I just returned from a meeting of similar companies from around the country, held this time in Denver. We always poll the group about market trends, and there was a great deal of commonality this year. Inventory, or the lack thereof, is the driver in most of the United States. Even Connecticut is short on supply in the lower price ranges, and in the healthy range for all but the million plus category. That higher supply in more expensive homes is also true in most areas around the country, but the real story is that starter homes and homes under about $500,000 have marketing times that are measured in days in most communities. This is driving up prices, which hasn't happened here as often yet, although we are seeing it with well-maintained and desirable homes. Mortgage rates are headed up as well, so time matters for many lookers.
Another big trend is in marketing. With the exception of certain kinds of direct mail, mostly postcards about homes just listed or recently sold, advertising is going digital at a rapid rate. We in Greater New Haven spent more on newspaper ads than almost anyone else, and very few did print advertising at all anymore. Digital ads (SEM) or organic search tools (SEO) dominate the field, along with costs of website improvements and video production. Lead generation is front and center, often focused simply on how to track leads. Some are even spending money to appear in the answers given by Alexa!
Some things haven't changed much. Personal relationships still account for most agent transactions, and, although people search for an agent on line (and pay a lot of attention to client testimonials), they are often starting with a recommendation from someone they know. Good agents still generate a lot of repeat business, and good agents are doing more and more of the total transactions. Real estate is an expensive business to be in for agents and for brokers (lately, even agents might feel sorry for the pressure put on broker returns!), and more is sold by a few top agents than ever before. As the market improves, more people are going into the business again, and they are more likely to be younger, but the industry as a whole skews old and non-diverse.
Companies are also consolidating, so that megafirms are more and more a dominant force. Teams have mostly taken the place of small firms, and are run as companies within companies. Legal and ethical compliance are big reasons for this tightening of the market, along with cost drivers that favor economies of scale. One-half of one percent of brokers did a third of all the business in the last year reported.
Buyers haven't varied in their desires as much as most thought they would, given the demographic profiles we see. Gen Xers and Millennials nationally still favor traditional homes with outdoor space, and in good school districts. That's good news for sellers, although the younger buyers are much more concerned with maintenance and walkability scores. Since there hasn't been enough new housing built in many regions, buyers will eventually have to buy what sellers have to sell, at least in the short run.
What are the takeaways here? Almost everyone thinks that mortgage rates will rise, and prices will rise as well, making now the time to buy. This is especially true at the high end of the market. Buyers will still want personal assistance in navigating home ownership, and sellers want that touch as well. Therefore, we will be reaching out to them in new and different ways, but with the same message: We're here to help.