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As homeowners move less often, will agents sell fewer homes?

(BROKERAGE NEWS) Did you miss the news about extended tenures in homes that will certainly impact your business for years to come?

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Homeowners are selling less frequently

Did you miss the news item that will certainly impact your business for years to come?

Homeowners are selling their homes two and a half times less often than they did just a few years ago — and now it is clear that this isn’t a temporary aberration. Homeowners are staying put 50 percent longer than they did in 2007, from six to nine years, which is bad news for real estate brokers and agents who need volume to grow their businesses. Even worse, new buyers plan to stay put for 15 years or even longer.

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Looking at the decline

Over the past 16 years, homeowners have been steadily increasing the time that they stay in their homes. For about 20 years, from 1987 to 2008, homeowners sold their homes an average of every six years. When the housing recession hit, homeowner tenure began to rise, and by 2014 homeowners were selling only every nine years. Following a bump up to ten years in 2014, the average homeowner is again selling every nine years, according to a new analysis by NAR’s Amanda Riggins.

Many experts suspected the housing recession, which sucked equity out of millions of homes, was the reason people couldn’t sell. If so, one would expect that since the recovery has almost returned that national median home price to its peak value, lost equity would be restored and owners would be free to finally sell and move.

Except that’s not happening.

What’s more, it looks as though owners will be staying put even longer in the years to come. NAR’s research found that repeat buyers’ median expected tenure rose to 15 years in 2010, and it hasn’t budged in the six years since then. First-timer buyers expect to sell in 10 years.

expected tenure in home

Why homeowners aren’t moving

Clearly, more forces are at work than the rise and fall of home equity. For one thing, the recession spurred an involuntary exodus of more than seven million families who lost their home to foreclosure or short sales. Second, only half of all homeowners have a mortgage, and the equity crunch handcuffed about half of those.

One of the primary causes for relocations — changing jobs — has also declined.

Workers stick with the same job longer today than they did 10, 20, and 30 years ago.

U.S. workers had an average job tenure of 4.6 years in 2012, the last year for which figures are available—that’s up from 3.7 years in 2002 and 3.5 in 1983, according to the Bureau of Labor Statistics. The trend holds up within almost every age and gender category — so it cannot be explained away by women’s increased presence in the workplace, or people working past traditional retirement age.

Moreover, mass migrations driven by opportunities for employment that characterized the Great Depression and continued through the 50s are also a thing of the past. The percentage of interstate movers dropped from nearly 3 percent in the 1980s to less than 1.5 percent from 2010 to 2015 according to Raven Molloy, a researcher at the Federal Reserve.

The decline is pervasive across all age, demographic, and socioeconomic groups, and Molloy finds no complete explanation for the magnitude of the drop.

Analysts say the long-term decline in migration has occurred because the U.S. population is getting older, and most moves are made when people are young. Another brake on moving is the rise of two-career couples since it is more difficult to coordinate a relocation when two jobs are involved.

Homeowners who don’t have to move for economic reasons also are not choosing to move because they like where they are. A recent Pew survey found that stayers overwhelmingly say they remain because of family ties and because their hometowns are good places to raise children. Their life circumstances match those explanations.

Most stayers say at least half a dozen members of their extended families live within an hour’s drive; for 40 percent more than 10 relatives live nearby.

A majority of stayers also cite a feeling of belonging as a major reason for staying put.

Finally, more Boomers are aging in place. Seniors are staying in their family homes rather than downsizing, or moving to retirement communities or rentals. According to AARP, 87 percent of adults age 65 plus want to stay in their current home and community as they age. Among people age 50 to 64, 71 percent of people want to age in place.

What it means for the real estate economy

Here’s a short list of the fallout of longer homeowner tenure:

• Both sell-side and buy-side representation will not grow as quickly as the growth in the number of homeowners. Homeowners buy and sell fewer homes less frequently, so each prospect will generate fewer transactions and less business during their lifetimes.

