Changing Consumers: Homebuyers of the Future
On September 8th, ARMLS presented Steve Murray, editor and president of Real Trends, Inc. as part of the ARMLS Speaker Series. Steve and co‐ author Ian Morris, CEO of Market Leader (NASDAQ: LEDR) recently pub‐ lished “GAME PLAN – How Real Estate Professionals can Thrive in an Un‐ certain Future”. The following discussion and the substance of Steve’s presentation is taken from their new book.
The Great Recession has changed large numbers of consumers in ways not been seen before. These changes will impact the client/customer make‐up of Agent business for at least the next five years.
Customer net worth, career prospects and net income have diminished and downsized not only what housing con‐ sumers can consider, but whether they will be able to obtain adequate financing to purchase.
Job eliminations and persistent unemployment will thin the ranks of young adults and first time homebuyers in the total home buying pool.
Mortgage delinquencies of 7.1% in prime mortgages compare to 2% delinquency rates in previous recessions. Median incomes dropped for all households over the decade to levels below 2000. Lenders have tightened their requirements to larger down payments and lower debt loads.
As a result of these changes five key trends will shape the residential real estate industry of the future:
Consumer and market forces will continue to evolve and interact. These forces will center around household for‐ mation, marriage, joblessness and immigration, lower home prices, subprime mortgage inventory and mobility.
The strong immigrant and minorities influence on household formation will outpace the similar influence of Cauca‐ sians. GenXers and boomers will remain repeat Buyers. Buying will be more favorable than renting due to the drop in home prices and mortgage rates.
The nature of what consumers buy is shifting. While detached single family homes are still desirable, a preference is emerging for homes in densely developed suburban neighborhoods near public transportation and entertain‐ ment.
Watch Steve Murray’s presentation or download his PowerPoint Presentation.
Contributor ‐ Chris Heagerty, Director – Communication, Professional and Business Development
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