From REAL Trends, the trusted source for real estate industry trends and news, this is REAL Trending, episode 75.
We’re analyzing the most important trends affecting brokerage companies and their agents. I’m Steve Murray, president of REAL Trends, and today we’re discussing consumer anxiety, the market recovery, and what have we learned. What do these trends mean, and how can brokerage firms best deal with them?
Fresh out from The Harris Poll, who has been tracking consumers for dozens of years, a report came out earlier this week that highlights some of the biggest challenges we’ll have in having an economic recovery. It’s not just about whether governments will allow stores and restaurants and theaters to reopen, or schools to reopen. It’s, will consumers, families feel safe going back into restaurants and movie theaters and retail stores?
This is not just one party’s decision, it’s kind of both parties’ decisions. The Harris Poll points out that nearly 80% of all consumers, this was just from this week, May 4th and 5th, 80% of consumers said they weren’t sure they wanted to go back to retail stores and restaurants unless there was some absolute assurance they would be safe in doing so.
Two-thirds of all families said they weren’t sure they wanted their kids to go back to school until they felt safe that their kids would be safe from COVID-19. I could go on, all kinds of different fears and anxieties about reentering the normal world we left behind just six weeks ago, although it does seem like a lifetime.
What does this mean for residential brokerage? The good news is, is showings have come back extremely strong in the last three to four weeks in most markets where agents were considered essential services and they were allowed to do their work. I mean, it’s an incredible resurgence in showings, which usually leads to pending contracts, which leads to closings.
It may in fact be a miraculous, rather quick recovery, even if we only get half to two-thirds of the way back from where we were in January, February, and March. It’s a significant improvement, but I think as an industry, brokers and agents, you’re going to have to install protocols and procedures and practices that your agents embrace to make people feel safe to show their home or to make buyers feel safe that they’re going in someone else’s home.
Now, many people are probably already doing some of this, but I think brokerage companies and agents are going to have to come to some agreements and work with local health officials and get other guidance of exactly what should those protocols and practices look like, and then it’s going to have to be communicated to buyers and sellers if we’re going to get all the way back.
Because, if that fear exists among people to go into retail stores and restaurants, that doesn’t mean that they’re not going to have some of the same residual fear about going into strange homes. So, to get all the way back, we, like every other provider of services and products, is going to need to assure consumers that they’ll be safe buying and selling homes again for us to get all the way back. It’s time now for brokers and brokerage firms, national, regional, and local to lead the way in looking really carefully at this and getting this put in place.
The market, as I said a minute ago, is recovering. We’re seeing strong indications, not just from showings on the showing time index, which God bless Michael Lane and the ShowingTime company for having that kind of a report out there. By the way, we know of other MLSs and other companies putting out really good data that people can track and forecast what’s likely to happen.
It all starts to look more positive right now than it did even three weeks ago. But, it was about three to four weeks ago when the turn came. Showing indexes in almost every state dropped from mid-March to about April the 7th or so when almost every state started to turn around, and most have closed half to two-thirds of the gap from the decline in showings.
We also were on the phone every week with numerous brokerage CEO groups and brokers under the auspices of state association of realtors. It’s enormous. We’re hearing that pending contracts, as they have in the past, are actually recovering along with the showing index, which we would have expected. It shouldn’t be a surprise, but nonetheless, it’s a real pleasant surprise, particularly in the face of 30 million unemployed citizens of our country.
Particularly in the face of that, people are still transacting housing. The market further is being aided by one more big trend, again, pointed out by Harris polling, but also by talking to people like Dan Duffy at United Country Real Estate and Greg Fay at Fay Ranches out of Montana. Their website traffic for rural, farm, and ranch properties, whether just normal common farms and ranches, bait and tackle shops, marinas, or just homes in the country, that business is booming.
Harris poll confirms many Americans are now reconsidering where they can live and still do their work; doesn’t necessarily mean they need to live in the urban core of a city or even in the suburbs. Harris also confirmed a trend that started years ago that millennial families and gen X families, even, this is not a new trend.
They were moving out of core cities into suburbs as they settled down and started families. These are all important trends that will feed the market recovery. Of course, it doesn’t hurt that mortgage rates are at historic lows. They’re all great factors.
We won’t get all the way back in a hurry. Economically, we simply can’t. There are not enough people that will qualify for mortgages to get all the houses bought that would normally have been bought. Maybe that’s a good thing, because brokers around the country and state association of realtors and NAR’s data continue to show a critical shortage of inventory remains a cap, if you will, on any explosion upward in housing sales. But, nonetheless, it is really great news that the market is already starting to heal for housing sales.
Last, what have we learned through the last six weeks? Well, I don’t really want to comment about the world in general about what we may have learned about how actually fast a pandemic can rise and bring a country to its knees, to humble countries all over the world. We’ll put that aside for now. What have we learned in our business?
I think it’s safe to say from all of our work with brokers over the last six weeks, there’s a whole lot of costs that brokers and agents both have been writing checks for that they really did not need to write checks for. That certainly is a big learning. But, more importantly than all the cost reductions and all the great technologies that enable us to connect with people is the fact that the best thing that brokers, managers, and agents can do is to actually connect with their clients, their customers, their family and friends. If you’re a broker, to connect with your agent. Yes, they are using Zoom and Hangouts and other technologies, and that’s great to have them, glad we had them at this time.
But, it’s not just the technology we’re using, but it’s the literal connection with people and the time that leaders in this industry are expending to connect with their agents and their staff and their managers, and the amount of time that agents are spending connecting with their consumers past, present, and future. That is what we’ve learned, that in many cases, it’s not that we totally forgot the importance of relationships and connection.
It’s just that we thought, “Oh, technology will help us do that,” or, “we don’t need to do that because technology can handle that.” Ladies and gentlemen, let’s not ever forget again that what builds great agent practices is relationships, and what builds great brokerage companies is relationships. Let’s not ever forget that, because that has been the biggest learning of these times.
Learn more about industry trends and successful tactics for brokerage firms, agents, and teams, as well as listen to past REAL Trending on Apple Podcast, Spotify, Google Play, and others. Visit www.realtrends.com/channels/. This has been Steve Murray wishing all of you to stay safe and healthy, and until next time.