These Are the 2020 Facts Agents Need to Know for Their Careers
Regardless of COVID-19, the residential real estate market has been red hot the past year. Markets around the country have seen record numbers, including a big increase in home value and a drop in average days listed. Much of this can be attributed to an easy-money environment with historically-low mortgage rates and housing inventory. These two main conditions fueled demand to rise beyond an already-depleted supply of homes, and, as we all know from Microeconomics 101, this leads to higher home prices. That being said, while these two factors determined how the real estate market would perform in a coronavirus-filled 2020, there were other aspects that came into play.
10 Facts Real Estate Agents Need to Know About 2020
As a real estate agent, it’s highly beneficial to stay up to date on all things residential real estate. Knowing the important facts that defined 2020 residential real estate can not only help your credentials moving forward, it can also inform your leads and clients about the current state of the U.S. residential real estate market. This data can act as fuel for influencing their next home transaction. Informing your leads and clients about these stable, growing conditions in a time of true uncertainty can be the ultimate difference when choosing you as their agent or when deciding to purchase their next home.
Back in March 2019, the pandemic established an entirely new set of rules and regulations that worried real estate agents and homeowners alike. The big question for agents surrounded their Essential Worker status. Thanks to local NAR groups, the majority of states deemed agents to be labeled under this designation, allowing for the residential real estate industry to continue and increase the Zillow Home Value Index (November 2020) to $262,604. This decision created a stable home price growth during the months of March, April, and May (+$1k total growth). In turn, enabling this stability allowed for the summer months to turn up the heat and see prices skyrocket +$40k into the month of November.
The stability created during the initial months of the pandemic exacerbated the historically-low mortgage rates. Back in 2019, there was heavy speculation by investors that an initial rise in the fed rate was bologna. A heavy majority of investors weren’t buying the rise. They felt the stock market was poised for a re-correction and thus, a drop in rates so the Fed money-printing machine can go “brrrrrrr” and increase cash flow into the economy. An inversion of the 10-2 Treasury Yield confirmed this belief.
At the beginning of the year, the Fed began dropping rates all the way to zero. With so much easy money for home purchases, the residential real estate market just needed to make it out of the first initial COVID-19 wave to flourish during the summer. With mortgages being cheaper than ever for purchasing a home, this stability provided a trampoline to keep the residential real estate market on the up with a U.S. home value growth of +6.6%.
Word-of-mouth recommendations are the strongest form of organic marketing. When you make a good impression with a client, they’re more likely to recommend your services to a friend, who is more likely to choose you as their real estate agent in turn. Why is this? Because as social animals, we’re more likely to trust someone we know rather than a review on a website or an advertisement on a bus bench. With 41% of buyers hiring agents off recommendations, your client’s “word” carries much more weight and can exponentially increase your client list if managed correctly on your end.
Overall, real estate license holders remained steady throughout the beginning of the pandemic and have grown to around two million agents total. There was a heavy delay in new license applications during the early months of the pandemic, mostly due to office closures preventing exams and licensing processing to occur. Wisconsin, for example, saw only 34 applications during the months of March and April but rebounded in June with 277 applications. Other states saw similar phenomena with processing and exam delays. When more information about the disease became known and the institution of social distancing protocols allowed offices to open back up, application processing picked up again.
With over two-thirds of REALTORS® identifying as female, it’s safe to say that residential real estate is dominated by women and has been that way since 1978. This may be attributed to the industry’s more independent and flexible scheduling that allows agents to control how much business they generate. There’s also the vocal associations like the National Association of REALTORS® that champion all genders and races for equality in the field of real estate. Despite being banned from professional industries in their early years, women have propelled to success in real estate over the past 40 years.
Unsurprisingly, the biggest social media platform -- and the current bad boy of U.S. antitrust laws -- was Facebook, which came in first, followed by LinkedIn, Instagram, and Twitter respectively. The platform Tik-Tok has also gained steam within the residential real estate sector.
Whether it’s creating new content or understanding how each platform works, we’ve published ample amounts of blogs, videos, and ebooks on the subject. Why? Because social media is probably the most effective way to engage your leads. It’s a medium that provides near-limitless access to your brand while allowing for easy communication between you and others. Whether it’s advertising or creating content (or both), it is worth investing your time, effort, and money into these channels for your short-term and long-term success.
A big reason that the Midwest dominates with a 71% homeownership rate directly centers on home values. Plain and simple, it’s cheaper buying a home in states like Wisconsin and Idaho. Coupled with the employment rate being the lowest it had been in a decade right before COVID-19 struck, it’s rather obvious as to why so many Midwesterners have equity. As the pandemic resides, it will be worth watching this data point and seeing if any long-term effects, like city diaspora and a lagging economy, help or hurt homeownership rates.
Remember that pesky 22-year-old college grad living with his parents up the street? You know, the one who couldn’t even get a gig at the local food mart after the 2008 market collapse? Well, he’s all grown up and even has enough money to purchase a home.
Millennials have finally joined the ranks as the generation with the most homebuyers in the market (37%). Although it took some time, this group is finally growing in their careers thanks to a thriving economy over the past decade. As the next decade progresses, expect Millenials to be at the forefront of this group (until Generation Z realizes that the half a million dollars they made on Tik-Tok would be better invested in a home than fidget spinners and Fortnite accounts).
This data point has been slowly dropping over the past 20 years. In 2010, this number rose to almost 50% thanks to the mortgage crisis of 2008 and has slowly fallen since. The future of homebuying practices will ultimately depend on the long-term effect of the pandemic. When we have a vaccine and a better understanding of Generation-Z’s career development, we will have a better understanding if this number will increase or decrease throughout the next decade.
At the end of the day, home sellers are most likely going to be around 56 years old and earning ~$100,000 per year. These figures make sense when you consider the average retirement age to be around 64.
As children grow up and we begin to consider leaving our careers, the need for that big house dwindles. It’s not just about the unneeded space and need for retirement money; taking care of a house that big can be taxing. Moving into a smaller, more accommodating home (that’s hopefully in a warm climate) can make life easier.
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Sharing these facts with your colleagues, leads, and clients can solidify you as a reliable knowledge base and a true professional in the real estate field. It can also help you gain their trust for future transactions and partnerships. If you do share this content piece on your social channels, please tag us @TheCEShop. Click below and gain access to our extended infographic now.
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