Can Your Real Estate Business Survive a Housing Bubble?

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With real estate in the news lately, you’re likely aware that housing prices are higher than they have ever been throughout the entire country. And while some people wonder whether the current state of the market could be here to stay, others believe that the market is in a housing bubble. If this sounds familiar, know that the market conditions are very different from the 2008 housing crisis, and many experts predict that we’ll be in a seller’s market for quite some time. Amid ongoing supply chain shortages, new builds are being delayed, and it seems unlikely that the housing supply will drastically change anytime soon.

However, no one can predict the future — we can only do our best to prepare. As a real estate professional, are you positioned to stay afloat if the housing market takes a turn for the worse? Let’s discuss what a housing bubble is, its causes and effects, and how your real estate business can survive a crash in the housing market.

What Is a Housing Bubble?

Housing prices have skyrocketed since 2020, and there are simply not enough houses available to keep up with the current demand, leading experts to believe that we are in the midst of a housing bubble. By definition, a housing bubble occurs when the demand for housing exceeds the inventory available. This demand further increases when investors acquire investment properties and flip houses for resale value. As a result, housing prices continue to rise.

Housing bubbles have a drastic effect on the real estate industry, not to mention homeowners and their financial status. These effects can extend beyond the housing market and affect the economy through increased interest rates and changes in lending standards. When the economy eventually crashes again, homeowners then struggle to keep up with their mortgage payments and may need to dip into their savings or retirement to keep their houses. In the worst-case scenario, some homeowners will go bankrupt and into foreclosure.

Typically, the effects of a housing bubble are only temporary. But as stated by the International Monetary Fund, a housing bubble can last for a few years before the inevitable crash.

What Causes a Housing Bubble and Why Does It Crash?

A housing bubble isn’t caused by one specific event but rather several events that seem to happen all at once. When housing prices increase, we must begin by asking what caused the increase in demand. The following events are often involved:

  • A rise in economic activity due to an increase in disposable income
  • Lower interest rates that make housing more affordable
  • An increase in the population that are looking to purchase a home
  • Risky behavior from property investors and homebuyers who are making investments based on unsustainable price appreciation estimates

A housing bubble cannot last forever. Eventually, the housing prices become so high that they are completely unrealistic and unsustainable. Meanwhile, the supply is increasing to accommodate the aforementioned increase in demand. As the supply rises, the demand decreases, and housing prices drastically drop. When the housing prices fall, it is more difficult for buyers to obtain a loan, and people leave the market.

How Can Real Estate Agents Survive a Housing Bubble?

Although a crash in the real estate market is inevitable, there are plenty of actions that you can take as a real estate agent to stay afloat when things are slow. To maintain financial stability during tough economic times, take the following steps to ensure that your real estate business doesn’t fall apart in the event of a housing market crash.

Build Stable Professional Relationships

Real estate agents need to build long-lasting professional relationships to succeed, and this becomes even more crucial during a rocky market. Stable professional relationships begin with effective and consistent communication. However, real estate agents are often busy and on the go. If you find it challenging to maintain consistent communication with multiple clients, consider using tools like Customer Relationship Management (CRM) software to automate messages and remind you to contact customers on a regular schedule.

Establish Multiple Streams of Income

When there aren’t very many clients available, you may need a few more sources of income to bolster your finances. Fortunately, as a real estate agent, you have many opportunities to increase your revenue that others may not be able to access. Consider the following options to supplement your income when sales slow down:

  • Real Estate Crowdfunding: Companies use real estate crowdfunding to raise money for investment properties. The investment opportunities can range from apartment buildings and offices to shopping centers.
  • Start a Real Estate Blog: If you have a talent for writing and a low amount of funds to invest in a side hustle, consider starting a real estate blog. You can use it to educate your current clients and draw in new ones. In addition, blogs can be monetized through advertisements and affiliate links to bring in more income.
  • Rent Out Things You Already Own: If you own a home, you can always rent out extra rooms or a guest house on Airbnb. You also have the option to rent out your cars using Turo to make hundreds of dollars a month in passive income. You even have the option to use websites like Neighbor to rent out any extra storage space you may have.

Widen Your Net to Increase Sales

If you’re struggling to find clients that align with your unique services, form a partnership with professional cold callers. In the beginning, professional cold callers will work with you to determine what type of clients you’re interested in attracting and devise a script crafted to highlight the benefits of your business. Cold callers will sift through cold leads, warm them up with carefully crafted pitches, and send qualified leads over to your sales team where they can close the deal.

Call Motivated Sellers

When it comes to diversifying leads and maintaining steady business in any housing market, partnering with experienced cold callers is your ace in the hole. Even in our modern society, other marketing tactics can’t compare to the unique benefits of cold calling, which helps you build your audience with a real human touch.

If you’re concerned about the housing bubble, Call Motivated Sellers can help. We have years of experience cold calling in the real estate industry, along with access to the best information for buyers, sellers, and agents to help you close more leads.

Still on the fence about whether or not cold calling is right for you? To learn more about the benefits of cold calling for your real estate business, just contact Call Motivated Sellers today!

 

 

Marketing by Joseph Studios

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