Two surveys take the spotlight on episode 218 of The Real Word, as Byron and Nicole discuss consumer confidence, builder confidence, and closing guarantees.
Survey of Consumer Expectations
The Survey of Consumer Expectations surveyed households in February 2022. In it, respondents shared what they think will happen to home and rent prices over the next year and over the next five years.
Byron and Nicole dive into all the numbers on the full episode, but as an agent, it’s most important to focus on homeowners’ and renters’ attitudes toward the market. (Because let’s face it, their track record for predicting the market isn’t always in line with what actually happens).
Here are two takeaways from the survey:
- Renters’ attitude toward buying a home has dropped. Just 43.3% of renters believe they have a chance of owning a home in the next year. As an agent, this is a great opportunity to reach out to renters and educate them about the cost of owning vs. the cost of renting.
- Households have a belief that mortgage rates will increase significantly. People who took the survey believe rates will rise to 6.7% this year, and in the next three years, up to 8.2%. If homeowners really believe this, they aren’t going to be spending money on new real estate, and they certainly won’t be giving up their current mortgage with a 3% interest rate; they are going to stay put. This could lead to the cold war in real estate, as Byron puts it, where no one is making any moves.
Every market needs more inventory. So how confident are builders? The most recent survey from the National Association of Home Builders/Wells Fargo Housing Market Index shows that builder confidence dropped 2 points to 77.
Why the drop? Rising interest rates and increased costs have caused builder confidence to decline four months in a row. As prices remain high and interest rates continue to increase, builders are in a tough spot, even as inventory is needed.
The Marketeer of the Week comes from REALTOR® Magazine, and it’s something that could be an advantage to help buyers win.
A closing guarantee is written into the contract and states the buyer guarantees the closing will take place on time. This is when you want to use Tomo – because 98% of their deals close on time (compared to the 40% average in the industry). If the closing doesn’t take place on time, the buyer compensates the seller.
What are you guaranteeing your buyers and sellers? With confidence waning across the board, ensure you communicate what you, as an agent, can provide your clients.