Plenty of people want to pick my brain about the correlation between election years and the state of the housing market, and this year is no different. With the historic pandemic as well as record-breaking unemployment rates because of it, there are a lot of people who are concerned about our industry and their stake in it.
I am not one, however, to look at the short term. As I always say, “There is opportunity in every market,” and the current state of affairs doesn’t change my focus, my optimism, or my ambition for things to come in our industry, either short-term or long-term. There are quite a few reasons why I feel this way. First of all, I always do my homework. Looking at articles and reading up on the current state of the industry from a nonpartisan position helps to alleviate my worries. After fact-checking, I always feel confident in my outlook and perspective. So if you have any questions or concerns, I encourage you to do your research before allowing yourself to give in to any fear or hype.
High Home Builder Confidence
My confidence comes from many places. For starters, home builder confidence is at an all-time high. “The National Association of Home Builders’ monthly confidence index rose five points to a reading of 83 in September. The index reading was the highest on record in the 35-year history of the data series, surpassing the previous month’s record high… Index readings over 50 are a sign of improving confidence.” (MarketWatch.com) This tells me that, in both the short-term and long-term, there is a demand for homes and thus builders will encounter no shortage of interest as they build to find buyers. But this also indicates that builders are looking at other statistics that speak to the boasting and bolstering of the industry, which means builders are doing their research as well.
Something that might be encouraging builders (that encourages me as well), that I’m sure you already know because we discuss it frequently: housing interest rates are at record lows and will stay below 3% for at least the next 3 years. This is a monumental, pivotal position for anyone in the buying market. Any consumer’s bottom line is the interest rate and cost, so I don’t have to tell you that the thousands of dollars buyers will save creates a huge infusion of interest in the market.
The Work From Home Effect
Additionally, behavioral shifts are also an indicator of change. “Normal” office or overhead behavior is shifting and/or unnecessary, so people are trying to reduce or eliminate financial output. What this means is potential clients may need to downsize or upsize to accommodate their new and changing needs. More people are working from home now. Though they may not love it, they may learn that working more at home may be something that is in the cards for them, be it temporary or long term. The result? More residents are likely to feel compelled to adjust their space or acquire more space to fit their needs.
The Rise of the Millennials
Another pivotal change is (and will be) millennial buying. Once considered a transient generation, millennials are changing because of the pandemic. A generation that is used to being untethered has been forced to stay put and put down roots. In the coming few years, we will see at least 50% of qualifying millennials purchasing. This is a staggering statistic, given that millennials have overtaken baby boomers as the highest-concentrated and represented generation on the planet. (Pewresearch.org) However, though the statistic is staggering, the combination of the number of benefits in the market, as well as the maturing and settling down of this generation translates to an assured up-and-coming generation that is prime for the picking. So while Baby Boomer interest might be dropping off, there is a whole new generation that is only beginning to build their real estate portfolio.
Moving to the Suburbs
Speaking of millennials, many people, especially millennials, are moving from densely populated areas to more remote locations. (Zillow.com) One of the reasons for this is that often remote locations provide financial levity for new homeowners. This creates movement as well. But additionally, as the millennial client matures and potentially settles down, they may want to have children. This creates a need for more space, locational security, and a different landscape than what their current needs. On the other hand, baby boomers and other generational buyers may be interested in trading in their current go-go-go lifestyle for something calmer and more relaxed, to match their anticipated lifestyle change.
In our industry change equals uncertainty, and uncertainty equals movement. When there is uncertainty, people start buying and selling. Whether downsizing or upscaling — our industry and our agents are always ready to accommodate our clients in whatever way possible, and the current climate is no different. Rest assured that the current state of our industry, as well as the world, will generate an unprecedented landscape, but we will not be thwarted, sidelined, or scared. I believe, given the information I provided and with even more encouraging information out there, we can be more successful this year (and in the immediate years to come) than we could’ve imagined. This is the time to incite excitement and reach out to all of your connections to emphasize the benefits of buying now. There is truly no time like the present, and it is your job to instill that feeling into all your potential clients. Share your knowledge and expertise, listen to them as they express their concerns, hesitations, or excitement, and then assure them that you and JohnHart have their interests in mind and can deliver in whatever way they need.
I’ll leave you all with one final thought. The next time someone says the market is going to crash, ask them, “Based on what?” Ask them to provide facts that support their theory. I can assure you their reason is nothing more than a hunch or gut feeling.