Today’s Power Broker Roundtable focuses on inventory, demand, and how we can solve some of today’s hardest housing challenges.
The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Nick D’Ambrosia, NAR’s Liaison for Large Residential Firms Relations. Watch for this column each month, where we address broker issues, concerns and milestones.
Moderator:
J. Nicholas (Nick) D’Ambrosia, Liaison for Large Residential Firms Relations, NAR; Broker of Record, The Long & Foster Companies, Chantilly, Va.
Participants:
Russell Grooms, Sales Associate, Watson Realty Corp., Jacksonville, Fla.
Dick Schlott, Chairman/CEO, Gloria Nilson & Co. Real Estate, Ocean County, N.J.
Joe Clement, Managing Broker, RE/MAX Properties, Colorado Springs, Colo.
Nick D’Ambrosia: By most industry standards, 2015 was a robust year. Accomplished practitioners headed into 2016 with expectations of another good year—and, according to NAR, the early part of the year produced an encouraging rise in pending home sales and forecasts of a 2.4 percent increase in existing-home sales over last year. As we move into our busiest season, we thought we’d take a mid-year market snapshot. Russell, how do you see the market mid-year?
Russell Grooms: I’m looking forward to a productive year, probably right in line with the NAR estimate of 2 – 3 percent over last year—and that’s not bad in a region that led the market in foreclosures just a few short years ago. Inventory is problematic for us. Houses, especially in the mid-range, are moving fast, and listings are not keeping pace. But the biggest problem I see is speeding up the financing end. Lenders are taking longer to process, the documentation is redundant and overwhelming, and the new TRID rules are sometimes adding eight days to a closing.
Dick Schlott: It’s a problem we’re all contending with, but we understand the purpose, and we’re finding better ways to work with it. The bigger problem, as I see it, is the lack of inventory. In our market, prices are up 5 – 8 percent over last year, but demand is high, and houses that are priced right are moving very quickly.
Joe Clement: We’re ahead of last year by 27 percent in closed transactions—with the mid-range, as you noted, the hot spot. The problem is, we have 1,850 listings on the books this year as opposed to 2,700 last year and 3,400 the year before.
ND’A: Low inventory has been a universal challenge. It seems that sellers are still pretty tentative. Let’s talk about demand, though. Joe, where do you see it coming from?
JC: Primarily from mid-range buyers. The upper end is slower to move. But we did add 7,400 jobs in our region last year, and with that, I see the younger crowd beginning to come into the market, especially since interest rates are still at historic lows.
RG: We recently closed on a home for a couple in their early 20s, so yes, I think the opportunity is there for young people with good jobs. But then, my book of business comes primarily from referrals. I keep in touch with past clients. When they’ve got a kid about to get married, I know about it. I’ve built a relationship with the family.
DS: I’m telling my agents, “List, list, list”—it’s at the top of our to-do list this year—but also, “Stay on top of your network.” There are a whole lot more people looking to buy a home today than there were 24 months ago, so let’s take that and run with it. I think the spring/summer market will be firm, if not super-strong. We need to encourage more sellers.
ND’A: What about credit? Are buyers getting their loans?
DS: Qualified buyers are getting loans. Lenders are certainly more aggressive than they were a year or two ago.
JC: We’re looking at better appraisals and 30- to 45-day loans. We’re not having any struggles with lenders.
ND’A: Clearly, the key to a better spring is bringing more homes into the market.
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