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The Most Successful Realtor You’ve Never Heard Of

June 24, 2024

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The Most Successful Realtor You’ve Never Heard Of

Title: The Hidden Opportunity in New Home Construction Amidst Housing Crisis

The housing crisis in America is reaching a critical point, with affordability becoming a top concern for voters, especially among younger generations. A recent Redfin survey revealed that 91% of Gen Z considers housing affordability a crucial factor in determining their vote. But why is this issue so pressing? Let’s dive into the numbers and explore an often-overlooked opportunity in the real estate market.

The Current Housing Landscape

  1. Home prices have surged 42% since 2020, while median income has only increased by 23% over the past four years.
  2. Home-buyers now need to earn 80% more than they did in 2020 to afford a home.
  3. The U.S. housing shortage is worsening, with 4.5 million fewer homes than needed in 2022, up from 4.3 million in 2021.

Experts agree that without increased construction and less restrictive zoning laws, this problem will persist. As voters, it’s crucial to focus on state-level solutions rather than just national politics.

The Challenges Facing Home-builders

Inflation is significantly impacting real estate and lending:

  • Interest rates on loans for land development and acquisition exceed 8.5%.
  • Lenders are increasingly reluctant to finance builders.
  • Building material costs remain high, despite easing supply chain issues.

Interestingly, new homes now account for 31% of homes on the market – the largest portion for any third quarter on record. Yet, we’re still about 6.5 million units short of meeting current demand.

A Tale of Two Successful Real Estate Professionals

I recently spoke with two industry insiders who are thriving despite these challenges:

  1. A Sacramento-area realtor:
    • Currently working on a 200-lot project around a lake, with prices ranging from $5,000 to $800,000.
    • Another project involves building 4 units for $1 million, with an expected profit of nearly $500,000.
    • Receives a new listing inquiry every 20 minutes on average.
    • Specializes in off-market transactions not listed on traditional MLS platforms.
  2. A loan officer in central Washington:
    • Personally financing 17 spec homes as a lucrative side business.
    • Echoes the realtor’s sentiment about high demand and insufficient supply.

The Key Takeaway: An Overlooked Opportunity

While large builders like Lennar and Pulte are under-building to maintain high home prices, smaller contractor/owner/builders are experiencing a boom. They can’t build fast enough to meet the demand left unaddressed by larger competitors.

This presents a unique opportunity for loan officers and realtors. By partnering with small construction companies and contractors, you can tap into a thriving market segment with less competition and higher potential for sustained business growth.

Action Steps for Industry Professionals

  1. Seek out and build relationships with local contractors and small construction companies.
  2. Explore specialized lending products designed for construction, spec homes, and investment properties.
  3. Consider diversifying your business to include new construction financing and sales.

Remember, when it comes to voting, consider candidates who are pro-housing and support sensible regulation. What’s good for housing is ultimately good for the economy and your future in the real estate industry.

In conclusion, while the housing crisis presents significant challenges, it also offers opportunities for those willing to adapt and explore new niches in the market. By focusing on new home construction and working with smaller builders, real estate professionals can position themselves for success in this evolving landscape.