Real Estate Resilience: 2 Factors Driving Real Estate Forward
Oct 02, 2023
I'm guessing you have clients telling you the market is going to crash.
I bet you've even entertained the thought yourself. π«£
You're not alone - I know I have.
But the market hasn't crashed, so we have to ask why and use objective data to find answers.
Let's look closer at two factors that are moving the market forward: cash sales and rent prices.
Cash Flowing into Real Estate
Very few people thought the market could survive the historic rise in rates we've experienced thus far.
In a nutshell, it's freezing the market rather than crashing it. π₯Ά
Cash sales are one thing keeping things moving, though.
In Florida, roughly 1 in 4 sales were being made with cash in March of 2020 (the low for cash sales).
Since then, we've moved up to 1 in 3 being cash across the state.
The numbers get even more impressive when you focus on luxury homes (> $1M).
2 of every 3 luxury sales in the state are all cash. π€
While higher rates are absolutely crushing the first-time buyer, the luxury buyer is continuing to make moves.
Rents Cheaper, But Moving Higher
Next, let's look at rents.
The primary substitute for buying a home is renting.
Back in '20 & '21, it was generally the same cost or less to buy compared to renting in most areas. The market was incentivized to purchase based on the cost of each option.
Now, not so much.
Because of this, rents are continuing to rise across the state as people opt to rent instead of buying.
The main challenge for renters is finding a rental that isn't an apartment. π₯΅
There are plenty of apartment buildings going up across the state, but if you want privacy, have pets, or want to live in many of the more desirable areas in town, you're limited on rental options.
Keep in mind, rents almost never go down. The property may rent for less than the list price, but the data shows an average increase of 4-5% vs. last year's rent is typical.
Finding Opportunity
The first question you should be asking yourself is "am I positioning myself to work with the people who can still buy?" π‘
It's a bonus if they also HAVE to make a move (advisor-directed, divorce, military orders, etc.)
You may think you have the perfect business plan, but if the customer can't afford to purchase, you'll be left spinning your wheels.
This data helps us to identify opportunities and the first one is to find ways to work with cash buyers.
That means developing the skills, knowledge, and purposely creating relationships that move you towards that arena.
If you're feeling like that's too much on your own, you can get help through joining a team/brokerage that can guide you. Also, I help my coaching clients to grow their market IQ and build their business. π¨π«
Remember, the luxury market expects a certain level of service and for you to speak their language. How much is it worth to speed up the learning process?
Finally, are you educating your database on the value of owning investment properties? Are you considering it yourself? π§
Based on the rent data, you should be!
Pro tip: when you're actively working in real estate, you get even more tax benefits when investing in properties.
Not only is it one of the most tax-advantaged way to invest, this shortage in housing inventory isn't likely to change soon.
This means that properties might not cash flow immediately, but the rents will catch up over time. Should rates fall, they're just one refinance away from passive income. As you know, It's far better to find the right property now. Both prices and competition will be higher if/when rates fall.
In the meantime, property values continue to rise and scooping up a property in the slower season (November & February) could be a good option.
You've got the resources - what actions will you take this week? π
Whenever you're ready, there are 3 ways I can help you:
- π― Market Insiders Coaching Membership: Join an exclusive group of Realtors focused on becoming experts in their local market. This membership gives you access to monthly live coaching from yours truly, a member-only community for private updates and discussions, and additional resources to address clients questions and supercharge your business.
- π©π» How to Use Market Stats in Your Business: Accelerate your business growth by learning how to use data. This course will help you more easily understand the market, improve your client presentations, and increase your conversion rate with clients.
Rated 9.84 out of 10 for value to their business by 100+ Realtors.
- π Schedule a live presentation: Want to learn in person? I offer the MarketPulse 360 presentation that connects all the dots (national to local) so you get a comprehensive breakdown of today's market.
**I've only got 1 spots remaining for late October/early November MarketPulse 360's so request before they run out.**
