At this time three years ago, the world was about to change in a fast-paced and unusual manner. Real estate sales were strong, and brokers and agents were working to accomplish their 2020 business plans. Then, the pandemic erupted, and everything changed.
Brokers and agents shifted business practices to maintain high levels of safety, including touch-free showings, remote video showings and staggered showings to minimize the gathering of people. The migration of people out of cities exacerbated an already inventory-strained market.
In the two years after the pandemic began, the very robust market continued. Closings and pricing both increased to record levels and the first sign of a cooling-off period only occurred when interest rates rose in September 2022.
As we begin 2023, it is a natural time to pause, reassess and plan for what the next one to three years are expected to bring. According to research conducted by the National Association of REALTORS®, prices are not expected to increase across the country. In Massachusetts, single-family home prices are projected to remain flat – prices will not decrease, as there is not enough housing inventory for the demand by buyers. Interest rates have eased some since the fall and are projected to remain somewhat steady for the next year, which will aid pricing to remain steady.
Due to the lack of inventory, the number of units sold in 2023 is projected to decrease compared to the last three years, returning to pre-pandemic norms. The lower rate of sales that began in the fall of 2022 will continue at the same rate. Currently, new listings are down close to 24% compared to 2021, as there simply are not enough existing homes available to list. When homes are actively listed, demand is still plentiful and the days on the market remain under 45 days.
Agents and brokers must prepare their businesses for these changes. The first step is by arming themselves with market knowledge through research – a must these days, after the unprecedented changes experienced over the last several years. It is critical to review the data and spot trends in the markets that you serve, as each is more different than it ever has been. Study the inventory that is available so that you can be ready quickly to assist your clients. Take some time to improve your knowledge of industry issues including Fair Housing and agency law. Look at what is coming before your local planning and zoning boards to understand what proposals could impact future inventory in your markets. Above all, advocate for housing to be built.
Another beneficial project would be to review all the services that you pay for and consider eliminating those expenses that are not being used. We all have those great intentions when learning about a new technology or product, we think we will use them to boost our business or streamline our administrative duties. But often, we forget that we have even subscribed or purchased a system and unknowingly continue to pay for it. Now is a great time to make sure that you are running your business efficiently.
Until there are more houses to sell, those of us in the real estate industry will need to be prepared to manage our business through a changing economic environment.
David McCarthy is the 2023 president of the Massachusetts Association of REALTORS®.