How to Survive a Turbulent Real Estate Market

“It was the best of times, it was the worst of times…” – Charles Dickens

It’s no secret: Today’s real estate market is trying and complicated. We’ve been here before, and we’ll be here again. However, in this ever-changing market, what matters most is learning how to weather the current and future storms that will inevitably come your way and prepare to survive. 

Ideally, not just survive: I want to teach you how to keep a sustainable, thriving business even in the worst of times. The key is maintaining a mindset that focuses on professionalism and actionable habits to continue fostering professional growth and keeping your client roster stable, healthy, and toward an upward trajectory. 

Those of us who value relationships, work by referral, and have a professional mindset are taking care of our clients. We’re always interested in what’s in it for them. I promise you, you will be just fine. The hallmark of the new professional is our ability to stay calm when all the other realtors around us are panicking. 

Let’s go back in time and consider the Great Recession in 2008 and 2009. What brought us out of the recession was how interest rates dropped like a rock – and mortgage interest rates dropped like a rock – but it didn’t help because housing prices were dropping. People were turning their backs on houses and giving banks back the keys. The real estate market had so much inventory that some homes spent six months plus on the market, sometimes even bordering on 120 to 250 days. 

That crisis was a completely different situation than what we are seeing today. To be perfectly frank, I wouldn’t call our current situation a crisis. However, it’s a concern. Whether you lived through the 2008 and 2009 crash or heard about it like a spooky campfire tale, it’s crucial to acknowledge how those years were very different. 

Here’s where they are similar: The answer from the Fed’s perspective and the government’s perspective was – both back then and today – to cut rates.

If you were around during 2008 and 2009, rates weren’t only good, you were getting a tax credit to buy a house. In essence, we were being bribed by the government with tax credits if we bought a house during those times. So, it was interesting, to say the least. 

Today, we’re in a situation where property values are not dropping. Let’s think about this question: How do realtors feel right now? 

Based on my conversations with realtors – and I’m talking with realtors every day, both inside and outside the company – I think many of us are operating from a genuinely fearful place. Prices are stable or even up, but transactions are down. Some of the top producers in the market are down this year by as much as 40%. 

As a result, we’re seeing a ton of agents leaving the market. I’m interested to see the realtor population at the end of this year compared to the previous year. However, for many reasons, I think we have retained lots of agents. 

Some agents had a fantastic time over the last three or four years and perhaps are further along in their careers. However, many of these people are starting to back away from the business. I don’t know whether these people are out in the sense of retirement or are shuttering and selling their business books – but I feel many folks who once were incredibly successful have reassessed how they want to live for the foreseeable future.

Realtors are the Canaries in the Economic Coal Mine

Realtors feel the next downturn – and the next upturn – before anybody else in the economy does. Interest rate fluctuations have a direct effect on mortgage rates. These increases have impacted us directly over the last 18 months while the broader economy has stayed strong. I’m not going to get into a long economic dissertation. I’m not qualified for that, but I try to keep on top of economic trends because I know, at some point, it will affect our agents.

There’s a strong case to be made that inflation will be with us for many years to come. 

Part of the reason we saw a high inflation rate was due to coming out of COVID, the supply chain disruptions, and so forth. The other thing that’s happening in the macro terms is, in the United States, we are actively bringing manufacturing back to North America from Asia and other places in the world. 

Here in Columbus, we’re getting an Intel chip factory outside the city. It’s a massive investment – and it will put thousands of people to work for years to come. It also means more people will see a wage increase, so there will be greater demand. We haven’t moved all the manufacturing over here yet, meaning prices will stay strong. If prices stay high and inflation – even at that 2%-3% rate year over year – can get down to that point and stay there, we must accept that higher interest rates are here to stay.

I’d love to be wrong, but I feel it’s far better to expect the worst and hope for the best. Today, we’re at roughly 7%, but still coming off of 3%. That’s more than double. I think what will help us into next spring is thinking about the mortgage interest rate forecast and when higher interest rates become less of a shock and more of an acute pain that becomes more chronic, manageable, and accepted. It takes time for people to get over the fact that we had ridiculous interest rates at 3% – or even less – and shift toward accepting those days are gone. 

At some point, time goes by, and the increases stop. However, it’s a fool’s errand to expect your business will pick up due to interest rates dropping anytime soon.

Final Thoughts

If we’re being candid, I don’t believe we will ever see mortgage interest rates as low as we did in 2020 and 2021 again, except maybe when the next crisis comes and the economy needs a shot in the arm. Since I’ve had my license, I’ve seen the Feds cut rates after 9/11; I’ve seen them cut rates after 2009, and now we’ve seen them cut rates again during COVID – but they’ve never been as low as they were coming out of COVID. 

We can’t sustain this country’s economy with sub 3% or 2% interest rates. 

Therefore, there must be an equilibrium. I would guess the equilibrium will be relatively close to where we are now for quite some time. As we move forward, my best hope is to experience a period of stability. Again, it’s my job to hope for the best – and plan for the worst. One thing we have to keep in mind as professionals is the knowledge that these booms never last. The busts don’t last, either. 

If you think the market is a little tough right now and feel like you’re struggling, my advice is to persevere. This, too, shall pass.