Yes, it’s true—the market is bouncing back. Well, maybe not bouncing, but at least creeping steadily. First half of 2013 results show median price increases of more than 30% over 2012 in places like Akron OH; San Francisco, Oakland, and Sacramento CA; Atlanta, GA; and Phoenix, AZ. Slightly lower but still promising increases showed up in Reno and Las Vegas, NV. (National Association of Realtors)
Interest rates are edging up but are still low by historical standards. When interest rates rise, first time home buyers are the first market segment that feels the effects. And while interest rates rise, the age of inventory declines. Across the country, the median age of inventory was 78 days in March 2013. That’s a decline of more than 20% from February, and another 12.3% from March 2012.
So the Realtor is faced with three concurrent challenges in order to thrive in today’s environment:
- How to get sellers to list their properties
- How to attract first-time buyers
- How to tap into hidden markets
How to get sellers to list their properties. Sellers don’t follow statistics, so many of them are still living with a “bad market” mindset. Nobody wants to list a home and have it sit on the market for six months or more. So just showing them statistics isn’t going to cut it. You’ve got to be creative—maybe even a little bit dramatic. An email blast and/or postcard mailing that says, “I sold 25 Huckleberry Lane in 7 days—will you be next?” can generate phone calls and listings.
Ask your Facebook friends and Twitter followers to send you leads. If a lead turns into a sale, they get a nice gift card from a local retailer (make sure you check with your Broker/Owner what you are permitted to do). Always post a status update on Facebook when you sell a property, so everyone knows you’re where the action is. Use ads on Craig’s List to drive traffic to your web site. That can generate a whole new pool of both buyers and sellers.
How to attract first-time buyers. The majority of first-time buyers are probably looking for smaller, less expensive homes. They are understandably nervous about the double whammy of rising prices and rising interest rates. The first thing you’ll need to do is help them get pre-qualified for a loan. Once you have that in place, you’ll know exactly what properties in the current inventory will be right for them. Most first-timers want to put their personal stamp on whatever they buy. Many may be attracted by DIY projects and fixer-uppers. At the very least, you’ll want to emphasize properties that are neutrally decorated, a blank slate waiting for their personal touches.
How to tap into hidden markets. Rather that scatter-shooting all over the marketplace, target segments that are especially hot right now. Here are three for you to consider: single women, foreign investors, and rental property investors.
Single women comprise more than 20% of new home buyers, and more than 40% of these are first time buyers. What an opportunity! Here’s what they are looking for: a home priced under $200,000; two bedrooms/two baths (a dual master in case a roommate situation develops); a low-maintenance yard or a condo with no maintenance responsibilities; and a location where they fit the demographic, rather than a neighborhood where they are surrounded by young families.
There is international home buying activity happening throughout the country. Foreign investors are tempted by proximity to friends and relatives, as well as ease of travel back and forth to their country of origin. Although there are ethnic communities in many places, the top destination states for international buyers are Arizona (9%), California (17%), Florida (23%), and Texas (9%). (National Association of Realtors)
Driven by buyers who are already priced out of the market, rental rates are rising rapidly. Especially in metropolitan areas, large investors are snapping up rental properties as fast as they come on the market. Hot areas right now include Las Vegas, and Miami, as well as cities in North Carolina and California. But even if you’re not in a position to attract the big players, every area has its individual investors who are ready to expand their portfolios. These investors are especially attracted by foreclosures and short sales. Not only are there bargains to be had, investors may wish to retain the current owners as tenants in some situations—a win-win for both parties.
Who’s buying and who’s selling? It doesn’t really matter. Look at your own market and adapt your strategy. There’s a harmonic convergence of opportunity out there. Don’t miss it!