Agents advise on getting ahead of competition in low-inventory luxury markets
By LISA KLEIN
Across the globe, housing inventory is scarce, continuing a pandemic-driven trend of low supply and more-than-normal demand.
This imbalance has been driving competition and an astronomical rise in housing costs, the luxury sector included. The situation is not hopeless, however, as savvy agents are leading the way for buyers who need to purchase a new home.
“I have decided that relying on inventory listed on the MLS is like trying to get tickets to the Super Bowl – everybody wants to go and only a few tickets are available,” said Annie Hagstrom, an agent with John R. Wood Properties in Naples, Florida.
“If you want success in this market you have to fight for it and use unconventional means to find a listing and make a sale happen,” she said.
Sliding stock
In the United States, many areas are still experiencing major shortages and the issues that come along with them. This is especially the case in southern states such as Florida, Georgia and Tennessee, where homebuyers have swarmed over the past two years thanks to good weather, extra space and lower taxes.
“Tampa Bay’s housing inventory has continued its slide back, with demand outpacing both the resale market and the new construction options available,” said Bob Glaser, president/CEO of Smith & Associates Real Estate in Tampa, Florida.
In Atlanta, inventory has also continued to decline in 2022, with some metro areas dipping 82 percent below the five to six months of inventory to be a balanced market, according to Luke Trigwell, vice president of marketing and communications for Harry Norman, REALTORS® in Atlanta.
“I think as we all moved into ‘season’ we all expected to see a surge in inventory,” Ms. Hagstrom said of the Naples market. “Personally, I have not seen the market inventory level increase enough to reflect a typical seasonal market.”
Throughout the pandemic, luxury buyers moved quickly in search of space, while material shortages caused an even bigger gap in inventory by slowing down construction of new homes.
Atlanta had already been experiencing population growth through top rankings in business-friendliness and millennial homebuyers.
“Couple the influx of companies, jobs and people moving into the city with low mortgage rates, comparative housing affordability and the untethered lifestyles of remote work and you have the ideal recipe for high-demand and low-supply,” Mr. Trigwell said.
Fierce competition, plus pandemic-padded cash savings and low mortgage rates, have fueled skyrocketing prices.
“The low inventory, high-demand market has driven price ceilings upward, as buyers in multiple offer scenarios are routinely paying well over asking to secure contracts,” said Ashlee Button, a Realtor with Parks Realty in Franklin, Tennessee.
The average sale price for a home in the U.S. increased a whopping 30.3 percent from first-quarter 2020 to first-quarter 2022. The previous two years saw a 0.8 percent decrease, although housing costs have been very slowly climbing since the 2008 recession.
“We are starved for new inventory, and this is driving prices to levels that are almost without ration,” Ms. Hagstrom said. “Buyers are behaving like they don’t care what a property is listed for, they just want to be here.”
Agent advantage
So, what are would-be luxury homebuyers to do?
“While there is no single solution in a low inventory market, an experienced, informed and well-connected agent can unlock additional possibilities,” Mr. Trigwell said. “A knowledgeable agent armed with the right tools and resources can make all the difference for buyers navigating competitive markets.”
An agent must understand their market to provide suggestions for competitive yet appropriate offers, navigate multiple offer situations, provide alternative ways to snag a home and, above all, act quickly.
“Buyers must be prepared to select a home within a short time frame, without the back-and-forth negotiation that would have been the norm in prior markets,” Ms. Button said. “Be mentally prepared to pay over asking to secure the home you want.”
Also, “think beyond price – terms also weigh heavily with sellers,” she said. “Are there things that are important to the sellers that you can include in your offer? For example, do they need post-close occupancy? Prefer a quick close? Can you pay title expenses or cover an appraisal gap?”
Waiving inspections and agreeing to zero contingencies are other ways to come out on top. According to Ms. Hagstrom, many sellers will take less to avoid an inspection.
“I have trained my buyers that if they want a property – really want it – they have to be willing to go the distance,” she said.
RISING INTEREST rates and a decrease in COVID-related impulse buying are expected to even out the housing market in the coming year, but low inventory issues have not let up quite yet.
Potential sellers are waiting it out, as they need to find another home themselves, and many millennials who stayed in rentals or with family during the pandemic are now ready to buy.
“Until the market can get a balance, we will not see any letting up of demand or pricing,” Mr. Glaser said.