Agents: Is Your City About to Bubble? What You Can Do
There has been a lot of chatter lately regarding the impending housing bubble that will affect major cities around the world — if they haven’t done so already. If you’re an agent, it’s probably no secret to you how the market is currently behaving in the area where you work. That being said, with all the rumors going around in the media, it can be difficult to prepare yourself for what’s about to — or not about to — come. The thing is, if you look at the history, housing bubbles are kind of inevitable.
So, if your city’s housing market is on the verge of blowing up this year, wouldn’t you like to know? And, if it seems completely unavoidable, what can you do to actually take advantage of it before everyone else hops on the bandwagon?
Cities Predicted to Bubble in 2018:
Hong Kong, Munich, London, Toronto…these metropolises are undoubtedly the best candidates for a bubble in 2018. Of course, if you’re a real estate agent working in the United States, then that doesn’t really effect you, does it?
Maybe not directly, and maybe not so suddenly. But, as any experienced agent knows (or anyone who has been alive since at least the early 2000s), the world operates like a set of dominoes. And, if these major cities are at risk, then certain cities in the United States will also be at risk.
Right now, according to National Mortgage News who reported on data found in the Attom Data Home Affordability Index, the top ten counties that are likely to experience a housing bubble are as follows:
1) Williamson County, Tennessee
2) Washington County, Utah
3) Kings County, New York
4) Jackson County, Oregon
5) Contra Costa County, California
6) Snohomish County, Washington
7) El Dorado County, California
8) Yamhill County, Oregon
9) King County, Washington
10) Comal County, Texas
What do all these counties have in common besides having funny names that still don’t give you any good idea of where they’re actually located? Well, you’ve probably heard of some of these counties’ major cities: Nashville, New York City, San Antonio, Portland, San Francisco, etc.
What do you think of now?
These are cities where people want to live. They are cities that have experienced rapid growth in a short amount of time, making housing prices shoot through the roof. They are cities that may or may not be affected by new tax laws. Last but not least, these are also cities that are currently the hot topic of discussion, leading to a lot of speculation which can inherently cause a housing bubble as well.
How Real Estate Agents Can Benefit from This Information
Now, a housing bubble wouldn’t worry a real estate agent, unless, of course, they personally owned a home in one of these cities. If anything, a smart agent would probably be eager to benefit from the imposing “bubble,” as would an investor who knows what they are doing. However, sometimes with housing bubbles also comes market crashes, and that’s not really good news for any real estate agent — particularly those who decided to get their licenses back when there was a boom.
But, then comes the discussion of ethics. What can a real estate agent really do to take care of themselves during a housing bubble, without violating a moral code? It’s it more important to have cash in your pocket, or maintain meaningful relationship with clients long-term?
If You’re Acting as the Buyer
If you’re working with buyers and you close a deal right now, you’re going to no doubt make an excellent commission. The value of homes are high right now, but it won’t stay that way if a bubble occurs.
But, let’s say that you’re a different kind of agent. You have a young couple who wants to start a family, looking to come in and buy a home in one of these cities right now. The nice thing to do would be encourage them to wait. Get their phone number, and tell them to be you’ll be in touch within a few of months.
Of course, you can also decide how much you want to let on regarding your knowledge of the market. Though, if you can gauge how this will play out for this particular buyer over time (a wealthy bachelor), then you can feed your family without necessarily hurting others.
Going the nice route actually pays off long term, too. After all, if you have clients that buy now, trying to help them make a return on their investment after the bubble is going to be hard work.
If You’re Acting as the Seller
Likewise, if you have a family that’s planning on selling their home sometime in the “near” future, you might feel obliged to encourage them to sell it as soon as possible. You might even offer an incentive to get them to sell sooner. This can be done by demonstrating what they might lose now, versus what they would risk to lose post-bubble. (“You won’t get as much on this home as you intended to get, but if you wait, you’ll be in the midst of a nightmare.”) This might mean throwing a prospective buyer under the bus, which makes this difficult. But, the problem with any bubble is that sometimes people win, and sometimes, people lose.
Hopefully, though, you can help minimize the carnage. Who said being a real estate agent was an easy job? You know what’s at stake, but you need to take care of yourself, too.
It’s clear that any housing market that’s speculating a bubble needs to be handled with care, because you need to ensure you have a job in a few years. The good news is that the more conversations you can have with prospective clients regarding the changes in the market, the more you’ll build their trust. At the end of the day, most people know that although an agent collects a commission, they generally have their clients’ best interests at heart. Make it clear that you are looking out for them, and they’ll look out for you, too.
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