• The coming of age of the largest generation of Americans in history, the millennials, will have a muted impact on the long term market place because they are buying at an older age. In fact, the entire market is aging; the median homebuyer in 2004 was 39 compared to 44 in 2015. Aging first-time buyers combined with longer tenure reduces the number of homes each household will buy even further.

• Homeowners will spend their money on remodeling, not moving. The Harvard Joint Center on Housing Studies projects that annual growth in home improvement and repair expenditures will increase at a rate surpassing eight percent by the second quarter of 2017. The combination of the aging population (another 10,000 Baby Boomers retire every day) and the aging housing stock means more homeowners are remodeling their existing homes so that they can age comfortably in them.

• Purchase mortgages will decline and so will defaults, as homeowners have more time to build equity. Lower migration can also increase demand for second liens, as homeowners decide to renovate the homes they plan to live in for a longer time. Buyers will prefer mortgage products that minimize interest rate risks, such as fixed-rate mortgages or longer-term adjustable-rate mortgages.

• Owners who stayed put over the past decade will realize the benefits of regaining the equity they lost, which will make their retirement years more comfortable.

#FutureOfSales

Steve Cook is editor and co-publisher of Real Estate Economy Watch, which has been recognized as one of the two best real estate news sites in the nation by the National Association of Real Estate Editors. Before he co-founded REEW in 2007, Cook was vice president of public affairs for the National Association of Realtors.

Real Estate Brokerage

Brokerages rarely write an internal communication strategy, here’s why they should

(BUSINESS) Almost no real estate brokerages have an internal communication strategy, but they absolutely should.

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It’s still early enough in the year that you can start fresh, personally and professionally. Help your organization by taking into account what’s happened in recent history and where you want to go. From there, you will determine what steps are necessary to achieve your goals.

Writing an internal communication (IC) strategy can be the first step in mapping your goals and is virtually unused in the real estate industry. According to All Things IC, an “internal communication strategy is like a map, an outline of your organization’s journey. It’s the big picture of what you want to achieve.” This can be done by a brokerage, or an independent agent alike.

Great! So, where do you start? First, know what an IC strategy needs to address. This includes the where, how, what, and why.

Write down the current state of the company, then state where you’re heading, or where you’d like to be. Create a list of objectives to support this.

Then break into your “how.” Explain how you are going to get to where you want to be, as well as how long it will take and why.

You’ll then venture over to a “what” by outlining what is involved along the way to your goal. Then, throw in a little “why” by explaining why this approach is the best for the job.

Go back to “how” and tell how you’ll know when you’ve reached your destination. This part will require tangibles, measurements to support a change in reaching your goal.

Finally, give one more “what” and address what will happen if you don’t change the way you’re currently operating. If things are working for your organization, that’s great! But, there is always room for improvement.

For an internal communication strategy, it is important to include the following: a title, an issue/purpose, structure, executive summary, audience segmentation/stakeholder mapping, a timeline, channels, measurement, communication objective, approval process and responsibilities, key messages, and an appendix.

Now, what was missing from the initial inclusions was a “who.” So, who should be the one to write this document?

Well, it needs to be someone with a strong understanding and implementation for internal communications. This can be done internally by someone on staff who is an expert; or, it can be outsourced to an expert. Regardless of who writes it, make sure it is clear and concise for the audience at hand.

What is most important to remember is that writing an internal communication strategy is just half the battle. Your work is not done once this document is agreed upon by the leadership team. And finally, you must be willing to enforce what’s written on these pages and be ready to make the changes you’ve outlined.

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Real Estate Brokerage

COVID-19: Huge list of resources to quickly help you and your clients

(NEWS) NAR has compiled a comprehensive list of resources for Realtors, homeowners, and insights on how the stimulus bill will impact the industry.

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As the COVID-19 crisis continues to rattle the globe, many of us have far more questions than answers. Realtors are trying to figure out how to be socially responsible, stay healthy, and maintain their business.

