How to cash in on the growing condo market
Plus, why we aren’t in a housing bubble
We aren’t fooling around today
We know it’s April Fool’s Day, but in real estate, it’s just another day at the office. In our industry, there are a lot of people trying to fool you every day, not just on April 1st.
That’s why we’re taking today to remind you that in a world of noise and misinformation, you can trust us to deliver info you can rely on every week.
It’s precisely why we created The Blueprint. When we were coming up, we wished we had a no-B.S. resource where we could get sound advice on how to succeed in this business and outsmart all the tricksters.
That’s our goal here. We want you to keep you on the lookout for fools not just today, but every day!
- James & David
What buyers will give up to get a home
We’ve been talking a lot about single-family homes lately, but this week condos are making headlines. According to a report by Redfin, while the condo market is still a bit less competitive than traditional homes, its lower price point is attracting a huge rush of buyers. Here’s what happened in February:
The average condo listed for $319,000. For comparison, a typical single-family home listed for $406,000.
Condo prices jumped 14.6% YoY and are up 22.7% since 2020
64.6% of condo offers faced bidding wars
41.1% of condos sold for more than their list price
Our take
We know those stats probably make you want to chase condo listings. When you are selling a condo, make sure you have all this information before presenting a condo to your buyer:
How long has the building been around?
When was the last HOA dues increase?
Have there been any special assessments recently that could be passed onto my buyers?
Have there been any recent upgrades?
How funded are the reserves?
All of this information not only protects your client, and ensures you look good.
Offices are so 2020
For millions of Americans, work from home is here to stay. 12.2% of office buildings nationwide are now vacant, up from 9.7% two years ago. Major corporate cities like San Francisco, Seattle, New York, and Los Angeles have seen the biggest increases in office vacancies.
What does this mean for the housing market? Millions of workers are now permanently working at home and are looking for properties with strong wifi and an office. Even hybrid workers are now willing to consider more affordable homes that require doubling their commute. Prices in these outer suburban areas are up 30% since February 2020.
Our take
This is fantastic news for us agents. It means our buyers are willing to consider more neighborhoods, more suburbs, and more options because their commute is becoming less and less important. Plus, wages are rising as companies are bringing in record-setting profits, meaning our clients have stronger finances and bigger down payments.
Watch for properties that have a great WFH setup and an extra room that can function as an office. Also, look outside the hottest areas, and remind your buyers that adding an extra 30 minutes to their commute won’t make much of a difference if they’re only heading into the office once or twice a week.
Why we aren't facing another Great Recession
The past several months have looked an awful lot like 2007 with rising inflation, climbing home prices, and volatile stocks. According to Fortune, today’s economy is much more stable. They offered these three key reasons:
Inflation looks a lot different. In the years leading up to 2007, inflation was low and stable at 2.85% in 2007 and 3.84% in 2008. Today’s inflation of 7.9% is a sign of our strong economy and high spending.
This isn’t a subprime mortgage crisis. Today’s lending standards are much stricter. Before 2007, just about anyone could get a loan, even with bad credit and no proof of income.
Our stocks are valued differently today. Yes, our current stock market is behaving a lot like the pre-Great Recession market, with equity prices hitting historic highs. However, some experts believe investors are getting better at evaluating companies, and argue these high stock prices do accurately reflect their true value.
Our take
We don’t believe this is a bubble. We think there will be a slowdown as interest rates keep rising, but we’re not expecting a massive sell-off. The high prices we are seeing result from crazy demand and low supply, not speculation. If your clients are worried about a Great Recession Part 2, send them these talking points above. That’s what this info is here for!
Schematics
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Get to know your newest clients: Gen Z
Foundation Plans
Advice from James and David to win the day
Mortgages can get complicated, fast. Here’s a quick crash course on a few common mortgage-related terms you need to know:
Prequalification vs. preapproval: Prequalification just means the lender has confirmed your buyer’s assets and income. It’s like a verbal thumbs-up. A preapproval letter is more official. That means the lender has run your buyer’s credit and verified all financial factors. Preapprovals are what sellers want to see.
Conforming loans: These loans meet Fannie Mae and Freddie Mac’s guidelines for buyer creditworthiness, income level, and purchase amount. They have more strict qualifications, so they often have lower interest rates than non-conforming loans.
Non-conforming loans: These are government-backed loans or jumbo loans for particularly expensive homes. These loans are helpful for buyers with a small down payment, low credit, or those in need of a larger loan limit for a more expensive market or property.
Fixed-rate vs. adjustable rate mortgages: Fixed-rate mortgages are locked in for the full duration of the loan, until your buyer refinances. Adjustable-rate mortgages (ARMs) are locked in for a set number of years, then start adjusting up or down every 6 to 12 months.
Q&A
You ask, James and David answer!
Q: I recently got a huge referral. It's a buyer with a $10M budget. If this works out, they'll be the biggest client of my career! What's some advice you can give me to close this client and make sure I become his go-to-agent for future business?
A: Congratulations! That’s a major milestone. In short, you’ve got to show him why you’re the absolute best at your job.
When you go into your pitch appointment, be completely prepared. Bring a list of potential showings, local data, a record of your past wins, and anything else you can show him that proves you're prepared to get him the home of his dreams. Show that buyer how you're getting creative at finding off-market listings. Make sure he knows you're working harder than the competition ever would. Communicate well and often. You've got this.
Got a question for us? We answer them every Friday. Ask here.
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
It’s a brand new month with 30 new opportunities to make it a great day. So get out there and drive some results you can be proud of! We’re cheering you on from LA!
Have a great weekend.
- James and David