Hey guys, with a Delta variant really starting to surge across America, it's coming back into the real estate conversation.
So I've got a couple of questions that you need to be asking clients. And a question you need to be prepared for if your clients ask.
So the two questions I want you to start asking (or thinking about asking) are these:
1. Would you prefer that I wear a mask?
So when you're working with a buyer, you need to start asking this question. Would you prefer that I wear a mask when we're talking? Some of them will say yes. Okay. Maybe most of them will say yes. It depends on your market area, right? It depends on the demographics. And what's going on in your market area. Remember, this is not a political conversation. You're not getting into a debate. You're just offering a service that if they feel more comfortable, you put a mask on.
If you're taking a listing, you might want to ask this second question:
2. Hey, would you...
Okay guys, you've heard me talk about forbearance. I'm going to give you another opportunity within this market that you're all going to want to take advantage of right now.
So we know right now there's 1.86 million homes that are in forbearance. It's about 3.5% of all the mortgages in America.
So when you look at that number, it sounds like a scary number. But 87% of those folks have 10% or more equity.
Now, here is the kicker behind that:
The 12-month period of time that the CARES Act provided is coming to an end for a lot of people. Hundreds of thousands of these properties are now having their forbearance ending.
And this is starting really at scale in September when 450,000 of these homeowners are now going to be at the end of their forbearance period.
Now here's the good news:
87% of those folks have 10% or more equity because we've had such a massive equity buildup over the past 12 months. So they can actually sell....
Are a ton of foreclosures about to hit the market?
The answer is absolutely not. Let me tell you why:
This is a myth that's happening among a lot of renters. People that don't own homes yet are all waiting for the shoe to drop and a bunch of foreclosures to hit the market. Let me tell you why it's not going to happen:
There is something called forbearance. And a lot of people did tap into it at the beginning of the pandemic. The experts thought that about 30% of mortgage holders would need to tap into it at the beginning of the pandemic. In other words, forbearance is where a lender gives you some level of grace.
They say, "Hey, you can stop making your payments for a while, or you can make a minimum payment or we'll tack on your payments to the end of the loan." There are a lot of different variations to it.
But the government said they want everybody to have a six-month opportunity if they've been struck by COVID or...
What's one thing we all need to be concerned about?
We're starting to see inflation rise across many spectrums of the economy. And it is a little bit unnerving when we look at it. Inflation has actually crossed the 2% threshold it's actually past 4% right now.
It's different every month, but it's rising fast across all kinds of asset classes and employment. We're starting to see that real, serious pressure on wages. And a lot of wages have driven up.
We now have more job openings in our country than we've ever had recorded before. Think about what I just said: Job openings are wide open.
This idea that we have an unemployment rate is almost ridiculous because every American -- based on the amount of openings right now -- could be employed. They're choosing not to be employed in some areas or they're choosing not to go to work because of wages or whatever. But in a lot of areas, there's not just enough jobs, there's too...
An interesting new study came out from Zillow recently that talked about what people's attitudes are related to working from home versus working in an office after COVID ends.
What's interesting is that 95% of the American population would prefer to work partly at home and partly at the office after COVID ends.
So big, big differences in how people want to work going forward. But even deeper than that — 36% of the population now prefers to work at home. So basically one third of Americans say they don't want to go back to an office after COVID ends. They just stay working remotely.
What does that mean for housing and real estate? Well, a couple of things:
It means that our trend, which has been trending towards smaller houses for a long time pre-COVID has reversed. Now we're trending towards larger homes where people can work from home, go to school from home, and really have multi-generational families in some cases where...
There's a question that we've had for a while now, which is: When are listing is going to come back in full force?
When can we have that expectation that we're going to start to see listings en masse start to come back to the marketplace?
We know there's been hesitancy because of COVID, but now that people are getting vaccines and the economy is strong. So when are we going to start to see people coming back and saying, Hey, I'm ready to make a sale. I'm ready to make a change.
There's an answer for us.
Zillow just did an extensive study talking to industry experts across the country. And the consensus is that it's going to be in the second half of 2021.
So we're coming right up onto that pretty soon here. And we're going to be right in the middle of 2021, which means we're going to start to see an acceleration of listings.
The question is: Are you ready for it? Are you out there lead generating to start stacking up that business now?
You learn something new every day in real estate. Even after 31 years in this business, I'm still learning.
I learned something fascinating this morning based on a study from Zillow:
In the last half of 2020, the number of listings taken week by week were about even with 2019.
There's a sense that there's a lot less listings in the market as a result of of us not taking as many listings, but it's just not true.
In the last half of 2020, we've taken as many listings as a nation as we did in 2019. But it doesn't feel like that.
So why doesn't it feel like that?
It's like if you own a grocery store and had a delivery guy come every Friday to fill your shelves with the same order. But what has changed is the number of buyers walking into your grocery store and how many products they're buying each time they come in.
If more buyers are coming into your store and buying more products from your shelves, it's going to seem like there's not as much on the shelves...
One question we always receive as REALTORS is - What's going to happen next? What's the crystal ball for where prices are going over the next 12 months?
According to the NAR, Zelman, Realtor.com, Freddie Mac, CoreLogic, Fannie Mae and the Mortgage Bankers Association, the average of all those top industry insiders and economists within those groups, their prediction for the next 12 months is that we're going to see appreciation at 3.9%. You might think that sounds low. After all we just went through a year where we had double digit appreciation and in many markets we saw appreciation as high as 15-16% . Why would this group of economists predict such a low number when most of us would reasonably expect it to be double digits or high single digits (at the very least).
The reason is I think those economists know something - When you have a low supply and high demand, what happens? Prices go up. When supply increases, it puts pressure on...
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