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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.

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Real Estate Brokerage

How you can stick with your habits and actually achieve your goals

(BROKERAGE) Sticking to new habits can be tough, but there are ways to train your brain. We’ve got the deets on the best way to beat fatigue.

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Person typing on computer representing habits in our workday.

Just about every Sunday night I say to myself, “This week, I am going to eat better.” And, just about every Monday afternoon, I find myself cooking the same frozen pizza I always eat. Why is it so difficult for us to stick to our guns and really follow through on developing better habits? Well, if you’re anything like me, it’s mostly because doing what you’re used to is so much easier.

Trick of the trade

Each year I find myself being notorious for skipping out on my New Year’s resolutions, my fitness goals, and my attempts at reading one book per month. Right when I was beginning to feel completely fed up with myself, I found a trick that has helped me form habits and maintain behavior to accomplish my goals.

And, this trick is quite simple: accountability.

This can be found in the form of a friend or in the form of a planner or calendar.

Creating accountable ideas

I have thousands of ideas per day, many of which are fleeting. However, some ideas are about self-improvement.

For example, I often have the idea of beginning a workout routine. While I know that I should be doing daily exercise to increase my overall health, it can be a difficult task to stick with.

By developing this idea into something that I am accountable for, it makes me much more likely to stick with this habit. Let me explain…

Accountable for others

The two aforementioned methods of accountability, a friend or planner, can be used for the given workout example.

If you find a friend who can daylight as your workout buddy, you have someone that will motivate you and that you can motivate.

Now that you’ve made this friend your workout buddy, you have someone to hold you accountable if you miss a day. Gone would be the days where you could skip a workout and have no one to answer to.

Accountable for yourself

But, if you are a solo exerciser like myself, it can be difficult to find a method of accountability. What I have found works for me is taking my thought of, “I should workout,” and putting my goals down on paper.

By writing down a workout plan and the attached goals, it fosters a sense of tangibility.

I then create a calendar where I write down what exercise I want to do on what day, and, after I complete my goal, I am able to check it out.

For the accountability aspect, I like to put this calendar somewhere in everyday eyesight, so that I can’t ignore it. And, sure, I could easily throw it away and pretend it never existed in the first place, but I promise the act of writing out your goals will motivate completion.

In the end…

While sticking to habits can be a tricky business and different methods work for different people, developing an environment in which you hold accountability helps to inspire motivation.

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Real Estate Brokerage

Sales Exercise: Can you sell water as well as you can sell a house?

(BROKERAGE) Spice up your office life! Create a friendly office competition and see if the sales prowess is limited to just homes.

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Here’s a fun way to shake up the daily grind at your brokerage and give your team a chance to practice their skills: a one-day sales challenge.

Choose a random day of the week to cancel all other plans and have the competition. It will be even more fun if you don’t warn your team – just spring it on them. Before you do, make sure no one is working up to any pressing deadlines.

How to play

Divide your staff into teams and give them the challenge of selling a tangible product. One group in Chicago sold bottles of water. Have the teams decide how much inventory they would like, with the rule that they can’t buy more later. It’s up to the teams to decide how much to charge for each unit.

This will challenge the teams to estimate how much inventory they think they can move

Overconfident teams may end up with too much inventory, while others will sell out quickly and may wish they had sold at a higher price, or had bought more to start with.

If you’d like, you can let teams that sell out quickly negotiate to buy extra inventory from teams that overbought.

Send your teams out to the streets and see how much they can sell in one day. Celebrate with a happy hour at the end of the day where you compare remaining inventories and net profits, congratulate the winners, and discuss lessons learned.

The benefits

This is a great challenge for encouraging teamwork. Teams have to communicate, make decisions, and make sales cooperatively. The competition and the time limit put the pressure on, but since it’s just a game, it’s also low stakes and there is no real risk.

Teams have to rely on their own skills, rather than the pre-existing systems of your business.

A sales challenge is obviously a great way to practice sales. Many Realtors are great at marketing or negotiation, but that doesn’t necessarily mean they can nail it when it comes to sales. The challenge can also help identify star salespeople, even in departments where you might not expect.

What’s to lose?

Bonus points for blogging about the challenge. Show your customers some of the personalities behind your company and celebrate the unsung sales heroes of your team.

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Real Estate Brokerage

3 important things to consider before you pivot your business model

(BROKERAGE) Many businesses have had to pivot during the global pandemic but maybe yours isn’t one of them. Consider these questions first!

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Team discussing the pivot of a business model.

When Ross asked Rachel and Chandler (Friends TV show 1994-2004) to move a couch, many of us will never forget his voice inflection and how many times he yelled “PIVOT”! It’s actually a really funny scene and if you’ve never seen it, it might be worth 3.5 minutes of your time. Ross had the best of intentions by starting with a sketch and enlisting help from friends but even that ends up in hilarity as getting his couch into his apartment doesn’t work and he ends up being offered $4 when he tries to return it (stay for the end of the clip).

The best plans and intentions for your business are often met with what the market and customers demand, where technology grows, and where your ROI is the best. You often know that your original plans will grow and evolve, even in the uncertainty and now… a global pandemic.

Many entrepreneurs and small businesses have had to lean on technology to add virtual services (or expand their offerings) to meet our current norm where people are just not out and about like they used to be. Some have seen this work well and others have had to completely re-design their offerings to maintain safe and socially distanced considerations.

The thing is, businesses that have pivoted are being highlighted. But it is also worth looking at what has worked for some businesses that didn’t have to completely shift their strategies in 2020. It is likely that they had to adapt but maybe not a ridiculous Ross-type “pivot” that resulted in a complete failure of the mission.

Harvard Business Review (HBR) shared an incredible article, “You Don’t Have to Pivot in a Crisis” with great insights about what to consider if you think you need to make changes or if you want reassurance you are still on the right track.

HBR shares a powerful thought:

“The lesson here is that when a crisis hits, it pays to resist knee-jerk reactions on how to handle external shocks and ask what is going to work best for your company, based on the particular realities of its business. Ignoring the playbook of rapid cuts plus strategic pivoting can be the smart move… However, staying the course doesn’t mean inaction.”

Here are three thought-starters you may want to consider for your business:

  1. What product line or service is best serving your customers right now? Is that one of your strongest and/or could it use some attention?
  2. What product line or service is not quite meeting your needs or customer demands at the moment that had seemingly always worked (not forever! Just right now)? For example, in-person gatherings and promotions like events, conferences, trade shows.
  3. Is there something you’ve always wanted to explore? And could now be a great time since people want things more virtually? Examples: Selling branded swag, workbooks, content subscriptions, educational webinars.

These are three simple things but could help point you in the right direction of where to focus your time and energy – at least for now. You may not need a complete re-design or to take a new road, it might be some tweaks and adjustments to hang on to what you’ve worked so hard to build.

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