Every now and then I come across an article of interest and whilst the words have changed a little the context remains the same .....Across the globe, these past months have been surreal for us all. Indiscriminately, every country, economy, sector and demographic has been profoundly impacted. With no precedence, we sit and observe. In following the rules and supporting the front-line workers, we are building a stronger sense of community and appreciation. People seem more connected, more willing to help and hyper-focused on moving forward.
We all are facing the same unknowns each day that we wake up. But over bumps and potholes, through the seemingly impossible, our country is forging ahead. I accept and appreciate the position I am in. Because now is my time to do what I do best: to be grateful, to lead by example, to be optimistic, to support my team, and to work even harder for our clients.
I would like to take a few minutes to assess where we currently are, but also to build optimism for our future.
I’ll ask you to think back to the last time you were in a traffic jam on the highway. Do you remember how you felt? Your GPS suggested that there was an accident ahead, but you couldn’t see it to confirm. Frustration built as you would be late for your appointments with clients. Business would suffer. The thought of your competitors, unstuck, caused great anxiety. As you inched ahead, frustration likely turned towards gratitude and concern. This could have been “me" ... "my family” ... or "my friends.” You prayed that everyone was okay and not badly hurt. Emergency workers had arrived to do their jobs. The slow crawl then gave way to an open road. You hit the gas and restarted your day. You were fortunate to have another day. You continued onwards to make up lost time. But did you really give it your all?
ROBERT FROST TOLD US
“The best way out, is through.”
The data has been shocking. And much of the data are lagging indicators. In the US, 6.6mm have people have filed for unemployment the week ending 4/3. Over the past 50 years, the average weekly claims have been just 350,000. 100 countries now have travel restrictions. Confusion among experts exists. BOA estimates that Q2 GDP will fall by -12%. Morgan Stanley estimates by -30%. The WSJ predicts -25%. The March unemployment rate was 3.8%. The latest WSJ survey predicts 13% by June. Against February, economists believe a total of 14.4 million jobs will be lost through May. In March 2019, the WSJ study showed a 25% chance of a recession; their reading for last week grew to 96%. Despite equity markets showing recent signs of life with deceleration in CV19 cases, the S&P is still down -17% YTD and down -27% from 2/19 highs. The FTSE100 is down -24% YTD.
The Federal Funds rate is now 0.00-0.25%, the lowest level ever recorded (along with 2008). While rates for banks and companies to borrow will remain at historical lows, individuals may face tighter lending requirements. Closing windows may lengthen temporarily and mortgage rates may lag the treasury market due to high backlog with the lenders. Refi applications are now up 168% y-o-y. Once the backlog clears, we will watch demand technicals as CV19 is more controlled. Buyers and sellers will likely both exercise caution, and to be honest, no one knows what to expect going forward. US homes sales fell -15.7% the week ending March 28, according to Realtor.com’s March Housing Trends report. Newly listed properties fell -34%.
Just this morning, the Federal Reserve demonstrated their ongoing commitment to supporting our financial markets. This will have meaningful impact on the real estate sector. The $2.2 trillion in support will provide relief to both smaller ($376bb) and larger sized businesses. $600bb (loans up to $150mm) will be set aside for businesses with up to 10,000 employees and $2.5bb in annual revenue. The Fed will also now be able to purchase both corporate investment grade and high yield bonds. These measures have not been taken before. The Fed will also stand ready to buy or support state and local issuers in the municipal bond market should the need arise. Thematically, the Fed is all in on support and stabilization.
The majority of these measures are without precedence. The Fed is posturing to build confidence in America's workers and businesses. Our industry, too, will benefit from increased financial stability. It will allo.w us to best serve our clients and our market in the rapidly changing weeks and months ahead.
There are a few observations I would like to make. We are all going through this together, and it’s very touch and go.
Taught us, as salespeople, to diversify income. We should expand businesses to capture multiple revenue streams. We learned that while we had no control over the big banks, we did have control over our industry’s response. More than ever, we need to make ourselves recession proof.
Taught us that diversification of location is critical and natural disasters happen. In our markets, we learned that density and over-concentration holds great risk. More than ever, we need to make ourselves disaster proof.
Is teaching us that illness, bio-terrorism, and other health crises can be the ultimate socio/economical disruptors. They are often unique, invisible and untested. Right now, alongside all industries and all businesses, we are working to become “illness” proof.
We are making decisions on the fly. Mistakes will be made. Mistakes, corrected, result in growth. But there will be great successes too. We will brainstorm with and support our clients. We will find unique ways to find both buyers and sellers solutions. We will champion a model of value-added services; those who do not will likely perish. We will expand data and technology platforms and systems internally while protecting our industry from imposters (the markets may even do away with imposters for us, as we’ve seen over the last 21 days). We will become even more kind and understanding of our clients' needs. We will be more patient and supportive of our staffs. We will take pride in knowing that our client’s investments are dynamic. We will help them to diversify and create substantial returns on their capital.
I don’t know about you, but I’ve been on the phone with all our clients from 8 AM to 8 PM, Monday through Friday, since March 16, and I will continue to do so until this passes.
Our industry is no stranger to adversity. More so than ever, we must leverage our past successes to serve our clients today. These are uncharted waters, and the tides will come in and out. Market patterns will be less discoverable. Commissions may be inconsistent. Supply may underscore or outpace demand.
But our clients will demand the best of us, and we must appreciate their uncertainties as well. Throughout time, the common denominator in successful business is prodigious customer service. And until there’s a “tech” that enables a house to sell itself to another house, there will be no “tech disruptors” in the real estate business that can, or will, replace the vital human customer experience needed to consummate a transaction.
The next decade will be defined by “we," not “you,” “me,” “I," or “it." What we do together, elbow-by-elbow, with gratitude and compassion for one another, will determine our fate. I am confident that if we lead with energy, effort and compassion, that we will make our mark for years to come.