As we celebrate Independence Day this year, it's natural to think about the American dream of homeownership. But this dream seems to be in trouble: Real estate transactions are down, and many are wondering why.
Is this due to fluctuating interest rates, weak consumer demand, or a reluctance to sell due to a lock-in effect? The demand and dream persists, but its feasibility is under increasing scrutiny.
As Gen Z enters the housing market, many say they've given up on homebuying. Some blame millennials, others blame baby boomers, and some say it's actually the baby boomers who faced the toughest headwinds when entering the housing market. There's a lot of blame to be given, but few solutions.
This article explores these issues and highlights the role of real estate and mortgage professionals in guiding their clients through these uncertain times.
Current Market Challenges
Currently, the real estate market is characterized by a complex interplay of various factors.
Fluctuating interest rates: Fluctuating interest rates are making it difficult for potential buyers to predict the cost of financing a home. Weakened consumer demand: Economic uncertainty and rising costs of living are dampening consumer enthusiasm. Reluctance to sell: Many homeowners are hesitant to sell, waiting for market conditions to improve or not feeling confident they can find a new home on their own.
Despite these challenges, the dream of homeownership lives on. The question is whether it's becoming harder to achieve or whether it's simply becoming more obscured by market noise and confusion.
The Role of Real Estate and Mortgage Professionals
In times like these, the role of real estate agents, brokerage owners and lenders becomes even more important. Our duty is to assist our clients, inform them and help them navigate the complexities of the current market. We have weathered difficult markets before, and history shows us that markets will eventually recover, regardless of interest rates or other factors.
Consumer sentiment and market perception
Consumer confidence is currently at a low point due to the rising cost of living and perceived barriers to homeownership. But this doesn't mean the dream is out of reach. As industry professionals, we have a responsibility to foster belief in the possibility of homeownership.
This isn't about selling fantasy, but about emphasizing a realistic path to achieving this goal, even if the process varies. That might mean getting ourselves and our potential clients to dig in and understand the details of credit repair, pre-qualifying and pre-approving for a loan, or even basic personal finance and budgeting. Doing this work is not menial for us; it's an important part of helping to inspire renewed faith and commitment to the positive possibilities of homeownership.
Shaping the story
The message we send as professionals has a huge impact on consumer perception. Too much talk about market turmoil, commission litigation, form changes, and exclusive buyer-broker agreements can overwhelm potential buyers. They begin to perceive homeownership as a financial burden they cannot navigate, especially with the common misconception that a 20% down payment is required, plus possible out-of-pocket fees.
It is important that we reframe our communications to emphasize that homeownership is still achievable. Certainly prices are rising, but this means a home is a worthwhile long-term investment. Historically, interest rates have not been as extreme as they may seem, and with the right guidance, potential buyers can find manageable financing options, including low down payments, down payment assistance, and possible seller concessions to help cover agent fees and closing costs.
Embrace change
The future of the real estate market will inevitably be different to the past. Change is constant, and as professionals we must adapt. By adopting new ways of thinking and operating, we can help our clients realize their dreams.
My friend Rene Rodriguez says, “Leaders, managers, agents, and loan officers need to lead by seeing through irrational fears and providing new stories of opportunity that move us all toward progress.”
Many will hit a mental roadblock and will be unable to think of anything other than what they have known up until now. This “new story” may be received with hesitation, skepticism or even resentment. Rene offers this advice: “There are two sides to the story conundrum: the leader who proposes the story, and the receiver of the story. Some people get stuck in a mental roadblock with old stories and narratives playing in their head. They may project them onto the current market and assume the worst. This whole process starts with self-awareness and opening yourself up to the possibility that there may be a new way of looking at things. Listen to the words and stories of people who are more successful than us. People who are doing well in difficult markets talk differently than those who are performing. Sometimes it's that simple.”
Just as kids once dreamed of owning a home, today's aspirations may include symbols of success like the Cybertruck. But the underlying desire for stability and investing in the future remains the same. It's our responsibility to harness that desire and show consumers that it's still meaningful, achievable and worthwhile.
This Independence Day, let’s renew our commitment to the American dream of homeownership. By refreshing our messaging and embracing change, we can help our customers navigate the current market and achieve their dreams.
Homeownership is a worthwhile, achievable goal that can bring long-term benefits and a sense of independence to celebrate on July 4. As real estate and mortgage professionals, we have the power to make this dream a reality for many people.
Troy Palmquist is director of growth at eXP California.
This column does not necessarily reflect the opinion of HousingWire editorial staff or its owners.
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