get rich quick without having to work hard.
On the bright side, Bailey believes that the current market isn’t going to be repeat of 2008. “Here’s why we don’t have a bubble compared with more than a decade ago: Of all the houses in the U.S., 34% don’t have a mortgage and 64% have positive equity. There’s only right about 2% of houses in the entire country that have negative equity. We’re going to see a gradual transition through the market as things slow a bit versus a crash.”