There’s no doubt that 2021 has been a challenging year. The real estate market has stayed in good shape, but there have also been significant shifts and changes, and many agents are concerned what the next six months will bring.
In my Bold Predictions Mid-Year broadcast, featuring an exclusive interview with NAR’s Dr. Lawrence Yun, I shared the most up-to-date economic data and real estate market trends available and explained how real estate agents can capitalize on future opportunities and maximize success. Here are some of the major takeaways:
The Market Is Hot, But It’s Not a Bubble
Because the market is hot – with houses selling in record time, prices increasing and bidding wars becoming commonplace – there’s anxiety about a possible property bubble and crash. However, there are many differences between the real estate market today and the market in 2007 – 2008, when the last bubble happened. Back then, the crash was caused by low down payments, flexible rate mortgages and an oversupply of property. The 2021 real estate market is very different: During the pandemic, homeowners have been making substantially higher down payments. Meanwhile, conventional mortgages have increased, from 49.7% pre-pandemic to 53% today. Finally, with tighter lending restrictions and stricter mortgage qualifications, people are staying within their means, decreasing the risk of a foreclosure crisis.
Dr. Yun shared that we are past the absolute acute shortage of inventory in the marketplace. However, housing stock is still low, with demand outstripping supply. In July 2007, for example, there were 4 million homes for sale. In early 2021, there were 1.03 million. New construction is beginning to play catch up, although housing is taking longer to complete because of higher material costs, including lumber. Interestingly, more inventory may come online as older sellers who were reluctant to show their homes during the pandemic gain the confidence to put their properties on the market now that COVID-19 cases are dropping and vaccinations have gained pace.
Because inventory is low and buyer demand has increased, home prices are still high. Houses are selling fast and buyers trying to enter the market face stiff competition and increased costs. Dr. Yun believes there will be no persistent decline in prices anytime soon because of the strength of the appreciation and the army of homebuyers who have been outbid and who want a second chance opportunity to purchase.
According to Dr. Yun, NAR’s membership is now at a record high of over 1.5 million. With so much competition in the marketplace, agents need to be more professional and expertly trained than ever before. Only those who are skilled at the highest levels will excel right now. That’s why the Buffini & Company 100 Days to Greatness® program, in partnership with NAR, is vital for new agents or those making less than $100,000 a year.
In this kind of competitive environment, agents really need to understand what’s driving the market and where the trends are headed so that they can be prepared for what’s coming next. My Bold Predictions Mid-Year broadcast uncovered what the future holds for real estate – and what agents need to do to succeed. If you missed the live event, make sure to watch the replay!