Sensibility to Survive a Fantastic Inventory Crunch

The lack of inventory in most of our markets is becoming less of an interesting headline and more of an extended, unfortunate reality. From Spokane to Seattle, in cities and towns across the state, we’re experiencing a dearth of available homes. Inventory can’t keep up with the demand of our buyers.

This environment has helped many homeowners gain back some of the equity losses from the 2007-2012 downturn. At the same time, it’s constricting ready-and-willing buyers’ ability to purchase.

It’s also making REALTORS®’ lives more difficult. Listings that sell quickly are welcome. One home with many offers creates one happy seller, but it also creates many unhappy buyers and REALTORS®. Competition like this in a real estate market with five months of inventory is healthy. In a market with one or two months of inventory, it’s inefficient.

So where should REALTORS® in today’s market be looking to guide their businesses through the next year?

To begin with, it doesn’t appear that inventory is going to grow in any significant fashion. We should all be encouraging our legislators to take sensible action that encourages building, strategic housing density, and forward-looking zoning regulations. Growth is inevitable. Washington is changing, and it needs to grow in a smart, managed fashion.

That’s not going to change our marketplace in the short-term, though. New construction, even if fully supported by legislation and our communities, will take years to catch up with demand. We need to frame our outlook based on today’s constraints.

When you’re asked “How’s business?” does the ubiquitous real estate training response kick in? “Fantastic!”

For many of our associates, business is not easy right now. We may not sense their difficulties behind the fantastic façade. Listings are harder to come by, and buyer services are far more difficult and time-consuming than usual.

A wise REALTOR® friend reminded our Board recently that for some of our members, making a living today is almost as difficult as it was in 2009. So it’s a good time to have some empathy for our counterparts who may not be outwardly showing their struggles. At the same time, we need to make sense of this new market and adjust our business tactics accordingly.

Is the circular logic of “I don’t know what I would buy next” the culprit in our lack of listings?

Find a way to assuage your sellers’ fears about lack of opportunities. Longer sales contracts, rent-backs, temporary housing accommodations—there are options for sellers who want to maximize their sales prices while transitioning comfortably into their next homes.

The interest rate environment and purchasing power of buyers should be primary talking points.

No matter how much the value of a seller’s home may rise in the coming years, rising interest rates could negate it all. Their buyers will be able to afford more home today. Most sellers will also buy as well. Their next purchase will be more affordable if they act while rates are still historically low.

Of course, all of this sensible talk requires starting conversations. That means going back to the basics. Our friends, neighbors, past clients, and our spheres—has the only thing they’ve heard from us recently been: “The market is hot! Business is fantastic! It’s a great time to buy/sell!”?

New inventory isn’t coming soon from anywhere but current homeowners. Maybe it’s time to open up to them about what’s really happening in the market. Have more thoughtful conversations about the difficulties and opportunities in the market. Allay your friends’ and clients’ fears, and help them make better decisions in a confusing atmosphere. To survive and thrive in this inventory crunch, a little more sensibility will benefit us all.

 


 

Sam DeBord

Sam-DeBord

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and President-Elect of Seattle King County REALTORS®. You can find his team at SeattleHome.com and BellevueHomes.com.

 

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