This is shaping up to be an interesting year in the housing market. As we close the first quarter of 2023, the American housing market is divided. In the eastern half of the US, including the midwest and most of Texas, home values are still climbing in most markets. At the same time, many markets in the western half of the country are seeing declining home values.
What is going on with these markets? And how are the housing market conditions of 2023 impacting real estate agents across the country?
Let’s break it down.
Why The East Is Still So Hot
Since COVID-19 ushered in the work-from-home era, we’re seeing population migrations as workers decide where they want to live. People no longer have to live within commuting distance of their workplace, so states in the East are an attractive draw because of the lower cost of living.
The Southeast has the additional benefit of warm weather year-round. And the fact that several states, including Texas, Florida, and Tennessee, don’t have a state income tax provides an additional financial incentive for residents and businesses to relocate. In Miami, for example, home values were up 12% in the first quarter of 2023, compared to 2022. Values in Orlando were up 9.3%.
But we’re not just seeing migrations between states. We’re also seeing smaller, more affordable markets grow in value as workers move further away from employment hubs like NYC and Boston. Buffalo, NY, for example, saw home values increase by 8.3%
What Real Estate Agents in Hot Markets Should Be Doing This Year
Here are three ways real estate agents in hot markets can capitalize on these market conditions:
1. Market to Out-of-State Buyers
If your market is seeing traffic from out-of-state buyers, reach for those leads before they get to your competitors.
Create a guide about relocating to your town (or state), and market that guide via social media to out-of-staters who might be interested in moving to your area.
2. Show Homeowners How Much They Can Make by Selling
If your market has been hot for a while, you’re probably tired of having too few homes for your new buyers to choose from. Drum up new listings by showing local homeowners how much money they can pocket from the sale of their homes thanks to rising property values.
3. Consider Hiring a Buyer’s Agent or a Showing Assistant
As nice as it is to have a full pipeline of buyer leads, showing properties is time-consuming. You can only fit in so many viewings in a day. This might be the time to build your Million Dollar Real Estate Team by bringing in a buyer’s agent or showing assistant who can take some of the tours off your plate and allow you to get more contracts and more closings.
Why the West Has Cooled
Housing markets in the West have been among the most expensive markets in the country for decades. Consider San Francisco, where home values rose by 112% from January 2012 through January 2020 (compared to the national average of just 58%). This growth was never sustainable. And the higher home values rise, the harder they fall. SF home values fell by 10.3% from Q1 2022 to Q1 2023.
What Real Estate Agents in Declining Markets Should Be Doing This Year
Here are three ways to boost your business in a declining market.
1. Help Sellers Leave the Area
Are your locals talking about getting out of the area? Help them sell their home (or maybe even rent it out) so they can move to a city that suits them better.
2. Cash in on Buyer Referrals
Let’s say you help a retiree couple sell their West Coast home so they can buy a condo in — where else? — Florida. Your sellers will need a buyer’s agent in FL. And you can earn a referral fee by connecting them with one.
3. Add Property Tax Appeal Services to Your Business
Property tax appeal services can be an easy way for real estate agents to diversify their income and recession-proof their businesses.
In declining markets, many homes are over-valued by the county tax assessor. This means homeowners are paying more in property taxes than they should. All you have to do is show your county tax assessor that your client’s house is worth less than the value their taxes are based on (using the CMA skills you already have). Your clients will get a tax refund or reduced tax bill, and you earn a fee for your service.
Is 2023 a Good Time to Get a Real Estate License?
Getting a real estate license is like investing in real estate; there’s never a bad time to do it. You just need to understand changing market conditions and adapt your business plan to meet current buyer and seller needs.
Are you ready to launch a career in real estate? Enroll in your online real estate course today, and you’ll be on your way to getting your license.