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| Builders and REALTORS® Collaborating in Tough Times |
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In the early 1980s, when I first entered the home building business, it was not customary for Houston builders to coop their sales with professional REALTORS®. Things were too good; builders simply did not think they needed REALTORS®. Then came the mid ‘80s, and those same builders were tripping all over themselves to attract REALTORS®. Those two extremes have evolved into today’s important marriage between two central players in the real estate industry.
Today our industry is going through a severe contraction. Builders and REALTORS® alike are experiencing difficult weeks as we spend more time with fewer buyers who have increased expectations and decreased budgets. Now more than ever is the time for REALTORS® and builders to work closely together to put buyers in homes where they will be happy for years to come after the sale.
Buyers trust their REALTOR® to keep them from making a mistake, and to put them in a home that will feel as good about five years out as it did the day they moved in. If that happens, those buyers will refer their friends and family to their builder and their REALTOR®; and without hesitation they will call their REALTOR® back when it comes time to sell their home.
Builders need professional REALTORS® who understand this changing market, know the difference between buying a beautiful and valuable home, and buying a “deal.” If it was a deal when they bought it, it will probably be a deal when they sell it. The best homes in the best neighborhoods by the best builders are not the “deal” some buyers think they want, but those best homes have proven record of appreciating in value through the good times and bad. A depreciating $300,000 “deal” is not as good as an appreciating $350,000 home. Helping clients understand this concept is what makes a REALTOR® a true professional.
The best builders and REALTORS® count on referrals from happy customers to make each year better than the last, to build a reputation and a sustainable business into the future. Houston’s market will recover and the best builders and the best REALTORS® will survive, and then thrive. The best builders and REALTORS® will get through this by supporting and protecting each other during these difficult times.
The correction in the Houston market will come quickly. Houston home appreciation and job growth has steadfastly remained positive, despite the national headlines. Actual sales are down, but model home traffic is already higher year-to-date in 2009 versus 2008! Surprised? Well it’s true. People have not stopped wanting a new home. That demand is patiently waiting for some green light telling them it is okay to buy.
At its peak, Houston “started” about 55,000 homes. In 2008 we “started” about 28,000. The interesting story in those numbers is that in the fourth quarter of 2008, Houston builders “started” only 4,200 homes. Four quarters of that and we will be down to “starting” less than 17,000 houses a year. Few industries have responded that quickly to a changing market. Combine that new home “starts” decline with a decreasing number of existing homes on MLS, and before we know it, we will be back to equilibrium. It will be a smaller, but healthier, home market. It can all turn that quickly.
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