Loom: Real Estate Market Analysis and Opportunities

Hello, Chris Shea here with Keller Williams Consultants in Columbus, Ohio. And I just wanted to reach out to check in on what you're currently seeing in the real estate market from the lender perspective and to share with you what I've been seeing, interpreting here.

And I think that's something from my own research that may be helpful to you as well. We all know since knowledge is king or I guess queen, either one in this type market, information and problem solving for clients is definitely a key to success.

And I think our partnerships with lenders and other key industry leaders to come up with a way to help you.

Even more important on how we can help each other thrive or some look at it as survive in this lean environment, come out on top of the other side of it.

So please do share any data or insights you may have. And, you know, let's look at how we might be able to build together.

Because I think there's going to be a lot of opportunity in the future in this, in this shifting market. So.

Connected here below or what I showed here below. And you can see it here in the video is this graph here from Trend Graphics showing, showing the current home sales in Columbus.

And I pulled it through just a couple of days ago. You know, as you see in the trend is pre-seasonal went down in January, going up in June, deadline.

It looks like, okay, well that's good. That's typical, but what's not typical. And what you see here is the light green.

Represents for sales, the dark green sold. So last year when, when we had this spike in rates right around July or August I guess July, we started getting a buildup of inventory.

Now when people stop buying a lot of people stop selling cause they're not moving, the buyers are eating up that inventory.

So you see this shift into a lot more solds than for sales, which is reducing inventory even more, which is why prices are staying.

So looking down here at current stats, and this is all, this is also all in the email. If you want to read it instead, but it goes through and it talks about all of our our current situation and looking at this chart here.

Here at the bottom in current right now, today's stats, when you look at current versus previous month to date, okay, it's showing that we're up from last month, but I, what I'm more interested in how we're doing versus a year ago, a year ago, we were already in a low market, low inventory market

. So let's look at the, through basically almost the end of July, we're down 15% on new listings or homes for sale and we're down almost 28%, 27% on solds for the month.

Which is huge when last July was already pretty slow. We think this trend's going to continue. When you look at this current year to date versus previous year to date, of course, the for sales is just pulling current, but the solds down 18% year to date.

Again, pendings are down too, which means, you know, you've got less in contract, less sold, and of course, less coming on the market.

So that all seems to trend that way. And we feel like that's going to continue. So went over this. And again, this will all be in the email as well.

So I want to break this down into some of the analysis I've done. So what the listing scenario right now is extremely low, obviously, and the demand is high.

So the end with the inventory now being back under one month of supply at about three quarters of a month.

And basically, we all know this anyone locked in with a sub four interest rate on their current house, they don't really have any desire to move.

They don't even pay seven plus percent unless they have to move. They're going to stay put, which now reduces an already low inventory.

And like I said, we're about 30% lower. Well, we're 28% lower in solds, but we're also about 30% lower in new listings coming to the market versus a year ago.

And now unfortunately, having just gone past the peak of the selling with the fourth of July and everyone going on vacation now and getting settled in for the new school year.

We think this trend is going to continue and actually even become worse as we go into the fall for various reasons.

I'll talk about blow, but this means an even tighter market and more competition on, on both the realtor side and you know, lender side and basically real estate business as a whole.

So. My solution right now, this is why I've always been kind of focused on my sphere and vetted clients to share with lenders versus just, you know, internet leads.

And I guess many realtors I've been talking to that I know rely on paid for leads with Zillow or others.

Some of them are actually even leaving the industry. I know a lot of them have canceled their lead. Generating that was pretty costly because it's not as lucrative.

And a lot of them are leaving the industry. They just can't sustain their business with, with enough buyers and sellers from the, from the internet type leads versus sphere.

And I tell you the amount of calls and emails I get now from paid for lead sources, scrambling to get new realtors to make up for that revenue that they cost.

It really supports that, that theory because they're losing those current clients they had in the real clients. It's also why I'm investing currently into real estate myself while others are kind of pulling out because I think, you know, there's future opportunities in any, any market,

and especially in a shifting market. And I think, you know, I'll, to paraphrase, Warren Buffett always says, you got to run in when everyone else is running out.

Totally agree with that. So just to briefly touch upon, so what am I doing to, to, you know, we need new listings.

That's, that's what everyone needs. Now, again, I know on the lender side, you're more concerned about buyers, but obviously listings leads to buyers too.

So and, and more deals for you. So what I did, and I've heard different talks on this, the D's, four D's, whatever, but I've actually come up with some, some different sources of potential listings that I call the 10 D's and here's what they are.

That I see one is diapers. So anyone having kids need more space, they've got a two bedroom. Now they need a three bedroom.

They're apt to move. It's not really a D, but I've got ed-u-cation. So anyone with squoised kids that are wanting, you know, into certain school districts and neighborhoods, of course, that's another reason to move.

