What's the number one reason somebody should be buying a home now as opposed to waiting?
Number one reason is this:
Lawrence Yun, chief economist for NAR at a recent conference said this. He said that it's totally within the realm of possibility that we'll see interest rates at eight and a half percent interest next year in 2023.
Why? We know the Fed has already announced they're gonna do another rate increase in November and another one after that, then they're gonna take a pause. So two more increases are coming and we're already at 7%, eight and a half, maybe a low estimate. So when, although we feel like the interest rate is high, it's not high relative to history. Remember the average interest rate over the last 50 years has been 8%. We're at 7%. So when we look at it from a historical standpoint, it's not as high as we perceive it.
We perceive it to be high because we're basing it on the 60 year low. We just live to...
Here's some information that I think is super powerful that really no one talks a lot about. But it absolutely will impact you and I as REALTORS.
From 1968 to 2000, the average building in the country was 1.5 million new units. That's a long history there, 1968 to 2000. From 2000 to 2010, that number dropped to about 1.28 million units. Okay. Then we had a big building boom during the run up to the Great Recession. But then it collapsed and builders stopped building at all.
At the end of the day, when you add all those numbers together, what you find, and what analysts have found is that we are not building enough homes by a mile, right? And in fact, in order for us to just meet the supply demands of the country, we need to add 5.5 million housing units to our current inventory out there. And if we don't do that, we're gonna have perpetual low supply, which leads to higher prices and leads to kind of the market that...
Is the market in a bubble situation? Is the market about ready to collapse?
Some people say that they're waiting for the market to collapse.
Well, that's not going to happen.
Here's the number one reason why:
When we look at the last market collapse that we had, which was 2008 and is still fresh in everybody's memory, it was caused by credit running amuck.
Credit was being given to people that shouldn't have been able to get a loan. In other words, there was a credit issue there.
People were getting liar loans and no doc loans. So the credit markets were out of control. They were bundling these junk mortgages and selling them on the stock market as derivatives. When that collapsed, it caused Lehman brothers and all these others to start collapsing, which caused the massive 2008 collapse in the marketplace.
Are we in that same situation today?
Absolutely not! Nothing compares to that.
In fact, right now, we have is super strict...
How long do people stay in their homes? It's an interesting question. And it's a question that's related to marketing for us.
Prior to 2008, the average person stayed in their home five years before they moved on. So quite a bit of turnover there.
From 2008 to 2016, that number moved up to eight years.
And now that number has gone even higher — it's now 10.6 years.
So why are people staying in their homes longer? Well, there's lots of reasons.
The Great Recession had an impact. Super low interest rates have an impact. Having less inventory in the markets for people to move up to and change homes has also made a big impact.
But one question we should know and ask our clients is how about our local market? How about with our own sphere? What does that look like for the people that you're actually doing business with?
It's a great text. It's a great social media post to ask this question:
"The average homeowner spends 10.6...
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