The principle of supply and demand is manifesting itself in the U.S. housing market – and it started even before the calendar start of spring and the traditional kickoff to the home-buying season, according to several indicators:
- Prices are up, Inventory is down.
Home values jumped 7% year-over-year in February while the number of homes for sale dropped 3% in the same time period, according to Zillow’s February 2017 Market Report.
- Rents are rising.
The Zillow Rent Index (ZRI) indicates rents have risen 1.2% nationwide between February 2016 and February 2017, with an average monthly payment of $1,406 per month.
These numbers may sound discouraging to home buying hopefuls, with rents and home prices increasing, and supplies decreasing. However, mortgage interest rates can still offset home price gains. Rates have experienced a couple of weeks of decline as documented by the Freddie Mac Primary Mortgage Market Survey (PMMS) for the week ending March 30. Any or all of these statistics are attractive fodder for the media, but they don't always put out complete - or even correct - information regarding real estate and mortgage, leaving consumers to draw conclusions that don't benefit them now or in the long term. The onus is on lending and real estate professionals to get the word out that while low inventory can be a challenge, buying is still a better deal than renting in many areas. But consumers need to hurry so the market doesn't pass them by.
Loan officers and Realtors should be translating and communicating what's happening in the industry to their database of past clients, sphere of influence and leads. Are you reaching out to prospects - and the public - about current market events and what they mean to renters, homeowners and potential buyers? Newsletters, marketing drip campaigns, phone call agendas and conversations at open houses should include:
- Interest rate activity over the past year and how payments differ on a specific property at different rates
- How purchase offers are viewed from buyers who have been pre-approved versus pre-qualified - especially when there's a lot of interest in a home
- How low inventory in certain price ranges can make it attractive for some homeowners to move up
Having this information prepared and sharing it with consumers can not only break the ice, but also help convert casual interest into action. The market is moving fast… team up with Realtor partners and help the public keep up.