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New-home construction is finally ramping up to meet increasing housing demand, but rising home prices and interest rates threaten to mute any sales gains. Even if this triggers a slowdown in buying and selling activity, you can maintain a healthy business with the right strategy. Here are six tips for weathering dips in the housing market.
1. Stay focused on the home buyers of the future. Hone in on millennials, Hispanics, African-Americans, and buyers ages 55 and older because they stand to make the biggest impact on housing in the coming years, based on their projected growth in population size. By watching them and studying their behaviors, you’ll be ready to serve them as soon as they make a move. Each group has different behaviors and attitudes toward homeownership.
- Studies show that the majority of millennials aspire to be homeowners, and 24 million meet the credit requirements to obtain a mortgage, according to research by Freddie Mac and Experian. One-third of millennials in Freddie Mac’s Profile of Today’s Renter survey say they plan to move within two years. Twenty-seven percent of those ages 18 to 24 say they plan to buy their next home, while 50 percent of those ages 25 to 34 say the same.
- Hispanics are younger than any other demographic in the U.S., with more than six in 10 born during or after the millennial generation. Furthermore, Hispanics are projected to comprise 52 percent of first-time home buyers by 2030, according to the Joint Center for Housing Studies of Harvard University.
- Though they may have a lower homeownership rate than Hispanics, African-Americans show a wealth of homebuying potential and market influence, as they are expected to comprise 13 percent of households by 2025, the JCHS study shows.
- Baby boomers still dominate the market; 69 million are homeowners. Sixty-three percent say they would prefer to age in place in their current home, according to Freddie Mac’s 55+ Survey. However, nearly 40 percent—or 25 million—plan to make another move, with 13 percent of that group indicating they will relocate within four years.
2. Sort fact from fiction for your clients. How many buyers believe they can’t purchase a home without a 20 percent down payment? How many shy away from the homebuying process because they think it’s too overwhelming? With banks offering a multitude of down payment options and free home buyer education courses widely available to consumers, you can help bust many pervasive homebuying myths. The more knowledge you can impart to your clients, the more your business will grow.
3. Put credit in perspective. Given today’s mortgage eligibility standards and tools, lenders are more confident in making loans to home buyers across the credit spectrum. Affordable mortgages are available to borrowers representing a wide range of credit and income background. Be sure to research options and educate your clients. For example, with Freddie Mac’s Home Possible® mortgage, borrowers without credit scores are eligible for loans with down payments as low as 5 percent.
4. Stay aware of industry developments. Mortgage-related products, policies, and technologies are constantly being enhanced or developed to meet changing market needs. Stay up-to-date on the latest trends so that you understand the options and opportunities available. One way to do this is by partnering with lenders and getting information about their mortgage product offerings. If you have this on hand, you can help dispel the myth that buyers need 20 percent down to purchase a home.
5. Become a reliable source. Share your knowledge to help home buyers make informed, responsible decisions and make the buying process smoother. Buyers—especially first-timers—look to you for advice and moral support. Based on what you learn about a buyer through conversation, help them to:
- Understand what to expect at each stage of the mortgage process.
- Know their options when comparing mortgage products.
- Discover helpful resources and tools.
Providing a positive buyer experience will yield business not only now but also in the future through repeat business and referrals.
6. Collaborate with other industry professionals. Everyone does more and better business when they work together. Sharing information and coordinating with other real estate professionals, lenders, housing agencies, and housing counselors, with a focus on supporting the buyer’s journey toward homeownership, will lead to real business benefits.
Freddie Mac is committed to helping real estate professionals further engage and better understand the needs of future homeowners. Visit FreddieMac.com/RealEstatePros for tips to boost referrals and invitations to training and networking events.
