3 Simple Ways to Sound Like a Real Estate Rockstar During this Holiday Season
The holidays are waiting for us around the bend and with that comes family time! Lots and lots of family time and inevitably that brings lots and lots of family discussions, speeches, opinions, debates and everything in between that Uncle Joe feels compelled to preach about at the dinner table. Did the thought of that bring you anxiety? Don’t worry – you’re not alone.
Now, in all of the conversations that happen, you can bet your pretty little dollar that someone will want to take on the real estate discussion. You know, the “So, how about this real estate market, huh!?” comment, or the “This real estate market is just ridiculous, isn’t it?.” No matter the angle, these real estate holiday discussions bring more confusion than clarity to everyone involved and someone needs to step in the gap to save the day — that’s YOU!
Here are 3 simple ways to take the lead & guide the real estate conversations that will happen through this holiday season. Use these 3 simple ways to squash the lies that are brought up & bring clarity to your family discussions. I guarantee that they will be in awe of your knowledge and you’ll just soak it all up. Here’s to you being a real estate rockstar for the holidays:
1. USE A VERY TECHNICAL & FANCY WORD – “ABSORPTION RATE.”
You know when you hear people discussing whether the market is either a “seller’s market” or a “buyer’s market”? The absorption rate is the technical and correct way to calculate this by dividing the current active listings within a market by the number of listings sold within the last 30 days (AR = Active Listings / Listings Sold within 30 Days). In essence, the absorption rate tells you how fast or slow houses are being “absorbed” (sold) within a specific market – a gauge of supply & demand. For example, if in your neighborhood there are currently 12 homes for sale and within the last 30 days there have been 4 sales (12/4 = 3), the absorption rate would be 3 months of supply (the current 12 listings will be sold/gone within 3 months). You’re probably thinking, “ok, so now what?” Now, you use this benchmark to translate where the market is:
0 to 5 months of supply = Seller’s Market (high demand & low inventory)
6 months of supply = Equalized Market (“Fair Market”)
7 and up months of supply = Buyer’s Market (low demand & more inventory)
*Disclaimer: These benchmarks are historically accurate for existing residential homes only.
And just like that you are using very impressive real “estatey” words and can show people how to calculate where the market TRULY is in their market. Like I always say, “the numbers never lie.” As an exercise, calculate the absorption rate of your neighborhood and see where you are. Go!
2. SQUASH THE RUMORS WITH KNOWING THE TRUE ISSUES IMPACTING THE MARKET. You will probably have some family members talk about an array of real estate issues that will doom us all, but know the facts of your own market and share them with confidence. The nation’s biggest real estate issues is: affordability. Construction labor shortages have delayed the production of new homes that help the overall market because they bring more inventory (based on the benchmark above – more inventory pushes us towards an equalized and/or buyer’s market, which keeps prices down). The delay in construction for the past 2-3 years has allowed for prices to balloon up (although seller’s aren’t complaining!) because of the lack of new inventory in the marketplace. There can be some more smaller issues that might affect us down the road, but for now this is the reason why our market has done what it has and why we are where we are today. Verbalize this, and you’ll sound like you receive personal calls from the chief economist of the country.
3. THE “BUBBLE” REMARK WILL COME & YOU WILL NEED TO DEAL WITH IT LIKE A PRO.
Let’s keep this one short – we are NOT in a bubble! The main fundamental difference between our home prices shooting up during this past cycle and in the crazy early 2000s is a problem of low inventory vs. bad loans. In the 2000s, if you had a pulse, you were approved for loans that were never designed to be paid back. When you have people running around with “free money”, markets tend to drastically inflate and will experience a HARD restart – that’s what happened in the 2000s. Today, we experienced strong appreciation values due to high demand and low inventory. This is a matter of supply & demand and not a distorted market. Share this stat to shut the conversation down and walk out with your cape hitting people in the face on the way out: In the early 2000s people were borrowing upwards of $181 billion annually in the real estate market. Today, it’s at $21 billion annually. That’s a whopping 88% decrease. Big difference. Also, equity is reaching to the same levels it was in the early 2000s, but lending is more heavily-regulated now and harder to obtain, so we don’t have homeowners going out and having buying-frenzies on their homes’ equity for new boats or dream vacations.
Well, there you have it. Make sure you have these 3 things down before the holidays get here and you will be golden! For practice, start now with your friends and see the magic unfold as you take their HGTV shenanigans and take them to real estate school like a rockstar!
I WANT TO HEAR FROM YOU! (Comment Below)
What is the MOST memorable real estate family discussion that you remember? Good, bad or ugly!
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