As we celebrate Independence Day this year, it’s natural to reflect on the American dream of homeownership. However, this dream appears to be facing challenges. Real estate transactions are down, and many are questioning why.
Is it because of interest rate fluctuations, sluggish consumer demand, or a reluctance to sell due to the lockdown effect? While needs and dreams remain, their achievability is increasingly under scrutiny.
As Gen Z enters the housing market, many say they have given up on buying a home. Some blame Millennials, some blame Baby Boomers, and some say Baby Boomers are, in fact, the ones facing the toughest resistance when entering the real estate market. There’s a lot of finger-pointing and very few solutions.
This article explores these issues and highlights the role of real estate and mortgage professionals in guiding clients through these turbulent times.
Current market challenges
The current real estate market is characterized by a complex interaction of multiple factors:
- Interest rate fluctuations: Fluctuating interest rates make it difficult for potential buyers to predict the cost of financing a home purchase.
- Low consumer demand: Economic uncertainty and high living costs have dampened consumer enthusiasm.
- Not willing to sell: Many homeowners are hesitant to sell, either waiting for better market conditions or unsure whether they can find a new home.
Despite these challenges, the dream of homeownership remains. The question is whether it is becoming increasingly difficult to achieve, or simply obscured by market noise and confusion.
The Role of Real Estate and Mortgage Professionals
In times like these, the roles of real estate agents, brokers, and lenders become even more important. Our role is to provide clients with support and information to help them navigate the complexities of today’s markets. We’ve been through difficult markets before, and history shows that markets eventually recover regardless of interest rates or other factors.
Consumer Sentiment and Market Perception
Consumer confidence is currently low due to the high cost of living and perceived barriers to homeownership. However, that doesn’t mean the dream is out of reach. As industry professionals, we have a responsibility to foster belief in the possibility of homeownership.
This is not to sell fantasy, but to highlight a realistic path to getting there, even if the process has changed. This could mean getting to know yourself and your prospects well and understanding the ins and outs of credit repair, loan pre-qualification and pre-approval, or even basic personal finance and budgeting. We shouldn’t be doing this work; it’s an important part of helping inspire new belief and commitment in the positive potential of homeownership.
Shape the narrative
The information we as professionals put out can greatly influence consumer perceptions. Excessive chatter about market disruptions, commission lawsuits, format changes and exclusive buyer broker agreements can overwhelm potential buyers. They begin to view homeownership as an insurmountable financial burden, especially given the common misconception that they will need to put down a 20 percent down payment, plus they may need to pay additional out-of-pocket commissions.
It’s critical to reframe our communications to emphasize that homeownership is still achievable. Yes, it’s more expensive, but that also means the home is a valuable long-term investment. Historically, interest rates are not as extreme as they may seem, and with the proper guidance, potential buyers can still find manageable financing options, including lower down payments, down payment assistance, and concessions that sellers may make to help Pay agent commissions and closing costs.
embrace change
The real estate market of the future will inevitably be different from the past. Change is constant and as professionals we must adapt. By adopting new ways of thinking and doing business, we help our clients realize their dreams.
My friend Rene Rodriguez said: “Leaders, managers, agents, and loan officers need to lead by delivering new opportunity narratives that penetrate irrational fears and move us all toward progress.”
Many people may experience psychological barriers that prevent them from enjoying anything other than what they previously knew. This “new narrative” may be met with hesitation, skepticism, or resentment. Rene made the following suggestions: “The narrative puzzle has two sides. On one side are the leaders who present the narrative. The other is the person receiving the narrative. Some people find that mental blocks from old stories and narratives appear in their brains. They project these into the current market, which may lead them to prepare for the worst. The whole process begins with self-awareness and opening yourself up to the possibility that there may be new ways of looking at things. Listen to the words and narratives of those who have been more successful than us. People who are doing well and struggling in the market tell different stories than people who are not doing well. Sometimes it’s that simple.“
Just as children once dreamed of owning a home, today’s wishes may include different symbols of success, such as a Cybertruck. However, the underlying desire for future stability and investment remains the same. It’s our responsibility to tap into that desire and show consumers that it’s still meaningful, achievable and worthwhile.
This Independence Day, let us reaffirm our commitment to the American dream of homeownership. By redesigning our messaging and embracing change, we can help our clients navigate the current market and realize their dreams.
Homeownership remains a valuable and achievable goal that provides long-term benefits and a sense of independence that we celebrate this July 4th. As real estate and mortgage professionals, we have the ability to make many people’s dreams a reality.
Troy Palmquist is the Director of Development for eXP California.
This column does not necessarily reflect the opinions of the HousingWire editorial staff and its owners.
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