Stimulus Checks: What Will They Mean for Real Estate in 2021?
Today, the last closing days of 2020, has officially gone through, so there's stimulus checks being distributed. Some of our employees at Market Maker said that they this morning already, the old $600 payments. What kind of impact is this $908 billion that's going out into the world. And what is that 908 going to do for real estate heading into 2021?
Impact of Stimulus Checks
When they start to pump money like these stimulus checks into the economy, the economy lights up and inflation happens. When they add money, the only way that they can suck the money back out is through interest rates.
That is a very likely scenario in the foreseeable future. During the financial crisis, there were a lot of fundamentally wrong things with our economy. This economic position almost artificially created because it's due to shutdowns that are through government mandates. Once those restrictions are lifted and everybody gets the vaccine, we're going to see hopefully a return to normalcy. But now we got all this money pumped into the economy, so what then?
Like a business, if you are able to front that money that you don't have in your account, at some point it has to come back. In real estate, the one thing that I have absolutely gotten to love about this industry is that no matter how things are going, how crazy up and down, left and right things are turning, the coolest part about real estate is that people got to have places to live, right?
The stimulus checks won't adversely impact because we still have the added lack of inventory as a significant factor. But one of the things that happen when interest rates go up is that monthly payments go up. Let's say of $1,000 that used to buy a quarter million will now maybe only buy $200,000. What happens to the price of a house? It has downward pressure on a house. It's going to be really interesting to see. Obviously, we're not economists, but you've got the inflation, which raises assets, which translates to lack of inventory, which I don't see changing in the near future.
What to Do As An Agent
If rates did go up because of the stimulus checks and did have some pressure on housing prices, What would you do as an agent? I guess would be the question, to make sure that your business stays healthy. The answer is the same thing that we tell you every single week: generate leads. Build a pipeline. Build your celebrity status in your community as the person who has the answers for real estate problems. Onward and upward, continue on because you can't control those things.
I've been watching more and more of people around real estate that have been talking heading into next year. Because you rewind back to March when stuff was shutting down, and it was the full-out panic mode. If you would've told everybody that from March until right now it would be the way it is, where inventory is low, stuff was on fire, everyone is getting stimulus checks and just buying like crazy, like new construction continuing to happen, like if you would have told people that, they would have been like, "Yeah right, and the pandemic is still going on? Yeah, right."
There are all kinds of red flags to be raised, but there's also stuff to be excited about rolling into this year. People have their pockets a little bit more flush with cash because of the stimulus checks, moving is more of an option. Getting that lake house is a little bit more of an option, you know what I mean? Like there are people still winning like crazy in times, even though there are a lot of people struggling.
Encourage Your Clients
Real estate agents, they should be winning like crazy right now. I think the best thing that you can do to guide people is encourage them to make the purchase. Encourage them to get the fixed-rate, encourage them to refinance if they were on the fence. If you were on the fence to refinance, and you're trying to time it, I'd say lock it up. I'm going to try to lock up my stuff in the probably first quarter or second quarter of '21, just in anticipation of the strong possibility and likelihood of rates going up, it's another plane that they're pumping.
I think we can speculate all we want, but we know for sure that owning the asset is a benefit. It's a hedge against inflation because it's fixed and it's a hard asset. Now is the time to be conservative with rates and make sure that you refinance or make the purchase and get the 30-year fixed at 2.375.
When I first started, I had an amortization book, we didn't have smartphones obviously, and it started at 5%. That was the limit, that was the lowest that you can even get.
It's just fascinating what I was looking at, something somebody shared recently. It compared what normal has been for us the last 10 years, interest rates, home payment, and what you could buy now versus three or four years ago. It is pretty significant how much more you can get for the same cost because of how much real estate is gone. Again, welcome to real estate and business, like everything's cyclical, it's going to come back up. When they pump money with things like the stimulus checks, it's just more sure that that's going to happen sooner rather than later.
Have a Learner's Mindset
Again, we're still in the middle of a pandemic, and you got all these things going on. But the most important thing is having the learner mindset that you need to have to be successful. If you're not reading about this stuff, to be able to help your clients make educated decisions about buying and selling and timing and all that fun stuff, you are doing yourself a disservice. More so you're doing the clients that you have a disservice. Buying a house is one of the biggest investment that they'll ever make in their entire lives. You have to do your due diligence to just stay up with what's going on because things are always changing. You've got to know what kind of impact that has for the real estate industry going forward.
You should be watching stuff like this, you should be reading articles. You should be doing that every single day so you can make sure that you're adding as much value as you possibly can every time you come into contact with anybody that that might need your help. Maybe use your stimulus checks to get access to some valuable assets!
