In Search of Listings and Leads
Where have all the listings gone?
We knew it would be bad – but this is worse than I’d anticipated in October. Listings have vanished, traditional lead gen has slowed to a hault, housing supply has disappeared forever altering the mortgage and real estate industry.
Lead generation marketing tools such as Just Listed Just Sold emails, texts and direct mail as well as leads generated from real estate portals depend on new inventory (listings) to drive traffic. If there are no listings, there are no leads. With no leads, reduced transactions – and most people in the real estate world require transactions to make money, grow their business or even survive.
While listings have been reduced almost 50% y/y the number of Realtors and LO’s has not dropped. In fact, when people lose their jobs in a recession, it typically swells the real estate ranks.
So how bad is the supply situation this year compared to last year?
Very, very bad. Right now, listing inventory is at its lowest in our lifetimes. Since the Census and HUD started tracking in 1963, we’ve never had this little supply.
Mike Simonson of AltosResearch tracks listing inventory and the temperature of the market by zipcode. He reports on the data on a monthly webinar and If you’ve not signed up for his data subscription and are in the industry, I highly recommend it.
(Disclosure – Mike is a really good dude and a friend of Revaluate)
I’ve been thinking that for sure WWII or 9/11 would have been worse. So yesterday, I asked Mike for some context. Is this the worst? The short answer: Yes.
We currently have the lowest housing inventory (listings) since the data has been recorded.
“It’s fair to say (the housing inventory is the) lowest in our lifetimes. But no one knows active inventory for the US pre-Altos. It doesn’t exist because no one tracked it.” Per Mike this current dire situation is the lowest number of listings per capita, for sure.
So – How did we get here?
1963 to 2020; National Monthly Housing Inventory
Coronavirus; the double headed dragon
Two key elements have worked along with Coronavirus to eliminate 50% of our inventory.
a) Sellers are not thrilled about opening up their homes for others to walk thru. This has directly eliminated some sellers from listing.
b) City dwellers that are no longer tied to their office cubicle have moved further outside the city centers – sometimes the suburbs, and some times more rural. Vacation destinations have seen a significant uptick in sales and prices, yet a reduction of inventory as people can work from dream locations like Vail or Hilton Head. These towns are / have seen a boom – and are now commonly referred to as Zoomtowns – where workers can WFH while on zoom.
Many of these city dwellers have not listed their other properties. In the future they will sell… there is pent up sell side demand that will flow once the pandemic risk has been significantly reduced.
The winter is the time of year when listings typically are reduced and unfortunately, the winter of 20/21 is no different. This time of year is bad for listings, however usually we start to see an uptick in volume starting at around MLK day and continuing thru the 4th of July timeframe where Inventory typically peaks.
The Winners and the Losers
So this is all very bad news, but now is not time to panic. Now is the time for action, as we are in a rapidly developing very concerning situation.
As we slide more deeply into our supply shortage hole, sweeping change is likely on the horizon.
That makes sense – because with 50% fewer transactions something has to give.
We can expect consolidation of teams, companies and brands. We should expect older, lower producing agents to depart the industry in order to avoid MLS / Association / Desk fees. But this will likely be delayed several months – due to the success in sales over the last 8 months of 2020 one would expect that many companies and individuals have saved a nest egg that can help ballance the decrease in revenue. When that money starts to wear thin – offices will be reduced in size (square feet and personnel) more than they already have with the pandemic.
The winners have already trimmed the fat, cut staff and sq footage and positioned themselves well to take over / buy out smaller less prepared teams. The winners will combine mortgage, title and real estate under an umbrella of efficiency.
The winners will control the (lack of) inventory. Now more than ever getting listings this spring is key to survival.
The answer may well be to expand your geographic footprint – Find a way to get the eyeballs of both city dwellers that still want to move out into the suburbs / rural areas and the people that live in the homes city dwellers desire. Leverage tools like Reside and Revaluate’s AI to build a clean database in these new to you markets outside your traditional reach and methods. (Reach out to Revaluate to learn more about Reside here.)
In hard times with low inventory, the ability to increase listings while becoming more efficient at lead generation is key – as long as you can wear multiple hats and keep your organization functioning at a highly effective level you will be on top and in control of this inventory shortage.