Divorce often leads to a sale of a home, separate finance to, you know, to separate the finances. And before death, anyone with a spouse or a parent or family member has passed away and they have to sell their home.

Displacement. This is for anyone relocating for a job or moving out of town that they would be selling. Obviously, buyers moving in as well, but this is on the listing side.

Debt. This is a big one to me. Anyone that's amassed death, lost a job or just needs to relieve bills and access equity in their home.

Many of them aren't going to be able to do a refi- so some of them that have been there forever and might have some equity might have to sell and go to renting or, or a smaller home.

Downsizing obviously self-explanatory, empty nesters or someone that just wants less less house. Diversification. This is one that I started focusing on some of them.

My sellers that don't want to move because of the rates I've talked about them when they can qualify some of them keeping their current house as a rental because of that demand where they make cashflow on that with their low rate now and then buy another residence.

Now I know with some of them having owner occupants that could get tricky if they're allowed to do that, but typically they've lived their long off.

Often sometimes people do run out their existing home and and can still even cashflow on those. Dissatisfied anyone that's just unhappy with development or increased crime or other changes in their area that they just want to move for for that alone peace of mind.

So like think about even like around the Intel area, you know, there's going to be a lot of people there that just get frustrated with the traffic and the demand of just it's going to be a huge onslaught of activity there and some people don't want that.

And finally, number 10 on my list is dilapidation. So anyone whose house is starting to fall down, poor shape, you know, absentee landlords, not getting their rent older.

Older folks or older homes with deferred maintenance, you know, those are the 10 I found and again, they'll they're in the email below.

The ones I'm focusing on are our education. So people may be looking into not new first time home bars, but, but moving up displacement, people that are moving.

Out of town debt is one I'm trying to target market in certain neighborhoods. Downsizing people. Well, I hate to say my age, but a little older than me starting to, to retire and wanting to downsize and the kids moving out.

Diversification. That's when I've been focused on with some clients that have the means to buy and not have to sell.

So. And then dilapidation, I'm going to focus on investment opportunities in this market as well. So anyway, I know those are listings.

It doesn't always something that you're focused on, but often they need to buy as well. And then it helps by getting more into the market for the buyers you do have.

So let's move on to talking about the. If you listen to the news, you get conflicting stories from economy, you know, whether it's robust or on the break of doom and gloom.

There's just a lot of noise you need to weed through because obviously there's spins for, for different political reasons or just whatever side of it you're on.

So I just like to look at the facts and data and then what history tells us that comes from that.

Because we've all seen. Cycles in this market that, that always is cyclical. Then the, then what we're kind of putting together as more of an educated guess or estimate based on the facts and not just based on like emotion and fear.

So bottom line though, is when inflation remains as high for this long and in my opinion, no immediate relief. It starts to take us to long consumers.

And though right now the spending remains strong or some, there's some pretty definitive stats that paint a definite shift that we're obviously already in.

For those that don't have, you know, their blinders on but it's definitely going to get reflected even more so in the coming months.

So number one, consuming consumer spending remains. High, however, business spending is, is way down and you know, typically the tightening is, as companies start shoring up their bottom lines to remain profitable or even minimize their losses.

And typically you do start to see businesses get savvy to this first. And many of them that, you know, want to tighten up and, and save cash.

They know that the economy is going to be tight. Because they're already seeing it in their, in their numbers. So that's always a first indicator.

They're smarter than, than the consumer. But the ones that are spending huge investments are using a lot of cash or long-term investment leverage, they're trying to buy in a market that's shifting for future returns.

And they have huge results. And Coll was established in 18 years. And I know that's going to be a game changer in Columbus.

Number two. And this was this was huge when I heard this that in 2021. So think, you know, a year or just getting into COVID about a year.

Late 2021 consumers had a mass the highest average cash balance cash bank account balances in US history on average. And it's like, wow, that's that's pretty awesome.

Well, why was that? Well, many were receiving PPP money. Many were receiving you know, government subsidies for not working and, and, but then also not spending money on traveling or shopping or eating out due to COVID.

So a lot of savings got amassed. But now the eye opening news on. This to me is that I, you know, latest data shows that two years later here in 2023 the last couple months come in coming out of COVID, everyone's traveling and shopping and excited to be spending again and continuing to do so, even

in this high inflation market. But overall burn through those cash reserves and, and supposedly what I've seen now is we're at a 20 year low on those.

And that's what we're talking about. We're talking about the average cash bank balance is just in, in that short amount of time because people are spending with their spending cash, typically their reserves.

They're also number three, the average household credit card debt is at an all time high. So you combine this with cash reserves dwindling and rates going higher.

You know, when these rates get adjusted up credit cards that were 15% and are now 25%. And there's going to be a lot of households impacted by this, especially those in my opinion that are paycheck to paycheck.

Is there the expense? And inflation remains high and, and all why the debt increases with this high credit card, they're going to get into a situation where they can't get ahead and even make minimum payments.

