Amidst the backdrop of the pandemic, tremendous disruption and the George Floyd protests, Inman’s virtual Connect Now conference gave attendees their first look at what to expect in the “new normal.” Taking action on these emerging trends now will keep your business strong during the turbulent times ahead.
Brad Inman opened Connect Now by describing the current economic situation as the “great reshuffling.” Gary Keller described the last few months as being “a fast track of disruption” with 5 to 10 years of change being condensed into 18 months.
From my personal perspective, we have moved through the “great pause” and now are in the midst of the “great reinvention.” If you’re ready to thrive in the midst of all the upheaval, here are seven key trends to watch plus action steps to take for your business.
1. Recognizing pricing trends using ‘high intent’ metrics
Economists agree that supply and demand are the best prognosticators of future prices. If you want the most accurate picture of what is happening right now, Mike DelPrete recommended focusing on “high intent” metrics.
On the supply side, this is the number of listings coming on the market. On the demand side, pending sales provide a snapshot of what is happening today rather than using closed-sale data which relies on 30-to-90-day old data.
To have the most up-to-date assessment of what is happening in your local market, watch for changes in these two metrics. When there are more pending sales than listings taken or if these two numbers are in parity, prospect for sellers. When there are more listings than pending sales, prospect for buyers.
The pandemic forced most businesses to operate remotely. As the lockdowns lift, many owners and employees will be continuing to operate remotely.
The current data is showing a trend towards “resuburbanization,” where people trade the convenience of living downtown for more space and a less expensive lifestyle outside downtown metro areas. Here’s what several Connect Now speakers reported seeing in their data:
- McMansions are making a comeback as more people create multi-generational households or merely need more space to accommodate working from home.
- Movement out of downtown communities to walkable areas in the close-in suburbs, small cities and rural areas.
- A surge in second homes sales in areas located a two to four-hour drive away from major metropolitan areas.
Become a referral agent. For example, if you work a downturn area, make sure you have good contacts in the suburbs with walkable areas and where there are McMansions suitable for multi-families or people with home offices. If you can’t help your clients find what they want, you can still earn a referral fee by referring your client to an agent who can help them.
3. Migration from apartments to single-family residences
Prior to the pandemic, many millennials had little interest in owning a home, preferring travel and other types of experiences instead. The pandemic has flipped all of this upside down — homeownership has now become a key priority among millennials.
Matt Gardner, Windermere’s chief economist, says the company’s data shows rental prices in multi-family buildings are decreasing while single-family rental prices are holding steady.
Prospect high-end rental properties for first-time buyers. For example, create a postcard campaign that asks: “Are you ready to stop paying your landlord’s mortgage and own your own home?”
Based upon my previous article on down payment assistance, you could also do a marketing campaign that asks: “Need help with your down payment? Contact me to learn how down payment assistance can help you become a homeowner now.”
4. A tsunami of rightsizing
When most people think of rightsizing, they’re generally describing moving from a larger property into a smaller property. Today, rightsizing can also mean scaling up into a larger property. This is how Rightsizing.com describes the trend:
“Rightsizing is the concept of working with what you have by making better use of existing space. The promise is that you can live more fully in your home if you right size. Moreover, rightsizing is not just right for Boomers; Millennials and Gen X have embraced the movement as well. It’s about the quality of the space you need to meet your needs — not the quantity.”
Several speakers reported working with three generations of family members who decided to sell their separate homes and purchase a much larger home where they could all live together. Other buyers are searching for large lots where they can build a family compound with multiple living units.
Identify any contacts in your database who may be candidates for rightsizing and reach out to them to discuss their needs. If there is nothing on the market that meets their needs, prospect owners of off-market properties to locate houses that would work.
When you do locate a fit, have the owner sign a one-party listing for your buyers and do the showing. Even if you don’t sell the property, you may end up with a listing.
5. Mortgage interest rates at 2.5 percent?
Matthew Gardner and Skylar Olsen, senior principal economist at Zillow, reported prices are holding steady, and even if there is a decline, it will not be more than 2 percent.
Their most interesting prediction was that interest rates in 2021 may be as low as 2.5 percent. The irony is this has already happened. A few days ago, one my friends closed on a condo with an interest rate of 2.6 percent.
Let your sphere and referral database know about today’s historically low rates. For those who show an interest, have a conversation with them about buying, selling or refinancing.
6. Office consolidation
Tami Bonnell, the CEO of EXIT Realty, shared a surprising statistic: 79 percent of the brokerages have six or fewer agents. Couple this fact with the current trend of providing one-stop shopping where the entire real estate transaction happens seamlessly in one place, and Bonnell believes there will be a major increase in the number of mergers and acquisitions.
If you own one of the 79 percent of brokerages with six or fewer agents, is it time to consider moving to a brokerage that would allow you and your agents to operate as a team within their brand and that provides all these services?
7. ‘Cash flow is the oxygen of business’
This was my favorite quote from the conference. Numerous speakers reported how they were trimming unnecessary costs. Leslie Appleton-Young, chief economist of the California Association of Realtors, reported that 39 percent of their brokers plan on reducing their physical footprint. Sixty-three percent reported they will not be renewing at least one of their leases.
Review your credit card bills for the last 12 months to identify all “automatic renewals” of services. If you are not using that service or product, cancel it.
Also, follow the 80-20 rule. Focus your time and spend your money on the top 20 percent of the activities that generate 80 percent of your business. Lop off the bottom 20 percent that contributes only about one percent to your bottom line.
You currently have a unique opportunity to reinvent yourself and create the business you want in the “new normal.” Use these trends and action steps to guide your decision-making. When you see the results, you’ll be glad you did.
Bernice Ross, President and CEO of BrokerageUP and RealEstateC