Learning on Demand
You can look at the low spots in my career consistently, and they center around me disconnecting, thinking that I know everything.
It's a challenge, and the way to avoid that is learning on demand. Whatever your obstacle is in your business, immersing yourself in that, learning about that in order to maneuver around it.
If you look back at the recession, a lot of people were able to switch gears, jump into short sales, jump into whatever was fashionable. Those are the people who are always at the top of whatever they're doing because they understand that the only thing that's constant is change.
It's never fun when you're going through the change. But it's very satisfying when you look back, and you're can see the journey. You can see that if that hadn't happened, then this wouldn't have happened, then I would've never met my wife and lived happily ever after, type of thing. You just don't know where it's going to go, but if you stay the course and you invest in yourself you will see the difference.
Learn the Steps, Make the Cookies
I saw an agent that I hadn't talked to in a couple of months. She just signed up for a new coaching program. I heard her say the words, "I don't know, I'm just so confused," roughly 15 times in a 10-minute conversation.
This is kind of the problem with where we're at right now. Especially in real estate, because you have people coming at you from all directions. People like us telling you one thing, and people that have had success in real estate telling you another thing. It's just so noisy that you have to have that clear plan and do things one step at a time.
For example, if you try and make chocolate chip cookies out of order, they're not going to come out right. There's a lot of priority confusion out there. It's hard for us as to give a step-by-step, because everybody's at a different spot. You have to understand the fundamentals.
For example: If you don't have a business, it's a lead problem. There's a lot of ways to solve that, pick your poison.
If you've got a bunch of leads and you're not converting them, then it's a conversion process.
If you've got them and you're converting them and you really don't have time, then it's a growth and growing a team challenge.
Have a Vision
You have to have the vision first. What do you want your business to look like? That will propel you to get there more than anything. You can't just say, "I want to be number one," or, "I want to make $1 million a year". I mean you can, that'll help you, but how? Do you want to multiply yourself through others? Do you want to be the one-armed paper hanger and just busy as can be?
Everybody that I've ever known that's had success in real estate has always had a clear path laid out. It goes back to the conversation we had with Ryan a few weeks back. You asked him, "What's the key to making agents on your team successful?". The number one thing, the first thing that came to his mind was proof, like, "Here is what's going to happen if you do these steps," you know what I mean?
Planning Promotes Belief, Belief Motivates Action
Once you have belief that you're going to accomplish your goals by doing these things, you're so much more bought into each step that you're taking. As opposed to running and sprinting 30 yards this way, being like, "Oh, wait, is that the way to the finish?
You really, really have to focus on the plan, buy into the plan, and execute the plan. Have it laid out so you don't have that hesitation, which I believe is that information overload.
Then you know what to ignore too. One of the things that was really good for me is understanding what I want so that I can stay away from what I don't want. Once I had a path, I could start ignoring the elements that didn't advance me on that path.
There's another story that I love, about a soldier in battle. The president needs to get a message through to someone named Garcia lost in the jungle. They had no idea where this person was at, but they knew the general vicinity. Someone turned to the president and said, "If you need to get a message to Garcia, you need to pick old Rowan here. If anybody can do it, Rowan can". He was told what needed to happen, not necessarily how it was going to happen, but he figured it out.
Learn From Successful People
LinkedIn is one of the most powerful places on the planet. You've got all kinds of people that connect with you, people in real estate that are where you want to be that would actually talk to you. But guess what? They're not going to friend you and ask you if you needed their help today.
I reached out to a lot of guys in the real estate business, and I was shocked at how many of them responded, "Yeah! What do you need?"
When you have a goal and you are unclear on how you can accomplish it, it does not take a whole lot, it just takes you being a little bit of a Rowan. Be a Rowan to go figure it out, because no one's going to be coming to you. All you have to do is pick up the phone a few times.
You can put yourself in situations where you can talk to people. If you reached out to me on Facebook saying, "Hey, I got some questions to find out what you did in your real estate business," I would be so excited to help.
If you reach out to me, you might regret it because I won't stop talking about it. I love talking about it, I love helping people. I think everybody who has reached a certain level of success feels the same way. Yesterday I'm eating lunch by myself, I hear these two guys talking about their business, and one guy just got equity capital. I just walked up and said, "Hey fellas, I overheard you talking about this," and the guy was like, "Oh man, yeah, I'll help you, give your number, let's connect."
Hey, if you want some help with this stuff, click here, to start 2021 off right. Find out how we generate leads for you, nurture those leads in a way that'll help get your status and authority in the mind of those leads, and then ultimately deliver them to your calendar as a prepositioned appointment.
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