Chris’s Real Estate Predictions for 2019
How will 2019 differ from 2018?
2018 was classic sellers’ market with homes across the country averaging less than 30 days on the market and selling for 99% of asking price according to data from the National Association of Realtors. There was some slowing in the second half of 2018 and we saw that in Ohio as well. Home prices are still rising in almost all areas of the country but not at the pace they were last year.
A ‘Normal’ Market
Rising prices combined with rising interest rates will likely continue into 2019. This will mean a return to a more ‘normal’ market with houses remaining available to purchase longer than they have been the last few years. There will still be multiple offer situations, primarily because both first time buying millennials, and downsizing baby boomers are looking at the same houses. Overall however, I believe the frenzy will subside.
Potential Head Winds
The erratic stock market is an indication that the overall economy could cool sooner rather than later. If that happens it will hasten the return of a market better balanced between buyers and sellers. t may no longer be a sellers’ market in the next few months, but unless something catastrophic happens, it will likely not become a one-sided buyers’ market either. I want to emphasize that this is my opinion and only my opinion.
What Does Any of This Mean for Us?
Most active agents today have never worked in a normal market. Some of the most experienced agents retired after the 2009 ‘correction’ and most of the newer agents earned their licenses just recently as the housing market regained strength. While the past few years have been challenging with limited inventory and multiple offers, the challenges of a normal market require a different skill set.
We Made it Look Easy
Let’s be real. If we got a listing any time during the past few months and priced it somewhere near market value, we could get it under contract within the month. We were heroes! The rules of success will change when the market slows and days on market starts to push back towards the more traditional three to six months. Managing seller expectations in a balanced market is the new challenge.
The Haves and The Have Nots
The best agents in the business are getting better, stronger, and making more and more money as they hone their skills and reinvest in themselves, their businesses, and most importantly, their relationships. The uncomfortable reality is that the average agent continues to make less and less money year over year. Average agent income has actually been declining during what has been a very strong real estate market.
Some statistics from the National Association of Realtors Member Profile:
The median gross income of Realtors® was $39,800 in 2017. This was down from $42,500 in 2016. Median gross income means that half of all Realtors made less than money than the median and half of all realtors made more money than the median. NAR focuses on median agent income because average agent income is even more depressing.
60% of Realtors with two years or less experience made less than $10,000 in 2017. 40% of Realtors with 16 or more years of experience made more than $100,000 in the same time frame. Agents and their teams at the upper end of the spectrum will continue to grow their businesses and report incomes of six figures and beyond.
We will all feel the changes one way or another.
As the market slows, the best of us will continue to make more money and the rest of us will get jobs. The fact is a changing market is going to be a disaster for the unskilled and unprepared licensees.
Those of us secure in our ability to navigate the coming changes will still feel the effects. We will sense stress amongst our fellow Realtors as commission checks become fewer and farther between for many. We will all feel pressure to cut our commissions as sellers begin to realize that they missed out on the best of the sellers’ market.
My Advice
We must improve our skills, knowledge and level of service we provide. We must embrace the fundamentals and nurture our spheres of influence. We have to stick to the basics and renew our commitment to working by referral and asking for the business.
Here are some things to keep in mind:
- Manage your cash flow better because the paychecks will be more sporadic.
- Prepare, Anticipate, Work Accordingly
- Stand out from the crowd. Don’t be just another agent.
- Relationships are infinitely more valuable than transactions. Invest accordingly.
- Look for ways to add greater and greater value to your clients.
- Know the value you provide. Buyers and Sellers will need us now more than ever. This is not the time to give away your skills by cutting your commissions.
Those agents focused on the fundamentals are going to continue to pull away from the pack. In fact, I predict that 2019 will be the best year ever for the skilled professionals among us. The rest of us are about to have some really bad years. Where will you land? I hope you embrace the coming change and choose success.
I’m done preaching. The congregation may be seated.
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