After almost two years of intense negotiations, countless offers, and blink-and-you-miss listings, 2022 has continued to challenge real estate agents and their endurance. While low inventory continues to create headaches and heartaches, record-breaking inflation has led to mortgage rates rising above 6% for the first time since 2008. Uncertainty for the future – regarding the market and world affairs – has caused many buyers to halt their search and sellers to retreat.
How can you dominate the last few months of 2022 and prepare for a kick-ass 2023?
Here at vipHomeLink, the leading digital home management solution for homeowners, we asked thousands of real estate agents from across the United States to share their unique, expert insight. Below, find the key findings about the current state of the market with tangible tips on how you can position yourself for a successful 2023.
The second half of 2022 brought drastic changes to the real estate market. Whereas 89% of real estate professionals called 2022 a seller’s market in our Q1 survey, only 70% of professionals now see the market as favoring sellers with one in five professionals believing it to be “balanced.”
“Interest rates have caused buyers to pause, and pricing decreases have done the same for sellers.” – a real estate professional based in Fredericksburg, Virginia, with more than 21 years of experience
For the second half of 2022, over half of respondents predict the market will continue to favor sellers (55%) while a quarter believe the market will balance. One in five participants believe it will tip in favor of buyers.
“The market prices have been way too high. They are starting to come down some. I’d like to see them come down more.” – a real estate professional based in Philadelphia, Pa., with more than 21 years of experience
Unfortunately, prices remain a top obstacle for homebuyers with more than a third of agents believing there will be “strong or moderate pricing increases” through the end of 2022. However, this is down drastically from our Q1 survey where one in three believed in “strong pricing increases” and almost three in five (59%) believed homebuyers would see “moderate pricing increases.”
Perhaps relief is in sight as almost half of all respondents (46%) believe “moderate or strong pricing decreases” will occur by the end of the year.
Buyers want more space! Almost nine out of 10 (87%) respondents see their clients with “strong or moderate interest” in upsizing, which is consistent with our Q1 survey.
Price, completeness, open floor plan, and outdoor space remain top drivers for homebuyers. Approximately 90% of agents saw “strong” or “some” interest in these segments, with price being a motivator 95% of the time.
Interest in “proximity to the city” saw a slight increase with 66% of respondents noting “some” or “strong” interest (up from 64% earlier this year). Home buyers continue to migrate from higher-density living arrangements (such as condos or apartments) in favor of lower-density dwellings (such as single-family houses). Almost half of respondents find buyers with strong or some interest in this housing shift.
Forty-three percent of real estate agents report home sellers have a “strong” interest in downsizing (up from 37% earlier this year). Almost half (46%) find home sellers have “some” interest.
Approximately one in four real estate agents saw home sellers looking to “move locally” or “move out of an area” (28% and 23%, respectively) with approximately half of all respondents citing “some interest” in these areas (56% and 44%, respectively).
Less than one in eight (11%) survey respondents have noticed sellers with a strong interest to upsize their current living conditions, down from 18% earlier this year.
As the market stabilized in what home buyers and sellers sought for their new digs, long-standing challenges, such as low inventory, continued to hamper client growth. New challenges arose as well, including buyer motivation and of course, skyrocketing interest rates.
“First, we had no inventory. Now buyers feel beat up and are giving up.” – a real estate professional based in Fort Collins, Colo., with at least four years of experience
Survey respondents highlighted the difficulty first-time and low-income home buyers have had in finding a new home.
“There’s no inventory for buyers between $80-160K, and they’re getting outbid.” – a real estate professional based in Columbus, Ohio, with more than 21 years of experience
Others mentioned difficulty in finding listings in the “$200k-$300k range” and at “lower price points.”
Respondents also added iBuyers as a top challenge as these entrants began creating additional inventory obstacles.
With the economic recovery and rising inflation came higher interest rates, and where respondents were divided earlier regarding how the increased rates would affect the market, now one in three cite rising interest rates as a top challenge of 2022.
“The market is trending towards a more balanced market; however, mortgage interest rates will keep buyers apprehensive until the rates settle.” – a real estate professional based in Shakopee, Minn., with at least four years of experience
However, several agents acknowledged that while rates are up, they aren’t necessarily higher than what we’ve seen before.
“Interest rates are still excellent, but buyers don’t like the increase.” a real estate professional based in Cleveland, Ohio, with more than 30 years of experience
While agents still see cash and multiple offers creating challenges for first-time and low-income home buyers, managing expectations from both buyers and sellers as well as the inevitable slowdown have also become additional challenges for agents this year.
