Cornerstone Connects - Digital Newsletter
From the desk of Stan Bajerski
Topic: Powerful Minds Ought To Know!
I recently had lunch with a husband and wife realtor team. They own a successful brokerage, and he has been in the biz for more than 25 years. After discussing a variety of topics pertaining to the current market, I was asked,
“When was the last time you inspected a foreclosure?” I had to think for a minute…I really didn’t remember. We have been through several waves of foreclosures over the years, but it has been quite some time since I inspected one. They began to explain to me that a number of large asset managers and private equity firms are very active
today in purchasing single-family residences. Many of them are scooping up foreclosures as well. They are renovating them and putting them up for rent. Mainly because the Gen Exers DO NOT WANT the responsibility of maintaining a house.
Just like our profession has changed dramatically in 40 years, from 5 to 10 page narrative style inspection reports, no photos, prepared on typewriters sent via USPS to 150 page software generated manuscripts sent through the airwaves to handheld cell phones for review, it appears that the American dream is changing. My son met his wife while in college in New Hampshire. After spending some time in New Hampshire after graduation, they visited friends in Charlotte, North Carolina. They fell in love with the city and moved there! They rented an apartment in a city block sized apartment building that was recently constructed. Get out of work, park your car underneath the building and head up to your apartment. Most buildings had retail on the ground level. Everything you could possibly want was underneath or within walking distance, gym, restaurant, bar, café, you name it. This is the
America of tomorrow. It is beginning to rear its head in my town, with high end well appointed apartment
buildings being built around the train station and city green. Squeeze as many people in a space as you can.
My son and daughter in-law did eventually buy a condo because their rent was on the rise. Now my son is complaining about how having to run to Home Depot for things to maintain his home cuts into his off time, and how his HOA fees and taxes have gone up. Welcome to adulthood my boy!
At the same time, declining boomer ownership will free up 9.2 million homes by 2035, a Freddie Mac report found. The 32 million homes owned by boomers will drop to 23 million by 2035, when the oldest members of the group are pushing 90. Home ownership rates "gradually starting to decline as households age beyond age 75," the report said. Is there another buyers market on the distant horizon?
As U.S. mortgage rates and house prices continue to hover near record highs, speculation around whether the housing market is in a bubble (that’s ready to burst) is growing. But Jim Tobin, the president and CEO of the National Association of Home Builders, is putting a pin in that hypothesis.
“I don’t see it as a bubble,” he told Fox Business in mid-February. “What we are facing is a crisis of our own making. Coming out of the Great Recession, builders were apprehensive to get back into the market in a big way. [They were] fearful of putting too much supply in the market and regenerating that big boom market that we had in the 2000s.” That’s what created the country’s housing supply shortage, according to Tobin. “Once we started to bring back our supply, we ran into headwinds with land use policies being very restrictive, lot prices, persistent labor shortages [and] then we ran into supply chain issues,” he said. “That’s why housing [prices are] going to continue to stay high.”
The only way out of this conundrum, according to Tobin, is to “build more housing.” But does the U.S. economy have the foundations to support that? Jim is optimistic.
The number of homes for sale in the 50 largest metro areas in the U.S. increased by 7.6%; however, inventory in this group of metro areas as a whole is still 36.7% below pre-pandemic levels.
And the real estate profession is in flux as well. As you have probably heard, the NAR settled its law suit for over $400 million dollars. Buyers agents can no longer get paid by the selling agent. I know realtors who are preparing for the possibility of becoming hourly employees. We will need to wait and see how that affects us, as they do not even know how it will affect them. So as we all mosey on down the road we must be ready to adjust with the flow. I would venture to say that how we market and who we market to may change. Begin to think about how you can diversify, how to use the skills, knowledge and tools that you have mastered in other ways to earn. Be prepared for change!
Be smart! Stay Educated!
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