The calendar says it's spring and what's traditionally known as the busy season for the housing market is getting underway and lack of inventory is on everyone's mind. Home prices and mortgage interest rates have been rising, but the steep drop in housing supply is presenting the biggest challenge. Even though Millennial-aged home buyers were the largest percentage of home buyers for the 5th consecutive year according to the National Association of Realtors' (NAR) Home Buyer and Seller Generational Trends Report, the trade group says tight housing inventory and rising prices are preventing them from reaching their home buying potential.
NAR Chief Economist Lawrence Yun says, "Realtors throughout the country have noticed both the notable upturn in buyer interest from young adults over the past year, as well as mounting frustration once they begin actively searching for a home to buy." What should motivated mortgage loan officers (MLOs) be doing to help their Realtor partners stir up business when there's not much out there to sell? Present the benefits of taking a proverbial leap…
NAR's Summary of Existing Home Sales for January breaks down the market by percentage of home sales in various price ranges and reported the following:
$100-250,000 - 42%
$250-500,000 - 33%
$500-750,000 - 8%
$750-1M - 2%
$1M+ - 3%
With 75% of home sales taking place under the 500,000 mark, it's clear that competition among buyers lessens in the upper price tiers. MLOs and their Realtor partners should do thorough analyses of their past client and other databases and look for homeowners who could make a move up, and consider what goals a quantum leap in home value could facilitate.
For example, do you have new or soon-to-be empty nesters who may consider swapping a suburban home in a coveted public school district for something smaller on a golf course? A few strategic questions peppered into phone calls to update people on market conditions and equity position could open up minds and possibilities. Current inventory conditions definitely present challenges, but enterprising MLOs willing to put in some effort can turn them into opportunities.