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The current shortage of inventory has been a major challenge for luxury agents and their buyers, and while it won’t last forever, it may be here for the foreseeable future.
“I have not seen an inventory shortage with staying power like this in the past,” observes Patrick Ryan, Broker Associate with Sotheby’s International Realty and a real estate expert on the Monterey Peninsula. “I’ve experienced periods of low inventory, usually in the first quarter, but by mid-second quarter, supply usually picks up. This is unprecedented territory.”
He notes that large segments of the population are still moving out of crowded urban areas
and that the only mitigating factor is the fact some people are hesitant to make a move in such uncertain times.
“The Monterey Peninsula is a poster child for the resurgent residential real estate market. We’re a magnet for buyers from Silicon Valley escaping the crowded conditions in the Bay Area, and many of them had already grown accustomed to a low inventory, multiple offer environment.”
So when the tables turn and the market favors sellers like never before, how can agents and their buyers stay in the game?
Opportunities amid the challenges
Ryan notes that while the inventory of homes for sale on the Monterey Peninsula has been cut in half, the number of potential buyers has more than doubled, leading to some tough conversations with clients.
“A real challenge has been managing buyer expectations during the offer process,” he says, “but as a result, an opportunity has surfaced to raise my guidance and advice for clients to another level.”
Likewise, Mary Binder, Associate Real Estate Broker and Notary with Daniel Gale Sotheby’s International Realty, who also serves as President-Elect of the Hampton Chapter of the Long Island Board of Realtors, has embraced the inventory shortage as a chance to double down on the essentials.
“The lack of inventory has taught me to get back to basic selling skills,” she says. “I have been doing one-time showings, with buyers not hesitating at making offers and negotiating quick closings.” In this high-pressure environment, her business has been thriving.
Be conscientious with your buyers
It’s no surprise that the inventory crunch has impacted clients’ mood and morale. “Buyers seem to be frustrated, but at the same time, understanding,” noted Ryan. “I encourage them to be patient, not make rash decisions based on emotion. As always, if it is meant to be, then they will get the home.”
Properties sell at blinding speed, and agents should be proactive in ensuring their prospective clients are all in. “We need to have excellent levels of communication with clients and set realistic expectations from day one,” says Ryan.
The market will cool off—someday
On the East Coast, Binder is already seeing signs of stability coming back, and buyers are starting to enjoy more time and more choice. “We are slowing down,” she says. “This was expected. We’ve achieved a new normal and pricing is starting to level off.”
But a look at the West Coast indicates that it may be a while before the seller’s market begins to shift. “I was of the firm belief that as we start to head into fall, we would see a gradual softening of demand and a slow increase in supply—however, now I’m not so sure,” says Ryan.
“New public health concerns have changed the calculus and added uncertainty into the market, and markets do not like uncertainty. With interest rates remaining low and the crisis continuing to cause havoc, I see the demand staying steady and supply staying low, unfortunately.”
Yet, Ryan agrees with Binder that a return to stability is inevitable, even if it’s not imminent everywhere. “One can only stretch a rubber band so far in one direction until it snaps back, and prices cannot continue on this upward trajectory forever.”
How to maintain a positive mindset
Binder’s advice in today’s changing and challenging market is to keep a level head and, as much as possible, always remain engaged with clients. “For me, that means writing personal notes, answering calls on the first ring, and always being available to my clients,” she says.
“I meditate everyday to keep my sanity, and it works,” laughs Ryan. “I also continue to stay present in the community by doing open houses, communicating with my database of past and present clients by providing pertinent information, and continuing community service with my local Rotary Club. I have also increased my social media presence with YouTube educational videos, Instagram, and Facebook to help stay top of mind.”
In times like these, it’s imperative to take care of your clients, while also taking care of yourself. “Follow up, follow up, and follow up,” says Binder. “Stay optimistic, and hug your dogs.”