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A Realtor’s Guide to Success in a Slow Market

In today’s post, we’re diving deep into the current state of the housing market, analyzing some crucial trends, and exploring innovative solutions for realtors and loan officers. Let’s break it down.

The Current Housing Market Landscape

Looking at data from 2020 to now, we’re seeing some alarming trends in housing starts, new construction permits, and single-family permits. Here are the key takeaways:

Pandemic Impact: We saw a significant drop in starts and permits during the initial pandemic isolation period. This created a “rock bottom” low in the industry.
Current Situation: We’re currently well below average in all three metrics (housing starts, overall permits, and single-family permits), rapidly approaching all-time lows. This is a major indicator of a potential recession.
Single-Family Homes vs. Condos: Single-family permits are notably lower than overall permits and housing starts. This suggests that while condo construction is down, single-family home construction has almost ground to a halt.

Why We’re Not Building

The reasons behind this construction slowdown are complex, but here’s a simplified explanation:

Protecting Equity: Building to meet demand would flood the market with homes, potentially causing significant price drops. This would eat into the equity homeowners have gained over the past seven years.
Affordability Crisis: Current home prices are out of reach for many, especially first-time buyers. A 20% drop in values could bring balance back to the market, but this conflicts with maintaining current equity levels.
Economic Implications: Without a healthy housing market, we’re facing down a potential recession that could be deeper than anything we’ve seen before.

A Solution for Realtors and Loan Officers

While the national outlook might seem grim, there’s an opportunity for individual realtors and loan officers to thrive. Here’s a strategy to consider:

Leverage FHA and VA Loans: Did you know you can use these loans to finance both a lot and a house? This includes manufactured and modular homes.
Find Available Lots: Look for vacant lots in your community. With the current lending climate, many of these are just sitting idle.
Partner with Manufacturers: Connect with companies that offer various modular or manufactured home models.
Offer a Unique Product: By combining available lots with new, customizable homes, you’re offering something unique in the market.
Competitive Advantage: This approach sets you apart from other realtors who are struggling in the traditional market.

Case Study: Solano County, California

Even in a small county like Solano (which includes Vacaville, literally meaning “Cowtown”), there are about 80 lots to choose from. Imagine the possibilities:

Negotiate deals on these idle lots.
Partner with a national manufactured home company.
Offer clients the chance to choose their lot and their home design.
Finance it all through FHA or VA loans.

This strategy allows you to essentially create your own “subdivision” without the constraints of a traditional builder.

The Bottom Line

While small and mid-size contractors are thriving in this environment, many realtors are struggling. By adopting this innovative approach, you can tap into a booming market segment and offer unique value to your clients.

Remember, in challenging times, creative solutions often lead to the biggest opportunities. If you need guidance on implementing these strategies or want to learn more, don’t hesitate to reach out for support and direction.

Stay innovative, stay ahead of the curve, and keep building your business even in these challenging market conditions!