Soaring Home Values
Home values reached a new all-time high in June according to the latest housing report by Zillow, as the median home value across the U.S. climbed to $350,213. This marks a 1.4% increase from May marking a four-month increase, primarily due to a prolonged period of scanty new listings. The average national home value reached an unprecedented $350,213, slightly surpassing last year’s peak of $348,225.
The rise in values seems universal across major U.S. markets. Yet, more than half of them are still reeling below the levels seen a year ago. Affordable cities like Chicago, Buffalo, New Orleans, Hartford, and Detroit lead in monthly value gains, with Los Angeles being the notable exception among pricier metros.
A Drought in New Listings
The dip in new listings this year is rather startling. Compared to last June, there was a 28% drop in new listings. This June recorded only 376,500 new listings, which mirrors figures usually seen in the winter months, rather than the average for June.
Several factors contribute to this shortage. Mortgage rates, currently at 6.8%, have jumped considerably over the past two years. Consequently, many homeowners, whose existing mortgage rates are lower, might find it uneconomical to sell and then buy at these higher rates. Additionally, after a 4% nationwide decline in home values from mid-2022 to January, homeowners may be waiting for values to soar before deciding to sell.
The housing market continues to face extremely low inventory levels, constraining sales activity. Total active inventory was down 10.4% year-over-year.
“The lack of new listings only intensified this June,” said GregoryArdbelava, CEO and Founder of PropertyPulse.AI “With fewer sellers listing their homes, inventory levels have fallen back below last year’s totals, creating competitive conditions for buyers even amid rising mortgage rates.”
Plummeting Inventory
Despite the skyrocketing prices, active inventory in June dwindled by 10.4% compared to last year and was a staggering 44.9% below the levels seen in June 2019.
While demand has softened in response to higher borrowing costs, buyer activity shows signs of resilience. Pending home sales in June were 16% lower than last June, but this deficit has narrowed over the past few months as some buyers continue their home search.
The scarcity of listings has been an ongoing trend over the past year as higher interest rates deter potential sellers. Rates on 30-year fixed mortgages are currently around 6.8%, significantly higher than 5.3% a year ago.
A Glimmer of Normalcy in Rents
On the rental side, asking rents are rising at a more moderate 0.6% monthly pace, signaling a return to normal seasonal trends. This should bring some relief to renters after rapid growth through much of the pandemic.
Inflation Eases, but for How Long?
The latest inflation report reveals a slight cooling in June, resulting in a dip in mortgage rates. The Consumer Price Index (CPI) rose by a modest 0.2% in June, indicating a slackening in annual price growth.
Although there’s a temporary sigh of relief in the housing inflation, the persistent high core inflation suggests the decline in bond yields and mortgage rates might be ephemeral.
Looking ahead, typical seasonal declines in demand during the summer may provide some breathing room. But without more sellers listing their homes, inventory will remain tight and keep competition strong in many housing markets across the country.
Here are some tips for real estate agents to succeed in today’s uncertain housing market:
- Lean into your network. Leverage past clients and sphere of influence for referrals. With fewer listings, working with repeat customers and referrals is essential.
- Get creative with marketing. With fewer sellers listing, take a targeted approach to marketing yourself and listings. Use social media ads, digital outreach, and open houses to generate interest.
- Stay patient and persistent. Today’s market requires resilience. Keep showing homes and writing offers even if deals are falling through. Maintain constant communication with buyers and sellers.
- Emphasize your expertise. Buyers and sellers need guidance now more than ever. Position yourself as an expert consultant on the local market who can help them make informed decisions.
By focusing on relationships, strategic marketing, and tenacity, agents can demonstrate value and drive success despite low inventory and high rates. The market always shifts, so remain flexible and keep clients’ best interests top of mind.
Creative marketing ideas real estate agents can use to stand out in a low inventory market:
Coming Soon:
- Host open houses for “coming soon” listings to generate excitement before they officially hit the market. Give sneak peeks of homes that will be listed soon.
- Hold first-look events for your exclusive listings. Invite top buyers in your database to view the property before wider marketing.
Embrace Technology:
- Virtual tours of your listings and boost them on social media. Virtual tours stand out and reach more potential buyers.
- Digital Marketing: Boost online presence through targeted ads, especially on platforms popular among homebuyers like Facebook, Instagram, and LinkedIn.
- Send Just Listed and Just Sold postcards to surround neighborhoods when you get a new listing or sale.
- Leverage retargeting ads on Facebook and Instagram to stay top of mind with potential clients.
- Create Listing3D Live Open House, YouTube Live open houses or Facebook Live home tours to engage buyers.
Diversify Marketing Strategies:
Given the tight inventory, agents can’t rely solely on listed properties. They should also:
- Farm Areas: Invest time and resources in specific neighborhoods. Send regular mailers and maintain a visible presence.
- Advertise on community message boards and Nextdoor to connect with local residents.
- Branding. With fewer sellers listing, take a targeted approach to marketing yoursel. Use social media ads, digital outreach, and open houses to generate interest.
Niche Marketing:
- Focus on a Specific Demographic:Tailor your marketing strategies towards specific groups such as first-time buyers, retirees, or pet owners.
- Certifications: Get certified in niche areas like green homes, luxury properties, or historic homes and market your specialized knowledge.
Referral Programs:
- Rewards: Offer incentives for past clients or local businesses to refer your services, such as gift cards or a small commission.
Personalized Direct Mail:
- 3D Pop-Up Cards: Send unique 3D pop-up cards of a property or a simple ‘thank you’ to make an impression.
- QR Codes: Include QR codes in your mailers that lead to virtual house tours or exclusive content.
- Mail printed newsletters or postcards with market updates to your sphere.
Expand Services:
Consider offering complementary services or partnering with professionals who do.
- Virtual Staging: If listings aren’t moving quickly, staging can make a home more appealing.
- Financial Consulting: Partner with financial advisors or mortgage brokers to provide clients with a better understanding of their financial situation, especially with fluctuating interest rates.
Build Trust:
- Transparency: Be open about the challenges in the current market so clients can make informed decisions.
- Testimonials: Gather and promote testimonials. Positive reviews can significantly impact trust, especially in uncertain times.
The key is getting creative and trying new approaches to marketing and exposure when listings are scarce. Agents who think outside the box will gain an edge.
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