New listing activity isn't keeping up with demand and as a result, April saw a dip in home sales, according to the National Association of Realtors' (NAR) Pending Home Sales Index (PHSI). The index was down 3.3% year-over-year nationwide and NAR economist, Lawrence Yun sums it up this way:
“Much of the country saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market. Realtors are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales. Prospective buyers are feeling the double whammy this spring of inventory that’s down nine percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”
In light of low inventory and slower sales, it's not surprising that the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 26 also showed a drop. It's hard to sell or finance what's not there.
So, what can MLOs and Realtors be doing to keep up their desired production pace and more importantly, help consumers? Move your market.
Start with homeowners
Are you consistently communicating with homeowners in your database of past clients and sphere of influence or farm areas? If not, this should be part of your monthly marketing and prospecting efforts. Instead of traditional materials designed to stay in front of past clients or casually troll for listings, MLOs and Realtors need to get homeowners' attention. Deploying email or print pieces that ask a yes or no question like, "Thinking of Selling?" make it too easy for a prospect to disqualify themselves and move on.
The current lack of inventory is a big indication that most homeowners are not 'thinking of selling' right now, but there's a good chance many of them don't realize that that their home's market value and their equity position have grown - or how much. Tap into curiosity with a message that piques enough interest to illicit a response that leads to a call or meeting.
Most people have milestones they want to reach before they consider selling, but the information you provide could influence that homeowner's one, three or five-year plans. Even if a homeowner decides to stay put, your willingness to provide market data and an equity review builds trust for future business and referrals.
Stay consistent with prospects
Consistent outreach and communication that adds value rather than pushing a sale are important with today's home buyers, particularly Millennials and other sophisticated consumers who transact in this digital age, and the latest sales data provides an opportunity to educate. Calls and other communications should focus on the importance of working with professionals who can make sure they're properly prepared to compete for available homes and have access to accurate, up-to-the-minute property status and availability.
Information about the ease of pre-approval and perspective on the impact of rising home prices compared to interest rate increases can help ease concerns and help prospects connect with opportunities.
All MLOs and Realtors should watch the market activity, but top producers find ways to drive it. Current homeowners may be able to accelerate certain plans, while prospective buyers may be holding back, anxious about their ability to afford and get into a home. The idea is not to get a homeowner or buyer prospect to do something they don't want to do, but rather make sure they understand the real options for their specific situations and avoid making decisions based on assumptions.
Review and evaluate your business plan and make adjustments to your marketing strategy and outreach to take advantage of current industry events. Today's market definitely presents challenges, but lending and real estate professionals know there is plenty of opportunity. The key is capturing consumers' attention with relevant, well-crafted messages that address the reality of what's going on and the solutions you can provide.