Every year, first tuesday asks readers to evaluate California home price — are prices headed up or down? At peak? Are they bottoming out?
In the logical continuation of this trend, our readers now agree that home prices are starting a downward surge as early signs of an imminent recession set in.
This conclusion is supported by our own research here at first tuesday. We’ve been sounding the alarm about the coming recessionary period — predicted to begin in 2020 — for awhile, and not without reason. The more time you have to plan, the better prepared you’ll be when the recession actually hits.
California home prices, after having risen steadily since 2012, crested in mid-2018 and have been on a downward trend ever since. In spite of some seasonal fluctuations, it looks like the trend is here to stay for the foreseeable future.
But even while prices have been on the rise for a few years, sales volume has been flat at best and interest rates have increased.
The explanation for this discrepancy? Sticky pricing. Also known as price persistence, sticky pricing is the propensity for sellers to fail to adjust their listing prices even in the face of a downward turn in the market. This phenomenon often masks signals of a coming recession.
But the veil is finally starting to lift, as sellers adjust prices downward to reflect real economic factors.
It’s time to start thinking about preparing for the coming recession. When home prices fall, so does an agent’s income, pushing them toward either eating into their savings or stepping up production.
Increasing production means extra transactions, focusing on higher-priced homes or earning supplemental income through activities like relocations or property management.
One of the most helpful ways to make sure you have the clientele to get you through a recession is to market more aggressively, including:
- expanding your FARM to additional neighborhoods and demographics;
- increasing the frequency with which you deliver marketing materials; and
- advertising your real estate website — or building one if you don’t already have one.
Widening your reach to new clients is essential, as it will supplement your income and allow you to maintain your current standard of living even when the economy takes a dive.
Additionally, becoming a broker may put you in a position to weather the storm of the recession by attaining a better fee split as a broker-associate or launching an independent brokerage.
Recessions are tough on everyone, but taking concrete steps to prepare is crucial when you want to stay ahead of the game.