“[It’s difficult to] manage expectations with the change in the market of the over list price and multiple offers with minimal contingencies of the past few years.” – a real estate professional based in Beaver Dam, Wis., with at least four years of experience
“We’ve had a slowdown in the Metro Milwaukee market. Homes that are priced right are still selling fast, but we are not seeing as many multiple offers or crazy offer terms (price exceeds neighborhood, post-close occupancy for sellers with no fees, no inspection). Homes above the $500,000 price point are starting to sit longer on the market.” – a real estate professional based in Milwaukee, Wis., with more than 21 years of experience
With so many market forces creating obstacles, real estate agents need to strengthen client relationships and leverage emerging digital solutions to increase referrals and sell even more homes in 2023.
Pumpkin spice lattes are back, which means 2023 isn’t far behind. While real estate agents need to navigate historic low inventory, skyrocketing inflation, and manage buyer and seller expectations, one agent from Prescott, Ariz., said that their top challenge was simply “staying ahead of the curve.”
Unfortunately, as you know best, real estate agents cannot make houses fall from the sky, and they cannot lower market prices, either. However, they can position themselves with emerging technologies and easy branding solutions to find homes before they come to market and welcome new clients through a boost in referrals.
Of course, we know this is easier said than done.
According to National Association of REALTORS’© Real Estate in the Digital Age study, “keeping up with technology” is still a challenge for 41% of real estate firms. However, real estate agents can make every showing, every open house, and every open door count with simple technological improvements and easy-to-use digital tools that strengthen client engagement and extend client relationships long after closing.
(We’ve all been there – sitting across the table from a past client who doesn’t remember us.)
Since the most desired tech tool not currently offered by members’ brokerages is lead generation, the first digital resource agents should leverage is a branded app for their homeowner clients.
Leading agencies use branded apps, such as vipHomeLink, to place their digital business card in their current and past clients’ hands. Of course, home-buying apps aid the homebuying process; however, agencies that provide a branded home management solution add value to their agency and their clients after closing. New homeowners will receive information about how to care for their home, and agencies will continue to engage with homeowners as their logo will be front and center on the home screen. Every time clients open the app, they’ll be reminded of their agent and their agent’s great service, and they’ll also have the agent’s contact information at their fingertips for easy referrals.
Thus, a branded app serves multiple purposes – to strengthen and extend agent-client relationships past closing, rekindle lost client relationships (by distributing a branded app to past clients), and for lead-gen, with your contact information always at your clients’ fingertips.
By using a branded app, real estate agents may also be able to relax occasionally. After all, 49% of agents use social media to help build and maintain relationships with existing clients and 36% use it to find new prospects. With a branded app, such as vipHomeLink, keeping you connected to your clients and courting new ones, real estate agents can focus on other tasks (or simply breathe).
Most homebuyers today are millennials (who live with their phone glued to their hand!), and automation can help to keep a real estate agent top of mind for those essential referrals.
While 95% of real estate agents use email daily, only 14% of agents use any sort of marketing automation tools. Only 21% use an email marketing tool. Real estate agents can easily stay “ahead of the curve” and gain a significant digital advantage by using marketing automation tools to a) stay in contact with their past homeowning clients with relevant home topics and b) seize new opportunities for sales by staying top of mind with potential clients.
Current, past, and potential clients will see the agent’s emails in their inbox regularly and remember the great service that was provided to them, even if it was just a brief meeting at an open house.
Of course, experienced real estate agents understand that sometimes the way to win is to focus on selling more homes and create ecosystem partnerships to handle their digital needs. Rather than attempting to “do it all,” today’s leaders and tomorrow’s winners forge relationships with emerging technologies and solutions, such as vipHomeLink, to not only connect with existing clients and reach more prospects but also increase their digital advantage.
Real estate agents that build their business through digital opportunities and partnerships will emerge stronger in 2022 and blaze a trail in 2023 by maximizing their efforts. Rather than burning out as the market slows, allow an ecosystem partner to boost your referrals through email initiatives, to increase your sales through personalized branded solutions, and strengthen your business with a robust digital agenda.
The vipHomeLink’s Real Estate Outlook Survey Part II was conducted as a web-based survey between August-September 2022. It consisted of 19 questions, and survey respondents were asked to evaluate statements regarding key aspects of the real estate market using associated 5-point Likert scales. Survey respondents included more than 170 real estate agents and brokers in 15 states. More than 99% of respondents had more than four years of experience in the industry, with 36% having more than 30 years.