The real estate market has witnessed significant fluctuations over the years, and the accompanying challenges for real estate agents can offer valuable insights and opportunities.
The lofty home prices we’ve seen in recent months have some comparing aspects of today with those foreshadowing the housing bubble that preceded the 2008 market crash and, ultimately, what has come to be known as the Great Recession.
Back in 2008, an artificial housing bubble burst due to reckless mortgage lending and speculative buying, leading to widespread foreclosures and a dramatic drop in home prices. The median home sales price in Southern California, for example, plummeted from $415,000 in January 2008 to $278,000 by the year’s end.
This collapse not only devastated the housing market but also triggered a global financial crisis. The stock market and housing market crashes of 2008 traced their origins to the unprecedented growth of the subprime mortgage market. Subprime borrowers, many with low credit scores and adjustable-rate mortgages, defaulted in high numbers, collapsing financial markets globally.
The aftermath of the 2008 crisis led to significant attrition among real estate agents. The National Association of REALTORS (NAR) membership numbers highlight this impact, with a sharp decline from a peak of nearly 1.4 million in 2006 to about 999,000 by 2012. Many agents, particularly part-timers and newcomers, exited the industry due to the severe market downturn and following credit crunch, which made securing loans exceedingly difficult. Those who remained faced intense competition and had to pivot their strategies to survive.
Fast forward to 2024, the landscape is markedly different, albeit challenging in its own way. The median existing-home sales price has since soared back to an all-time high of $419,300 in May 2024, driven by a persistent shortage of homes and surging demand. Unlike the subprime mortgage crisis though, today’s market is characterized by tougher lending standards, a supply restraint market and greater homeowner equity, reducing the risk of a widespread collapse.
Despite mortgage rates hovering around 7.5%, the current market remains more resilient, with fewer “seriously underwater” mortgages compared to 2008. The share of these mortgages in early 2024 was just 2.7% nationally, a stark contrast to the peak of 26% during the subprime crisis. This relative stability is good news and presents a unique set of opportunities for real estate agents.
However, the industry is once again experiencing a wave of attrition. As of mid-April 2024, the National Association of Realtors had about 1.5 million agents registered, down more than 100,000 from 2022. According to some experts’ predictions, as many as 80% of the country’s real estate agents could be looking for a new line of work.
For agents looking to continue to thrive in real estate, navigating the 2024 market requires adapting to new realities and realizing emerging opportunities.
- Real estate is more than just buying and selling. Unlike in 2008, today’s agents benefit from a market where rentals are steadily increasing and a more viable and lucrative option for agents. About 38% of U.S. households are renters today. Embracing this shift, and the improved technology tools that are servicing this industry segment much more effectively, and offering comprehensive rental services can diversify revenue streams, support lead generation and provide stability during turbulent times. Rentals, once seen as a challenging segment, can now represent a critical lifeline for real estate professionals looking to hedge their business models and cater to a broader clientele during this drier sales period.
- Focusing on relationships. Relationships are a crucial part of lead generation, as one never knows who may be a client in the future or what services and vendors one may need to lean on when the market picks back up. Staying in consistent touch with clients, lenders, contractors, and other industry professionals can enhance service offerings and strengthen client relationships.
- Maintaining a consistent marketing strategy. Cutting back on marketing during slow periods can be detrimental. Instead, investing in digital marketing, leveraging social media, and using data analytics to target potential clients can yield significant short- and long-term returns.
By pivoting their approach, staying innovative, and remaining resilient, real estate agents can give themselves a chance to thrive in the evolving market of 2024. The lessons from 2008 underscore the importance of adaptability and resilience. Agents can look to past downturns to help navigate the current market challenges by leveraging technology and embracing new opportunities, including those in the rental market.
Michael Lucarelli is the CEO and Co-Founder of RentSpree.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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