How Real Estate Professionals Can Help Stabilize Housing Inventory and Affordability

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The housing market is currently facing challenges with inventory and affordability, but real estate professionals have a significant role in addressing these issues. By gaining a deeper understanding of the industry and taking strategic actions, Realtors, Real Estate Brokers, Loan officers, and Mortgage Brokers can make a meaningful impact on their communities. Here are some steps they can take.

Understand the Industry and Its Challenges

Real estate professionals must first grasp the complexities of the industry and the various factors contributing to the housing inventory and affordability crisis. This includes recognizing how certain organizations and practices, such as hedge fund investors, “iBuyers”, and built-to-rent communities influence the housing market.

Investor Competition

While it is commonly believed that the housing affordability crisis is primarily driven by low inventory and high interest rates, a significant underlying issue is the competition from hedge fund investors. These investors purchase single-family homes and convert them into rental properties. This practice reduces the available housing stock and drives up prices, making it increasingly difficult for potential homebuyers to be able to purchase a home.  

Advocate for Policy Changes

Real estate professionals should get involved in encouraging Federal, State, and Local Governments to implement policies that reduce the number of hedge fund investors in the housing market. This includes advocating against the development of built-to-rent communities which contribute to higher purchase and rental costs. By supporting measures that prioritize homeownership opportunities for individuals and families, real estate professionals can help mitigate the impact of investor-driven competition and work towards stabilizing the housing market.

Promote Affordable Housing Development

Governments should be encouraged to revise zoning laws to support the construction of starter homes and make low-cost loans available to builders, with the condition that these homes are sold to owner-occupants. This would help increase the supply of affordable housing for first-time homebuyers.

Educate Homebuyers

Prospective homebuyers should consider the extra costs associated with renting from built-to-rent communities and large corporate landlords. While these communities provide various amenities, they add to the housing inventory and affordability issues, and their rental rates are generally higher compared to multifamily apartment buildings and traditional landlords.

Discourage Use of Manipulative Platforms

Homebuyers and sellers should be advised to avoid using platforms like Zillow, which engage in market manipulation. Zillow's inaccurate Zestimate and “iBuying” practices have contributed to the current inventory and affordability issues. When Zillow's “iBuying” venture failed, they sold their single-family homes to hedge fund investors who converted them into rental units, further exacerbating the housing problem.

Direct Engagement with Local Agents and Brokers

Encourage homebuyers and sellers to connect directly with local real estate agents and brokers. Direct communication ensures that homebuyers and sellers receive personalized services tailored to their specific needs, and avoids the pitfalls of using large, profit-driven platforms.

 Focus on Branding and Reduce Lead Purchasing

Agents and brokers should prioritize building their personal and company brands instead of depending on purchasing leads. Platforms like Zillow have been using referral fees from agents to support initiatives that ultimately challenge the real estate profession. By investing in brand-building, agents can establish a more sustainable and independent business model.

Conclusion

Real estate professionals play a critical role in addressing the challenges of housing market inventory and affordability. They can make a difference by advocating for policy changes, educating homebuyers, discouraging the use of manipulative platforms, and focusing on direct engagement and brand-building. Their efforts can contribute to creating a more stable and affordable housing market for everyone.



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