The US is facing a housing shortage which is seeing prices soar in many areas. New home building was slashed by half in the 2010s. But demand for residential property has increased during that time, with millennials having families and looking for homes. Historically-low interest rates have also fuelled interest in home-buying. Freddie Mac research suggests a supply shortage of 2.5 million units.
It’s the perfect storm for real estate brokers and agents who face huge buyer-demand but are struggling to get listings. In a survey we carried out, 41% of brokers listed a "surplus in buyer demand" as the biggest cause of the shortage.
Existing stock is also hard to get hold of. Many owners are hesitant to list because they’re unsure if there will be a replacement home available to meet their needs. As one broker described it: "People I know won't move because there is nothing to buy. They always say… 'Where would I go?'"
COVID has intensified the crisis. A significant proportion of owners are nervous about opening up their homes and risking exposure to the virus. One broker reported that 40% of sellers took their homes off the market in March 2020 but only 20% of those came back. As vaccination programs are rolled out these fears may become less of an issue.
But sellers are still reluctant to sell because of general uncertainty surrounding the pandemic and job market insecurity. They’re anxious about the economy and the prospect of losing their job. "I think right now people are in limbo. Waiting to see what the new administration does and also waiting for Covid to die down," one agent said.
So what are brokers and agents doing to tackle the crisis and generate more listings?
- Reaching out to owners in desirable neighbourhoods
One of the key ways is reaching out to homeowners outside of their contact database who are living in desirable neighborhoods. 41% of brokers are trying this tactic.
- Networking with housing developers and lenders
Others are connecting with new housing developers and speaking with Mortgage Lenders and related professionals to get insight into new listings.
- Pushing the "good time to sell" message
High prices are seen as one lever to encourage owners to sell. Many agents are reaching out to past clients to see if they have any interest in selling at all-time highs. Spreading the message about it being a "good time to sell", and that "houses are a hot commodity".
The pandemic has also changed the kinds of properties that buyers are looking for. People are looking for areas where they can be outside. The work-from-home trend has led to interest in larger properties, with space for a home office, even if it meaning living further outside a city.