Lack of Housing Inventory Makes Headlines, but There's More to the Story
Read industry headlines or talk to just about any Realtor and you’ll hear about tight housing inventory. The shortage of homes on the market in 2016 is expected to continue into 2017 – especially in the first-time home buyer price range and coveted locations.
It’s easy to develop a gloomy outlook for the spring market and to fixate on challenges like rising interest rates, but looking deeper can reveal opportunities that aren’t immediately obvious. First American’s Chief Economist Mark Fleming said about the inventory situation:
“How do we address the fact that the existing homeowner, the largest single source of housing supply, has a built-in financial disincentive to make that supply move? You’re making that decision to supply as a function of what you can afford to buy, but all else held equal, because you lose that low rate and have to get a new mortgage at a higher rate, you might not be able to buy your own home back from yourself without an increased monthly payment.”
More to the Story
Fleming’s statement is true. But like so many predictions and quotes that become headlines, it’s somewhat esoteric because examining what a monthly payment would be if a person were to sell their home and buy it back doesn’t address the human aspect of why that homeowner might be contemplating a move.
Of course homeowners need to see a comparison of what they’re paying for their current home with an estimate of what the next property will cost when considering selling. But the numbers don’t tell the whole story – mortgage loan officers (MLOs) and Realtors are the true ‘boots on the ground’ when it comes to the realities that consumers deal with. So, to answer Mr. Fleming and address the “built-in financial disincentive,” MLOs and agents must get the rest of the story and help people factor in goals and other life changes along with the numbers.
There will never be a shortage of expert opinions and predictions, which is precisely why MLOs and Realtors need to communicate directly, frequently and consistently with their prospects, past and present clients, and their sphere of influence. Market data and conditions are important for industry professionals to follow, but it’s more important to translate what they mean to the public.
Marketing messages must take current events into consideration, but most importantly in 2017, they must get people thinking about what’s going on in their lives and intrigue them to want more information. For MLOs and Realtors, this is an opportunity to reach out together and offer property value and equity position reviews.
The news is going to keep coming – the key to success is making sure that you and your company are a reliable and innovative, go-to source of analysis and insights.