Illustration by Lanette Behiry/Real Estate News

Agents Decoded: What to make of the current market, and how to thrive in it 

The headlines are scary, but Jay Thompson advises agents to focus on fundamentals and to try not to panic — the market is just normalizing.

November 4, 2022
4 minutes

The direction of your business depends on decisions you make every day. Agents Decoded can help you by presenting the perspectives of seasoned pros who have been there, made mistakes, and found success.

You don't have to look hard to find frightening headlines about the real estate market.

Words like "crash," "gloomy" and "deteriorating" are freely tossed around in the media, social sites and hallway conversations. 

Most industry pundits and economists don't believe a "crash" is imminent. There is little question, however, that the market is shifting away from the red-hot sellers market we've experienced across most of the country over the past couple of years.

Anecdotal evidence abounds that in many areas, the days of multiple offers over list price, waiving of inspection and appraisal contingencies, and frenzied bidding wars are over. Rather than going under contract in hours, some listings are sitting for days, weeks, or even months.

This is good news for buyers who have been frustrated by failed attempts to purchase a home — or who had decided to avoid the frenzy altogether. Despite mortgage rates impacting what they can afford, buyers now have a chance to not only find a home, but actually submit a purchase contract that gets accepted.

For those who make a living helping people navigate the trials and tribulations of buying or selling a home, however, the state of the market might be concerning. For the majority of real estate agents who work as independent contractors, in effect you wake up every day unemployed. Nothing in escrow? Then you have no paycheck on the way. Even if you get a listing or put a buyer under contract today, you're a good thirty days out from getting paid. This creates understandable stress and anxiety, compounded by a cooling market. 

Stress, yes. But whether you've been selling real estate for decades or months, there is no need to panic. 

For the industry veteran who has experienced multiple shifts, booms and busts, the most important thing you can do is understand and accept the forces impacting the market. Denial is a dangerous thing. You've lived it, you know the real estate market is cyclical. Always has been, always will be. Remember, a downward shift in a market is inevitably followed by an upward trend.  

For the 150,000 people who have joined the Realtor ranks since 2019 and have only seen the boom times, the current trend can be downright terrifying. Understand that today's market is far more normal than what the last couple of years have offered. Focus on what's been working for you, and invest in education and training so you're well-positioned to succeed.  

Regardless of your licensing tenure, the most important thing you can do right now is to ride things out and avoid making rash business decisions based on fear. What we're seeing in the market now is not a crash, it's a return to normal.

If you're only comparing today's market to last year, it might feel like a crash — but that isn't really a fair comparison. There was nothing normal about the 2020-2021 pandemic-fueled real estate market. If you instead compare today's market to historical averages from 2012 to 2019, you will find existing home sales (EHS) are only down 0.9%. That is significantly lower than the 16% drop seen when comparing 2022 EHS to 2021 — an outlying year.

Of course, "Home sales plummet 16%!" is a far more eye-catching, clickbait headline than "Home sales down 0.9%." Sensationalism sells subscriptions and advertising, and historical data and context are often missing from these doom-and-gloom announcements.

Yes, the market is shifting, cooling, even dropping. But it's dropping from historical highs to what is historically normal. Relax. Take a deep breath. Don't panic. Remember your fundamentals — prospecting, client education, value proposition, building brand awareness. 

Be prepared for market cycles because they aren't ever going away. The old saying, "what goes up must come down" holds true, but what we often forget is the other half of market cycles: "What goes down comes back up."

Jay Thompson is a former real estate agent, broker-owner and industry outreach director. He is currently an industry consultant and sits on several boards. The views expressed in this column are solely those of the author.

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