Each year, Inman gathers a group of top real estate leaders to discuss the industry’s challenges and predict what the future holds for real estate. Inman’s report is a must-read for mortgage lenders and their sales professionals. Although 2030 seems a long way from now, it is right around the corner in terms of business strategy. It is clear that the mortgage landscape will be dramatically different in 2030 than it is today. Unfortunately, some lenders and originators will not survive because they failed to adjust to changing market conditions fast enough.
I want to highlight three predictions from the report that I think are especially relevant for mortgage banking professionals:
- Half of all purchases in 2030 will be made using alternative methods of financing. The top executives believe that 50% of home purchases will be alternative transactions. Anything other than a cash offer including financing contingencies will be viewed as subprime. They mentioned that in 2021, 23% of buyers purchased homes with cash.
- Real estate brokerages will lean into ancillary services. Real estate commissions are being pressured by low-cost providers and as a result, brokerages will need to boost revenues with ancillary services. The services mentioned are mortgage, title and relocation services. The group contends that offering these services will not only generate income but will also make their firms more valuable in the long run. These additional products will make the homebuying transaction seamless.
- Real estate agents will become financial advisors. The top real estate group believes that homebuyers are knowledgeable about properties. Thanks to Zillow and other real estate websites, consumers can find everything they want to know about a property, neighborhood and taxes – with the click of a mouse. Consequently, the traditional role of a real estate agent as the gatekeeper to the MLS will not be as relevant as it once was. Homebuyers will seek out Realtors who can help arrange financing and provide advice about the best financing options to pursue. The Realtor role will become more expansive, according to the group of executives.
I haven’t even mentioned some other predictions that the group made including the rise of the metaverse; co-ownership that is not linked to direct family members; and services that make it easy to find co-owners. The last prediction is that video data about listings will also include audio — listings will talk to potential buyers!
One of the top priorities for real estate leaders in the coming years is to make the homebuying transaction easier. Companies are not standing still on this issue, but are investing in making the process smoother and easier than ever.
What this Means for Mortgage Lenders
After the last few years where loans were plentiful, now we are back to the traditional purchase money marketplace. On top of the product shift, the industry is experiencing rising interest rates and limited inventory. All of these issues have been faced before but now, consumers have access to unlimited information on lenders and their originators. It is the last part that is the real challenge for lenders that may no longer have protection from other industries stepping into their business lines. As a result, competition is coming from the very group that has been providing leads to mortgage lenders’ sales staff.
This is new territory for mortgage and financial services companies that previously operated in their own lane protected by regulations. Now, the lane is widening into a freeway with more competitors coming in from all sides.
But even with the inevitable changes, shifts and increased competition the future may hold, a successful homebuying transaction will still depend on an interaction between a consumer and a knowledgeable advisor. In my view, the success of every sales organization will come down to how well that interaction is handled.
Is your sales group ready for the fight to win in 2030?