PRESIDENT'S CORNER: Looking at the Big Picture
Anthony Domathoti | August 11, 2022
Welcome to August!! With the rapidly shifting housing market over the last two years, you may be hesitant about purchasing a home today. You have valid concerns and I understand why you feel that way.
According to NAR, first-time homebuyers made up 30% of June 2022 sales, compared to 31% in June 2021. Investors and second-home buyers made up 16% of sales this June from 14% last year. Additionally, 25% of sales were cash transactions this June, up from 23% in June 2021. Lower days on the market suggest some are pricing their homes right. Higher-priced homes remain on the market longer, deterring some prospective buyers.
Interest rates are rising due to higher inflation. Rates have risen more than 225 basis points since the start of the year and home prices are climbing, causing housing affordability to remain a big challenge for many. To bring interest rates down, inflation needs to be contained. Until that happens, housing affordability will remain a troubling issue.
What I have found important to remember is that no matter how the market evolves, we can continue to make a difference in the lives of our customers and clients. We can also continue to build up our fellow Realtors in how we act, and what we say.
Because we are so invested in the threads of our clients’ stories and their real estate goals, we often forget the bigger impact our industry is making within our local communities and our state. So, let us dig into some numbers, shall we? In 2021, the real estate industry accounted for $294.2 billion of economic impact in the State of New York, equating to 15.9% of the gross state product! Whether you are a commercial or a residential Realtor, you are participating in 15.9% of our state’s overall economy. Realtors are providing opportunities through the purchase, sale and leasing of real property—not just to local businesses, buyers and sellers, but to all of the uniquely impacted parties involved as a ripple effect of that transaction.
A real estate transaction goes beyond the transition of ownership, it’s the very foundation of our economy—the backbone of the American Dream and its ripple effect is seen in more ways than one when we consider the numbers above. I just wanted to remind each of you that while the days can feel long, the market will inevitably give you whiplash and sometimes the wins seem too infrequent—we have the privilege to serve our clients and our communities so they can thrive and flourish.
Let’s re-energize and expect the unexpected and anticipate what might occur so we are ready for it. Most people wouldn’t even know we had resorted to a Plan B, C, or Z if that’s what it takes because we keep things moving seamlessly. It is critical for us, as Realtors, to be innovative, flexible and help our clients and consumers adapt.
While I certainly appreciate buyers’ concern about purchasing in these market conditions, here are three reasons why you will want to consider getting off the sidelines sooner rather than later. First, prices are not expected to crash. Recalling the fallout from the Great Recession, most market downturns do not result in falling prices. Looking at data from the Federal Reserve on home pricing going all the way back to the 1970s, we have experienced six recessions. Five out of six times prices increased or held flat!
The number two reason to buy a home today is wealth creation. The average homeowner has 40x the net worth of the average renter, and 70% of that net worth is directly tied to the property that they own.
The third reason to buy a home is because your biggest risk is waiting and it’s better to secure the best home you can at today’s prices, and then refinance in the near future when interest rates decline.
Let’s renew our commitment to honor the Realtors Pledge, I hope that each of you stand up to take the pledge for yourself. This pledge is what makes this industry great and one of the many reasons I am thankful every day to be a small part of it with all of you! I AM A REALTOR. I pledge myself: To protect the individual right of real estate ownership and to widen the opportunity to enjoy it; To be honorable and honest in all my dealings; To seek better to represent my clients by building my knowledge and competence; To act fairly towards all in the spirit of the Golden Rule; To observe the REALTOR Code of Ethics and conform my conduct to its lofty ideals.
“When we least expect it, life sets us a challenge to test our courage and willingness to change; at such a moment, there is no point in pretending that nothing has happened or in saying that we are not yet ready. The challenge will not wait. Life does not look back.” – Paulo Coelho
Change is the only constant, and we must remain flexible and creative with regard to how we pursue our fiduciary responsibilities in the culture and environment of the present. It is easy to become stagnant and irrelevant if you are unwilling to embrace change. While it’s the universal rule that things will always change, pivots will be required, and it takes a unique human to do what we do. We can rest assured that our value is bigger than anyone could summarize in words or a news article. Sometimes the magic is in the intangible, it’s in the big picture, if we only look to see the forest through the trees.
Please do not hesitate to reach out to me if we can be of assistance to you or answer any questions you may have about any of this information. I can be reached at firstname.lastname@example.org
Thank you again for being so supportive of each other and maintaining professionalism. Thank you for everything you do for our association and in your communities. God bless you and your families.