In times of uncertainty, it can be difficult for a business to stay afloat. The affordable housing crisis is not just affecting real estate agents and brokers; it affects every owner. It is obvious that a lack of financial means would limit a person’s expenses and investment potential.
The real estate industry has to accept that things are going to be tough for a while, so it needs to focus on easing the ever-increasing financial burden on its customers ahead of the looming recession.
Brokers can’t control interest rates, the cost of living, or the lack of demand that stems from the first two issues, but they have the power to reinvigorate the US housing market.
How Brokers Can Succeed During Economic Downturns
If you operate an independent brokerage or plan to operate one, chances are you are going through a recession. Fortunately, brokers can still be successful during economic downturns.
Discourage real estate investment
Should you really turn down business, especially before a recession? Turning away investors seems like a bad idea, and it may be short-term, but their deep pockets are badly affecting the housing market. They decrease the supply, especially for the first houses, which increases the prices.
When prices rise, homeowners are unable to buy homes. This forces them to rent, and with rental prices so high, it can take even longer to put together a down payment. If you can afford to play for the long haul, you’ll have more options for buyers to work with, which will improve your overall profits.
Pay your staff a higher salary
The idea of paying your staff more, especially when you’re in trouble, sounds ridiculous, but hear us out. Between 1960 and 2017, median house prices increased by 195%, while wages only increased by 26%. A family in 1960 could easily save for a down payment in 3 years.
In 1960, the average household earned $5,600 a year by age 24, and the median cost of a home was $11,900. In 2017, the average household earned $28,528 per year at age 24, and the average cost of a home was $815,906.36. Age is important here, as the new owners in 1960 were between 24 and 25 years old, but there’s no way a 24-25 year old in 2017 could afford a house.
It’s even worse now. In 2022, Americans must earn at least $46, or $95,000 a year, to earn a living wage nationally. Only 35.8% of American households bring in more than $100,000 a year.
To solve the housing crisis, Americans must earn enough to afford to buy them. If you can afford to pay a living wage and encourage others to do the same, you can help improve the economy.
Remote work support
Remote work is more than a trend. Even if it did, brokers should definitely take advantage of it to save money. In fact, real estate companies can avoid losing business by providing more remote work options. They can even hire freelancers for occasional projects.
To help your agents save money on travel, invest in technology that provides a 360-degree tour from the comfort of their home. Agents who work from home are often more productive and efficient, so you’ll reduce your overhead and generate more cash flow simultaneously.
Provide affordable housing options
Many real estate professionals work in areas that have or need affordable housing. Since this is not a popular real estate niche, you probably don’t participate in the affordable housing sectors, but they are worth participating. A good number of Americans can only afford these homes.
However, you will still come across buyers who cannot buy a new home in their area. In these cases, you can suggest a rent-to-own program. For example, the Divvy program offers small, ready-to-move-in homes that don’t need to be repaired. They cost between $60,000 and $550,000, depending on the region, and buyers only need a minimum credit score of 550 to get a mortgage.
Alternatively, you can look into the sustainable or green housing markets. These homes are cheaper to buy and maintain because they often use green energy sources, such as solar or wind power.
It is cheaper and greener to recycle existing building stock to make it green, sustainable or environmentally friendly. If you are building new or luxury green homes, it is impossible to make them affordable.
When the economy is hurting, we all look for ways to save money. Although there are many people who can still afford a home, they can still rent due to the added expense that comes with owning a property. Most tenants don’t even have to pay for utilities or internet.
When building new homes, be sure to keep property taxes, insurance, and utility payments in mind. For example, building a house in a corner is more expensive to own than a house that is not. The option of paying less tax or spending less money will always be attractive to homeowners.
(Disclaimer: Devdiscourse journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse claims no responsibility for them.)