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It’s no secret that the past two years or so have been a wild ride for real estate. Low inventory, low interest rates, a return to the home as a true “home base,” high unemployment rates, high construction costs, tight labor market, bidding wars — the list goes on and on.
With 2022 just around the corner, it’s time to prepare for the challenges real estate teams will face in the year ahead. Although we can’t predict the future (hello, March 2020), we can use trends, historical data, and market and economic information to think about — and plan for — those obstacles.
Here are four significant challenges I believe teams will have to overcome in 2022:
1. Emotional fatigue
Emotional fatigue or emotional exhaustion is when stress accumulates over time from negative or challenging events in life without reprieve. It often happens slowly, and it affects people emotionally and physically, as well as their overall performance.
Some of the symptoms include anxiety, lack of motivation, fatigue, failing to meet deadlines, apathy, feeling hopeless or powerless and lower workplace commitment.
Why is this important to talk about? Because some or all of your team members may be experiencing emotional fatigue now or could be in the months ahead. It has been a particularly uncertain and emotionally charged two years, and if it hasn’t caught up to your team members yet — it probably will at some point.
Understanding what to watch out for is the first step, and then, work with your team members or employees to reduce emotional exhaustion as much as possible. Simply educating your team on this is a great place to start.
That way, they too can be aware of what they are experiencing. Sometimes, it’s more than just about having a bad day. Months-long or even year-long stress can build up over time and spill over when you least expect it.
Some other strategies to reduce emotional exhaustion include exercise, getting enough good quality sleep, mindfulness practices, journaling, meditation, a healthy diet and of course, eliminating or minimize any of the stress triggers whenever possible.
In 2022, leaders will need to keep an eye on emotional fatigue and work with their teams to encourage self-care and time for rest and recovery.
As of September 2021, the U.S. employment rate was 4.8 percent, with the number of unemployed at about 7.4 million. Generally, a 5 percent unemployment rate means good people are hard to find, and companies are competing for talent.
When the unemployment rate drops below 5 percent, the economy is very close to or at full capacity. All to say, the labor market is tight, and it’s an employee market out there right now. If this continues into 2022, for teams, it may mean more money spent on recruiting, longer hiring times, tougher completion for talent and the continuation of increased salaries and compensation packages.
This is not necessarily a bad thing for employees! However, it does put additional stress on the employer, such as tighter margins and going longer stretches of time understaffed. This, of course, creates a ripple effect and may impact the number of services or number of clients a team can serve.
Getting ahead of this is key. Preparing to cut expenses in some areas to allocate those funds to talent will be important in the year ahead. In addition, give yourself a longer runway to hire talent. Don’t wait until the last minute; it could still take you six months to find your next hire.
Always be recruiting, meeting with potential employees, building relationships and building your brand to attract talent to you, so that you are ready to pull someone off the bench as soon as your company is ready.
3. Potential market shift
For the past 10 years or so, the real estate market has been strong and rising. Many agents, teams and employees who entered the real estate industry during that time don’t know how to operate under any other conditions.
While the market may or may not shift, if it does, that could pose a challenge for agents and employees who are not ready to operate in a down market.
If interest rates rise, buying power will decline. There are currently less homes on the market than five years, and home prices are currently outpacing wages. If home prices go up another 12 percent, will people still be able to purchase homes?
What does this all mean for teams? Increased education about the market and sales training will need to increase. Teams will need to be more creative in finding sellers in 2022 to close the gap of homes on the market.
Sales may decline so teams may need to look to luxury markets or areas with a higher average sales price to offset fewer sales. Teams will need to eliminate or cut nonessential expenses and learn to operate on less to stay lean. And agents and their support team will need to work harder to secure each deal (more calls, more follow-up, more communication, more negotiations, etc.).
Long story short, teams will need to be at the top of their game, more educated and more tactical in the year ahead.
4. Increased competition
There are more options for agents (and employees) out there now than ever before, between national brokerages, boutique firms, mega expansion teams, tech-first real estate companies, and everything in between.
There is a ton of money being invested into the real estate industry right now, which will be a challenge for teams in 2022. The way to combat this is threefold:
- Getting crystal-clear on your mission, vision and values, sharing that widely and attracting people who want to work alongside you.
- Proactively recruiting the best of the best agents and employees.
- Developing your team or platform to make it easier than ever for agents to do what they do best: create relationships and close deals.
All that being said, competition will never go away. Knowing what your competitors are doing is just good business, but becoming fixated or bogged down by the completion will ultimately harm you. Stay focused on the customers always. That is how you will truly win.
There is no doubt that there will be challenges in 2022 — some, like the ones above, that we can plan and prepare for, and still others that we will be unable to predict.
Challenges are a part of life. Being adaptable, focusing on what you can control and being willing to make tough decisions in the face of uncertainty is ultimately what will help you thrive in 2022 and beyond.
Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies