One more set of predictions for the 2018 housing market…this time the predictions are topical.
Here are seven topics to drill into you agent/broker brains:
1. Affordability – Affordability, of course, is relative depending upon the location of your respective real estate market. It’s one thing to find a decent house in Silicon Valley for under $2M; it’s another to find a decent house in Nashville for under $300,000. It’s also more challenging to find an affordable property that doesn’t require a significant amount of work particularly since the foreclosure market has dropped to just 3% of the total housing market. Builders are not building to the needs of first-time buyers or empty nesters due to land acquisition, materials and labor costs. And lastly, affordability is hampered by limited wage growth compared to rising home prices and interest rates.
2. Exodus and Migration – Look for an exodus from states with high living costs, burdensome income tax rates, “new normal” punitive caps on mortgage interest and local/state tax deductions, harsh weather and a migration to states with lower costs of living, no/little state income tax and milder climates. No income tax states like Florida, Nevada, Tennessee and Texas may have increased housing demands that could push prices higher and strain supplies. Cost prohibitive states like Connecticut, California, Illinois, New Jersey and New York may have less buyer interest and push housing prices down. Owners of high-end homes in these states may be advised to list their homes well ahead of their plans to move as it may take longer to sell these homes. Glen Kelman, CEO of Redfin, is already seeing this exodus and migration first hand.
3. Redevelopment – Land parcels currently housing super-sized, functionally obsolete homes are ripe for redevelopment. Old, out-dated living and working structures will be created as newer, more functional space
4. Net Neutrality – We don’t yet know the effects of banished net neutrality but we can bet that large Internet providers will take advantage of this new, non-regulated reality. Will large real estate behemoths partner with large broadband behemoths to ensure that their subscribers don’t miss out on the latest listings in real time? Will smaller real estate players experience slow surfing and/or limited access to limited data? Think about this one…it may matter…a lot.
5. Natural Disasters – It’s one thing to watch mandatory evacuations, weeks-long power outages, repeated road closures due to flooding, burned down homes. It’s another thing to live those realities. As real estate agents and brokers, focus on disclosing property damages, fire risk, flooding and essentially risks vs. rewards. And focus on the cost and even availability of insurance in flood, hurricane, fire zones. Does anyone want to invest in housing in such areas?
6. Resales are Reinvented – It’s no longer an option to renovate, repair, fix up a house to sell it…it’s a requirement. Buyers want brand or like new or model home-like houses on both the inside and outside. Unless the listing house is an amazing bargain, potential buyers are not interested in unkempt and/or outdated homes.
7. Micro Markets – Know that every street, every block, every neighborhood, every subdivision is different. Focus on the micro-specifics and price accordingly.
Now agents and brokers, drill these topics into your clients’ brains.