Real Estate Expert Matthew Bell Warns of Impending Industry Disruption

“If you want the business, you’re going to have to work harder and smarter than before.”

Smart agents will need to be proactive in addressing this increased workload to avoid mistakes and burnout, while smart brokers will need to be proactive in giving them the tools and support that enables them to do that. And the hidden benefit to this is reduced turnover, which helps brokers to run a more effective brokerage.

Supply chain challenges

During the pandemic, supply chain issues started to bud, and before long, had fully bloomed into a disaster affecting all industries. As a result, construction costs have skyrocketed and new construction has slowed to a snail’s pace because the increased cost isn’t in alignment with current levels of demand.

This means less new inventory is added to the market, which keeps prices artificially higher than they should be.

Unfortunately, even once these supply chain issues are resolved, it will still take time for prices to recover because this is a slow moving industry with lots of moving parts. It’s a lot like trying to turn a battleship around.

Growing inflation

Inflation has increased the prices of everything, and in an effort to fight this inflation, the Federal Reserve has increased interest rates, further driving up the cost of real estate significantly.

As a result, homes that have dropped in price by tens of thousands of dollars or more now come with mortgage payments that are the same as they were before the price drop because of interest rates that are roughly double what they were just a few months ago, making them significantly less attractive to buyers.

Real estate expert and YouTube host, Jason Hartman, summarizes this phenomenon perfectly, by saying, “People buy the payment,” meaning that buyers will make a decision based more on the payment they can afford, which is a culmination of sale price and interest rate, rather than factors like sale price or interest rates in a vacuum.

Bell explains that with rising interest rates, payments are going up across the board, meaning many people will not be able to afford the homes they want, so many of them will simply put off buying until interest rates drop, driving payments back down to the point where they can afford what they truly want.