Yearly, first tuesday asks readers how they perceive their financial situation will change in the coming year. In response to our 2018 poll, the dominating outlook was optimistic (though just barely); 56% of respondents believed their personal financial situation would improve in 2018.
However, things have changed in the year since. When asked the same question at the outset of 2019, only 39% said their situation would improve, equal to the number of respondents who claimed their situation will remain the same.
Few readers are more overtly pessimistic about their 2019 finances as opposed to 2018 (23% compared to 20%), but the change marks a noticeable downshift in what was a sunny outlook.
So what gives? What contributed to this altered outlook?
The looming recession
But typically, concern over one’s personal finances mirrors concern over economic recession, and our readers know it’s coming down the line.
Yes, we harp on this a lot. But the reality is all signs point to a recession hitting in the next year or so, and agents and brokers prudent enough to read those signs need to know where to go from here.
The main sign in question is the yield spread. The yield spread is the difference between the short-term rate influenced by the Federal Reserve (the Fed) and the 10-year Treasury Note rate influenced by private bond market investors. This is a time-tested predictor of recession — historically one year from the yield spread going below zero, a fast-approaching reality.
Batten down the hatches
So how can you prepare for the onset of recession? According to another recent first tuesday poll, the majority of our readers regularly put a portion of their income into a savings account. However, 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.