There’s no way to predict the market, but you can prepare for it.
During a recent coaching session, an agent asked me where I thought the market was heading. Did I think the market was going to get better, and how does one set themself up for success in the next couple of months? Unfortunately, none of us have a crystal ball, and we can’t predict the future. Based on my 20 years of experience, however, the only thing we can do is try to understand what causes the market to shift. There are two things that are affecting the market right now: seasonal market trends and interest rate increases.
Seasonal trends occur every year and are particularly important to understand as we head into the winter months. While people are still moving, the number of sales is lower. However, people are starting to think about getting back into the market, which fuels the spring and summer sales season when the number of contracts and sales is usually at its highest. Remember, anywhere from 30% to 50% of real estate sales occur because a life event necessitated a move. These people will be moving regardless of the season.
“There are two things that are affecting the market right now.”
There are some people, though, who move for emotional reasons or would move if the conditions were advantageous for them. These are the people who are caused to reconsider moving because of higher interest rates. For every 1% increase in rates, buyers’ purchasing power is reduced by almost 10%. That means the last year has reduced their purchasing power by nearly 40%. This has created a mental block for some buyers and has discouraged those who already have a favorable rate. The people who don’t have to move are less likely to move.
The good news is that the market in the Richmond area has started to stabilize. It isn’t crashing so much as normalizing. People will adapt quickly to the 7% interest rates because they are typical, historically speaking.
So what do you do during the winter months, when things are starting to slow down? You can reach out to as many people as possible—past clients, friends, and family members—and remind them that you are in real estate. Offer them data about the market and help calm their nerves. Start planting the seeds of a move now so you can take advantage when people are ready. Those looking to move because of life changes will be particularly important. You want to talk to as many people as possible during this time and provide value for them so that you stay top of mind.
If you have any questions or would like a consultation, please call or email me. My team would be happy to help you put together an action plan. And remember, it’s not the market… it’s the marketing that makes a difference!