The National Association of Realtors (NAR) has collected several resources to help you and your clients stay informed of industry happenings during these difficult times.

Click the following headlines for the full lists.

Resources for property owners

This guide collects resources curated by trusted sources like the American Land Title Association, bank regulators, and the Consumer Financial Protection Bureau to provide property owners with guidance during the COVID-19 crisis. Some of the resources provided include:

  • A real-time list of county record office closures
  • Disaster recovery and business continuity plans
  • Information from major banking institutions regarding their policies and customer outreach
  • Information from mortgage insurers
  • Federal Housing Administration (FHA) foreclosure and eviction moratorium

Guidance on tech-driven alternatives to open houses

As more states head into lockdown or shelter-in-place situations, open houses are a no-go now and for the foreseeable future. While many are concerned about what this means for their business, there are options available as long as you are willing to get creative and embrace technology. In order to help facilitate this shift, the NAR has created a set of guidelines to help members navigate this situation in a way that is safe for them and their clients.

How stimulus recovery will affect the industry

A $2 trillion economic relief bill just passed the U.S. Senate and is expected to pass through the U.S. House and Presidential office without issue. The NAR has been hard at work to make sure that self-employed and independent contractors will see relief from this stimulus package.

What are Realtors doing to help their communities?

Realtors are a vital part of their communities; they know the neighborhoods and small business owners whom they see every day. During the COVID-19 crisis many realtors across the country are doing their part to help the most vulnerable people in their communities.

This is a constantly evolving situation as every state is being faced with tough decisions that affect the health of the citizens and economy. We encourage realtors to stay safe and continue checking resources as the situation progresses in their area.

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Real Estate Brokerage

Project Hatch: Advice directly from successful people

(BUSINESS) Project Hatch shares stories of major founders around the world in an effort to help others grow professionally and “found” their dreams.

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Even if we’re at the tip top of the professional food chain, there is always something that we can learn from those who came before us. Additionally, there is always something that can be learned from peers (or mentors if you’re continuing the career-ladder climb).

This is the intent of Project Hatch, which is designed to tell the stories of founders in order to inspire others who are looking to go down that path. “The best way to learn how to build a company is from those who have done it before,” according to Project Hatch’s official website. “Project Hatch features case studies and analysis from the view-point of founding teams.”

Examples of case studies include some current heavy hitters, such as Tyler Handley – founder of Inkbox, Alex Zaccaria – founder of Linktree, and David Ciccarelli – founder of Voices.com. Their stories include where they are and how they got there.

“So for us, the primary drivers of growth have typically been performance marketing and the associated word of mouth and the organic and return off that. So Facebook, Instagram, Pinterest, Snap and we’re experimenting with TicTok right now,” – Tyler Handley

“We created a solution to a problem that we thought was unique to us; but it turns out millions of other people had the same problem. One of the key moments of validation for us, was early on, when the platform was uploaded to Product Hunt,” – Alex Zaccaria

“Exactly two years ago, we raised $18 million USD from Morgan Stanley Expansion Capital out of San Francisco. As growth stage equity investors, they were attracted to a large and growing market for voice and audio products,” – David Ciccarelli

The case studies include four key areas that are broken down for major industries. These include: ecommerce, media, agency, and SaaS. With ecommerce, you can learn how to create scalable stores; with media, you can find out how media giants receive hundreds of millions of views on different social platforms; with agency, you can learn how to be more innovative in order to standout in today’s competitive market; and, SaaS offers the most passive form of online income when done correctly, so they feature those who have done it (and are making $600k per month!)

Project Hatch boasts over 15,000 monthly users, over 33,000 monthly page views, and 111 monthly interviews. The site also includes run downs of celebrities’ net worths (so, be sure to look through that if you want to feel bad about yourself).

This is a solid platform that offers something interesting for everyone at any point in their career. However, I would be remiss if I didn’t mention that, since there is so much professional advice out there, don’t go overboard looking into so much of it that you forget to do your own work.

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