Few individuals in real estate are quoted more often than CJ Patrick Company Founder & CEO Rick Sharga, one of the nation’s foremost experts on housing market, mortgage, and foreclosure data. The BidMyListing community recently had the exclusive opportunity to access Sharga’s 20+ years of industry-leading expertise during “Unlock Success in 2023: Housing Market Insights for a Winning Year,” a live market analysis session that focused on leveraging data for business growth. Click here to watch the event recording or read on to learn our top five takeaways for setting a course to success amid the shifting housing market.
1. Challenging conditions, but hope on the horizon
2022 saw rising mortgage rates and explosive property appreciation that priced many potential buyers out of the market. We're continuing to feel the impact of these market conditions today – but it's not all doom and gloom. Key market health barometers, such as strong annual wage growth, stabilized home prices, and a potential mortgage rate peak, suggest gradual market improvements throughout the year's second half. According to Sharga, a return to normalcy is not only possible but visible on the horizon.
2. Navigating market headwinds: inventory and affordability
Consumers have displayed incredible resilience since 2020, but Sharga cites two major red flags as signs for concern: record credit card spending and a drop in savings rates below normal levels. Both of these factors indicate that today's average consumer is struggling with rising prices across the board. Real estate is no exception, with the dual combination of record-high home prices and interest rates significantly hampering housing affordability.
While consumers grapple with affordability, the real estate market is simultaneously experiencing a housing shortage. In a normal market, inventory levels typically average about six months of homes available. Today's market, however, has just 3.5 months of homes available. This shortage has several root causes, such as the many homeowners locked into low mortgage rates and pent-up demand for sales. Combined, these ongoing affordability and inventory issues present two of the strongest headwinds facing today's real estate market.
3. Make smart decisions about mortgage rates
Mortgage rates are an ongoing concern for the real estate industry but have likely peaked for this cycle, barring any unexpected inflation. Sharga expects rates to begin a slow decline in Q2 and trickle down into the five percent range by the end of the year. While this good news means that real estate agents can begin preparing buyers and sellers for a thawing housing market, it doesn't necessarily mean advising clients to hold off on transactions. Sharga recommends that buyers who can afford today's prices move forward now, as waiting for rates to drop slowly could mean missing out on the perfect home. Sellers, meanwhile, should focus on pricing their homes realistically and always keep their equity in context. Individuals who have owned property for at least 2-3 years have accumulated enormous equity amid the housing price boom. Selling now may mean dipping slightly below an ideal asking price, but it will likely still net a high overall profit.
4. Understand your local market
Although real estate agents should stay up-to-date on general nationwide trends, Sharga also noted the vital role that regional data plays in business growth. Real estate is a highly localized market. Many market health indicators, such as unemployment levels, housing price trends, population growth, job growth, inventory levels, and days on the market, vary by region. Staying informed about local conditions is essential for agents looking to make the best choices for themselves and their clients.
5. Uncover new opportunities with data
Leveraging both national and local data allows savvy real estate agents to uncover new business avenues. One current opportunity revealed through data analysis is distressed homeowners. According to Sharga, 92% of current borrowers in foreclosure have positive equity – yet many are unaware of their equity and their option to sell before foreclosure. Real estate agents who act on this data can help distressed homeowners preserve their equity while securing valuable property listings.
If you missed the webinar, click here to access the event recording. Stay tuned for more free live training sessions with other real estate experts, exclusively for the BidMyListing community!