What a Housing Shortage Means for Relocation
Last year when everything came to a screeching halt in March, everyone thought the worst for real estate. Surely no one would want to move in the middle of a pandemic. They would hunker down and not leave their homes until this was over. The opposite happened. People became painfully aware of the shortcomings of their living situation. They were too crowded or lacked outdoor space. They evaluated how and where they live and why they lived there.
So the search to find a new place that was not only their home, but also their office and school was on. The challenge was that we were already facing an inventory shortage and people really didn’t want potential buyers marching through their homes, so new listings on the market slowed to the lowest levels seen in years. Builders struggled with their supply chain and it dramatically affected new construction.
Today we are still feeling the affects of the shortages and will for years to come. Now that people are in more control of where they can live and work, the options are endless for a change of lifestyle. Large densely populated cities like LA, San Francisco and New York have seen an exodus. But is it long term?
Many people love urban living and they have a short memory. While the large cities may see a increase in available properties, other cities are seeing an influx of self-motivated moves tightening up inventory further. But there are people who love urban living and while at this moment it may not seem like what they want, their tastes may revert back as they realize they miss what the large cities have to offer.
Housing inventory is down about 60% to approximately 300,000 properties available nationally. That is down from the average of 800,000-1 million properties typically on the market. This is quite a challenge for real estate brokers who are assisting potential transferees with their home search particularly in the popular mid to lower level price points. The competition to win those properties is fierce. Transferees may still be hesitant about traveling and going into stranger’s homes, but moves that were put on hold are definitely starting to become active again.
Here are some ways to help prepare the transferees or self-motivated movers for what’s going on in a market that is low on available housing. The last thing we want is for the agent to be blamed for an inability to show a lot of options to the client because they had not been properly prepared.
Communication is the key:
Set up a video conference before they arrive so you can read their body language and determine how prepared they are and how they are feeling about everything
Determine how they feel about riding in a car with the agent and going into listings. Have alternative plans ready to accommodate them if they have health concerns.
Tell them what precautions the agent and company have taken to ensure everyone is safe
Find out what the ‘must haves’ are for their new home and have them prioritize them
Are they willing to commute further? Or give up some of their required amenities?
Immediately start feeding them market data about number of properties on the market and how that differs from the usual. They need to have perspective on what agents are facing when trying to find appropriate listings to show.
Make sure they are pre-approved for their mortgage. They are likely to face stiff competition when they find a property and they need to be ready to move quickly.
Are they willing to go above asking price if they find a property they really want? If it doesn’t appraise, are they willing or able to pay the difference in cash?
Are they willing to make an offer, sight unseen? With video touring and a knowledgeable agent, it is becoming more common.
Help them understand the multiple offer process before they are in the middle of it.
Can their closing date be flexible to accommodate the seller?
Would they consider paying closing costs to make their offer stand out?
Are they willing to waive contingencies to get the property? Clearly explain what that means to them.
Would they consider putting in a back up offer on a property they really want and waiting it out?
Would they be comfortable writing a personal letter to the seller telling them how much they love their house? Just make sure the letter is generic and only speaks to what they like about their house not revealing any personal information about themselves or it could be perceived as a fair housing issue.
Keeping regular communication open with the listing agent can’t hurt either.
Once the neighborhood is identified they like, would the agent be willing to do some door knocking to see if anyone may be considering selling?
Because the process can move so fast, make sure they are confident about the property they are making an offer on. Buyer’s remorse can kick in if they feel they were pressured into making an offer on a property that may be less than ideal for them due to the scarcity of available options.
Corporations and Relocation Management Companies need to set the stage for the transferee before they ever speak with a real estate broker. The broker will give them the local nuances, but the shortage of available home for sale is so widespread that it needs to be part of the initial benefits counseling discussion as they evaluate whether a move to certain markets is right for them or should possibly wait until things cools down.
The expertise of a local professional is critical. They deal with it first-hand every day and can guide even the most sophisticated of buyers through this competitive buying landscape.
“I am basically a full-time psychologist who shows houses every now and then.” -Dori Warner, real estate agent
