The housing market has really changed, and it’s not an easy time to work in real estate. I know people in all parts of the profession who are having a hard time and wondering how to make things work. So, I wanted to share some perspective to hopefully bring encouragement. This post is sort of a combination of market trends and mindset. I hope it helps.
UPCOMING (PUBLIC) SPEAKING GIGS:
11/17/22 Bias & Real Estate Lunch & Learn (RSVP here)
12/5/22 SAFE Credit Union market update on Zoom (register here (free))
1/18/23 WCR Market Update in Cameron Park (details TBD)
1/19/23 Big market update at SAR on Zoom (details TBD)
1/23/23 Residential RoundUP (register here (free))
5/22/23 Yolo YPN (details TBD)
THE BIG TRUTH
The reality is we are in the midst of change and there is pain ahead. But the market will figure this out. Bottom line. And we can’t control what the market does, but we can control our response to the market.
IDEAS FOR BEING SUCCESSFUL IN A NEW MARKET
And now some encouragement. Or maybe it’s unsolicited advice. You decide.
– Work harder than ever before.
– Tighten up finances (both personal and business).
– Run toward the challenge of a new market.
– Expect fewer deals on your desk since fewer transactions are happening.
– Plan to make less money (and be grateful if you make more).
– Be okay that not everything is perfect.
– Strategize for how you need to diversify your business.
– Focus on building relationships and serving your network. If your network is small, it’s time to increase its size.
– Make a plan and work it. Be consistent in whatever you do.
– Plant seeds today that might not sprout for a couple of years.
– Expect more NOs before you get to a YES.
– Obsess over understanding who the buyers and sellers are today. Whenever you hear about a sale, ask this: Why did the seller sell? Why did the buyer buy? This give clues into who is playing the game right now.
– Know the stats better than anyone.
– Take your mental health seriously.
– Stop 24/7 housing market doomscrolling (seriously).
– Find things outside of work that give you life, and do those things.
– If you don’t have a hobby, it’s time to find or rekindle one.
WRITE A “DEAR DOWNTURN” LETTER
I know, this sound cheesy. I heard this idea from someone (Tom Ferry?). I’ve written a letter to myself called “Dear Downturn.” In my letter I lay out a plan for how I’m going to succeed in a down market. If this might work for you, go for it. Be as practical as possible about what you’ll do to position yourself for success. My letter includes things like write one weekly post, eat clean, get back to my goal weight, be a daily resource on social media, speak somewhere once a week, make a few longboards, get my turn-time down to X number of days… Here’s the start of my letter:
First of all, I’m not excited that you’re here, but I’ve been waiting for you. And I’m ready to take you on. Here is the way I’m going to conquer you.
I just did this podcast. Check it out if you’d like. I think it goes well with this post because it’s about market trends without sensationalism.
CHOOSING HAPPINESS IN A DOWN MARKET:
It’s easy to feel awesome about life when business is thriving, but when things get tight or the phone stops ringing, that’s when we really get to find out what we’re made of. Here’s the sobering questions I’m asking myself. Am I only going to be happy during an up market? Or is it possible to have joy and contentment during a down cycle? I have to think it is possible, but it won’t happen by accident either. It’s time to get intentional.
MARKET CYCLES AND WORRY
Often when the market declines it’s a good five or six years of decline (in Sacramento at least). That might sound daunting, but it takes time for a cycle to adjust. The verdict is still out on how long the market will correct, so we’re not locked into any timeline. Of course, it feels like a game hosted by the Fed right now, so we’ll see what they do. I bring this up because if I’m lucky enough to live for thirty more years, and we have two more downward cycles within these decades, it’s possible prices could decline for more than a decade of my life ahead. This is important perspective. Am I going to be full of worry when the market is “bad” and only full of joy when it’s “good”? By the way, if this ends up being a typical cycle, remember the market doesn’t do a nosedive for the entire period. There can be portions of sharp and slower decline. It’s not just one speed for the entire cycle.
WINNING IN A DOWNWARD MARKET
People buy and sell real estate in all types of markets. In a down market, especially at the beginning, that’s when we see the biggest exodus of buyers since prices and uncertainty are too high. Today about 40% of the market has been missing lately in Sacramento, which also means 60% of the market has been happening. My advice? Focus on being a part of what is happening rather than fixating on what is missing. Also, some people who bought in 2008 and 2009 ended up winning big after the market rebounded. Technically prices still declined for three to four more years, but these buyers came out as major winners eventually as the market went up again. I mention this because it’s a good reminder that timing a bottom isn’t easy to pull off, and it’s not necessary in all cases either. I think sometimes people focus so heavily on geeky price metrics without giving enough weight to their lifestyle. Where do you want to live? Who do you want to do life with? What does your lifestyle mandate? Look, buy or don’t buy, but think about prices and your lifestyle as you make your decision. No pressure from me.
1) YOU DON’T HAVE TO BE ULTRA-POSITIVE:
If you feel tempted to only say positive stuff about the housing market, ask yourself why. Some real estate professionals think they have to keep it positive, so it can be challenging to know what to say when there is no longer a glowing honeymoon market. Now is the time to be real with what is happening. This is a season for buyers, so it’s time to abandon a seller-oriented narrative that focuses heavily on prices being up. It’s time to focus on buyers and sellers who are making lifestyle moves. What do buyers need to hear right now? What do sellers need to hear? Focus on that. If you are the expert, let people know exactly what it’s like out there. Tell the story of the market and help people find inroads to participate. Get rid of cliches and don’t promise everything will be okay (not a promise you can keep).
2) EMBRACE THE STATS, BUT DON’T DWELL ON NEGATIVITY:
This is a hard one. Some agent friends have even told me it’s tough to see some of my stats right now. My goal is always objectivity, but sometimes I feel like I’m swimming in a pool of negativity since the stats are showing declining prices and dropping volume. But this is where we’re at. If our market is going to decline for the foreseeable future, it’s time to embrace this new season and not stress over it. It is what it is. I’m not trying to be flippant about struggle, but either we can be defined by worry or we can find a way to embrace this next season of life and business. My advice is to know the stats extremely well so you can clearly articulate what the market is doing, but don’t let stats affect your mood. There has to be a way to embrace a downward trend without becoming the trend or getting sucked into a negative spiral.
3) FOLLOW & UNFOLLOW:
Choose carefully who you follow right now. Listen to objectivity and cultivate objectivity in your life. That’s what matters most. On that note, unsubscribe from people who are spewing sensationalism. It’s okay to step back from listening or following people if it’s too much for your mental health. And to be blatant, if my content feels like too much right now, take a break from my weekly post, hide me on social media, or unsubscribe. Take care of yourself (but please don’t live in denial).
I hope this was helpful. Just some stuff on my mind. Much love,
Thanks for being here.
Questions: What stands out to you above? What did I miss? Any advice for real estate professionals right now? I’d love to hear your take.