Unfortunately, I think it's going to create a big. So, I think there's a bigger divide between the haves and the have nots in our society.

But it is what it is at this point. So it's like, the longer this inflation goes and costs are up.

I think the worse that situation is going to become. And number four, inflation and other factors as a catalyst. So, even though I've been reading that there's predictions, inflation's not going to.

Ize soon. It mainly due to factors like gas prices, they're expecting those to start going up here soon. I won't get into the nitty gritty on that, but with China and some other reasons for that.

But, you know, that'll start to wear again on the middle and lower class income. That's trying to right now kick the can down the road by using credit card.

And using their cash and just trying to get to the other side of this, the longer it goes on, at some point that becomes a house of cards at falls and it's unsustainable.

Something this is going to improve, but personally the data I look at, I think it's going to be tough for, for some time, for, for many.

And you know, add to this. There's another factor we go into September the forbearance on student loans ends and borrowers that were not having to make payments are going to have to start doing that and even at minimum payments on a lot of these are going to be two or three hundred dollars a month

and although it doesn't sound like a lot when you weren't paying that and that money was going to rent or mortgages or other expenses that also.

So if you weren't going down but up then then it's becomes even worse. Now I guess the offset excited this is salaries are increasing companies are hiring on the higher end jobs and tech jobs and even even our blue collar job salaries are increasing but again if you're if you're already

tight and pinched and now have. You have to add that into your monthly payment that can get that can get hard as well.

Okay, now all this said you probably just want to say, well, enough doom and gloom. And I'm not trying to just be pessimistic.

I'm just looking at the stats and how I interpret them but, but I do think there's still good news. It's not all doom and gloom.

I think any kind of market has opportunities. And this shift we're definitely going to see them. I mean, we all already see that no one's having to pay, but not always have to pay grossly over list and huge appraisal gaps and, you know, starting to get inspections.

And so we're seeing some of that, which is all good and it's just how we present that to our clients.

So I'm looking at ways to use. You know, our problem solving and logic and find opportunities, how to help others.

You know, others in our industry with their businesses, but also my clients with purchases and home, home purchases and real estate investing and selling and everything.

So it's all about timing. One thing I've learned in my career is that the only thing that's the same, that remains the same is that change is going to happen.

So now I'm just trying to learn from the past and brace on this change and look for how to pivot my business, build stronger partnerships with yourself and others.

And collaborate with industry experts and, you know, how we can help each other. So real estate, what does all this mean to real estate?

Well, a lot of the obvious comes to mind, like the higher rates means less people are wanting to buy and as a lender, you're already addressing this.

You know, with your buy downs, free revise, other incentives and our job as realtors to educate our clients on that.

So any info you can share there helps us to do so with, you know, your incentives and things that you have.

Also, you know, you may have heard that over, according to NAR, over 60,000 realtors have, have not renewed their license that we're leaving the business nationally.

Staggering number, but I think with inventory and business down nationally, we definitely, this is necessary and expected to have reduction in the agent count after this thriving three, four years we've had.

So now agents had to be even more resourceful and we're at lots of value and the ones that we're already doing it will survive to the shift.

Even stronger and I'm sure the same with the lenders and you know, it's good and bad. I don't want anyone to go out of business, but I think it's nice to call have some level callings, so to speak, like maybe ones that that we're just jumping in for the ease of the game.

So I'm glad to see that there might be some shake out there. And I'm going to keep trying to build my network with, with industry.

I'm not sure if we can help each other. And I don't mean just the normal channels. Oh, let's pay for some postcards.

I'm working on ways to reach those different d categories that I mentioned and I'm focusing on. I'm tarding my, my sphere.

I've a strong sphere of buyers and sellers in the engineering field. You know, they're in a pretty recession proof industry with all the funding they have from the governmental transportation work.

O dots budgets at an all time high. I talk to them all the time and these, these companies are hiring like crazy.

You know, we're talking people that are starting in the 70s, 80s, easily making over 100 dual incomes, 200 really solid, let buyers.

And I'm trying to put together ways to. To target them with buyers seminars, networking events, doing a lot of direct mailing to, you know, specific areas.

So open to all kinds of ideas on that. And again, what many may see as a terrible time to be in business and we can all sit and lament on that.

I just, I look at the facts, but then, you know, let's look for the opportunities. And again. And by opportunity, I always look for opportunities, you know, as a, as a problem solver and looking for solutions to help, not, not opportunities like go and take advantage of people like will also be

happening, but ways we can help others with our knowledge of the industry. And so, so everyone realizes it's not all doom and gloom and there are, there are things we can do.

I hope you find it. Information useful, look forward to learning what you're seeing and doing currently and collaborating together. And please feel free to reach out if you want some more info or any other thing I can help with.

So look forward to it and talk to you soon.