RE/MAX Leader: Prepare for the Boom in New Home Sales.

RE/MAX Leader: Prepare for the Boom in New Home Sales.

While RE/MAX Chairman of the Board and Co-founder Dave Liniger is famous for building one of the world’s largest and most successful real estate brands, he’s also renowned for his expertise in being ahead of the curve on key market trends. The next big wave in real estate, according to the industry icon? New-home sales. But capitalizing on the new construction market of today will require an updated set of skills to meet the needs of a new demographic. “It’s essential for everyone to recognize that you can’t do today’s business with yesterday’s methods and expect to be in business tomorrow,” says the straight-talking Liniger in this exclusive Power Broker Report interview. Find out what’s driving the new-home boom and how to best meet the impending demand.

Teresa Walsh: What do brokers and agents need to be most aware of regarding the significance of new homes in today’s market?

Dave Liniger: About three years ago, Fortune Magazine ran an article about the new construction business, and they were right on the money. They talked about the challenges facing builders at that time, but also predicted a turnaround where there would be dramatic, long-term growth in new-home building.

For brokers and agents, now is the time to prepare for the changing face of the real estate market. New construction will experience robust growth for the next decade and account for a significant amount of our business. It’s important for real estate agents to expand their skill set to support new-homes business—to be well versed in the details of new construction and how to work professionally with builders and new-home buyers.

TW: What’s driving the current boom in new homes?

DL: As you know, everything in our business is driven by supply and demand. One factor driving this increased demand is household formation, which ran at historically low levels during the downturn. These numbers are now picking up substantially and are expected to exceed more than one million in 2013 and into the future.

We also have an increase in population growth as immigration continues, with a large number of these individuals and families buying homes in their first year. Some of these are homes that house multi-generational families, creating a demand for housing designed to meet their needs.

At the same time these factors are driving increased demand from buyers, we’ve been experiencing a shortage of inventory in many markets across the nation. Although we expect more sellers to come back into the market over time, there is an undeniable need for builders to pick up the pace and deliver more housing of numerous styles and price points. The dramatic increase in housing starts we’ve seen over the last several quarters are clearly substantiating this – and demonstrating the beginning of a new homes boom.

TW: How does new construction impact the overall real estate market?

DL: New home business has always been important for resale—there’s clearly a relationship between the two. Our ability to help buyers across both areas attracts more buyers overall. Think about buyers today who are throwing their hands up in the air frustrated because they can’t find existing homes to meet their needs. They’re competing with multiple offers and investors coming in with cash. In many markets we find very tight inventory, so new homes offer a compelling alternative.

TW: What advice would you offer for success in the new market of today and coming years?

DL: It’s essential for everyone to recognize that you can’t do today’s business with yesterday’s methods and expect to be in business tomorrow! You need to adapt—and any competitive edge you can get is important.

What are the competitive advantages you can get to create more business? You can find ways to increase your market share—you can build a brand name—and you can gain skills from education.

Builders are beginning to prosper again, so agents absolutely need to make sure they are prepared and arm themselves with education in new home sales. I’m very enthusiastic about new homes and urge everyone in real estate to prepare for the boom in new home sales.

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