Real Estate Trends Session 2008

Good Morning Ballantyne

“Any type of real estate market is always good for someone.”

Current Trends in Real Estate

• CRRA Trends Session facilitated by Jerry Matthews– May 7th and 8th – 8 presenters via teleconference and visual aids– CRRA/CMLS Officers and Directors

• 2008 Candidates

– An opportunity to interact with some of the most sought after “influencers” in the real estate space.

– Preparation for the Strategic Planning Retreat, June 18th and 19th

“Real estate professionals may need to rethink their assumptions in order to be sure they are still providing services that their customers want.”

“Real estate professionals may need to rethink their assumptions in order to be sure they are still providing services that their customers want.”


• Member Survey– 11,157 surveys, 2,041 responses = 18% response rate

– Significant observations:• “My membership in CRRA provides good value for me.” 71% Agree or

Strongly Agree– 12% of Brokers (non-owners) Disagree or Strongly Disagree

• CRRA keeps me well informed on government actions that affect my business.” 77% Agree or Strongly Agree

• 27% of members made $20,000 or less, 37% made $30,000 or less• 20% of Salespersons made $10,000 or less, 33% made $20,000 or less,

and 44% made $30,000 or less.• Members making $20,000 or less have household income of $40,000 or

more• Members making $30,000 or less have household income of $60,000 or

more.


• Member Survey– Significant observations:

• 45% of members have been in real estate 5 years or less• 67% of members have been in real estate 10 years or less• 53% of salespersons have been in real estate 5 years or less and 73% have

been in business 10 years or less.• “CRRA’s stance on political issues represents my point of view”, only 44% of

members Agree or Strongly Agree. 17% of Broker/Owners Disagree or Strongly Disagree.

• “Volunteering for CRRA is important to me”, 21% of members Agree or Strongly Agree with 21% Disagree or Strongly Disagree. 58% are neutral.

• 61% of respondents and 64% of sales associates are female.• 73% of respondents are sales associates.• 52% of respondents are Republican, 28% Democrat• 42% of respondents are with single office firms and 71% are in firms with 5

or fewer offices


• Member Survey– Significant observations:

• Highest rated services: MLS, CSS, Professional Standards, Code of Ethics, Education, Professional Development, Public Awareness, Realtor image campaign

– Comments• “new square footage range is unprofessional, inaccurate, and driven by lazy,

incompetent agents”• “Tempo MLS is antiquated and not really web-based. Not compatible with

devices and software today…”• “CSS not efficient or responsive in timely manner. Service and fee were

forced on membership.”• “CRRA dues and MLS fees seem high compared to contiguous

Associations.”


• John Tucillo, Ph.D., JTA LLC, consultant• Credits:

– Former Chief Economist for NAR– Clients; FNMA, Microsoft, FNIS, GMAC, PREA, Re/Max, Cendant, Ellie Mae– “Eight New Rules of Real Estate”, “Click and Close”, “New Business Models for the New

Economy”

• Next 2 quarters 1% growth in economy

• Real income fallen 2% since 2006 (hidden by home equity piggy bank)

• 2009 economy will recover but with inflation!

– driven by commodity prices, weak dollar, liquidity crisis

– Long term rates will rise 2%

• Pent up housing demand will begin to emerge in 2009

• Demographic trends will shape housing going forward

– Understand generational differences

– Watch how consumers use technology

• Going forward emphasis will be on “managerial talent”


• John Tucillo, Ph.D., JTA LLC, consultant– How to spot a turnaround market:

1. DOM begins to fall

2. Sales price to list price going down

3. Drop in new listings

– Generational differences affect real estate business• Boomers: little distinction between work and personal life

• Gen X: give me what I want…now!

• Gen Y: gotta be me!, get a life

• Real Estate must change the way the business is conducted– Lots of implications for Boards of Realtors

• Get younger faster! Go where the consumer is going…it’s expected!

– Consumer is more and more ahead of the real estate professional in pushing the envelope of technology.


• Stephan Swanepoel, Futurist– Credits: Swanepoel Real Estate TRENDS Report, “Real Estate Confronts Reality”, “Real

Estate Confronts the Future”

• CEO Realty U, Inc., CEO iSucceed, Inc., CEO CreateAPlan Inc.

• Top 10 Trends10.Shattered Glass (women, youth, minorities step up to leadership)

9. Thought Reform (DNA of the “new” real estate professional) (transparency)

8.Clash of the Titans (big get bigger…common good?)

7.Tug of War (niche models…The Long Tail)

6.Gone in 60 Seconds… (data theft is rampant)

5. Search for Productivity (agent productivity continues to fall despite technology)

4.Four weddings and a funeral (the future of MLS?)

3.New digital economy (evolution of the web…Web 2.0)

2.Pop goes the weasel (bubbles burst!)

1.Two worlds, One history (online communities, blogs, wiki, social media)


• Justin McCarthy, Google Strategic Partner Development Team– Credits: formerly with DoubleClick, General Manager, Entertainment & Travel

Networks, NY Times and Hartford Media, BA English Trinity College• 250,000 real estate searches per hour = 6,000,000 per day = 21 billion per year• Google attracts 60% of all real estate searches and 36% of all agent or broker

searches• Google Base; view listings directly as opposed to going to Broker/Agent sites

– Mapplet interface with social overlays (Google Gadgets)– “Permissioning” (getting free content feeds)

• Virtuous User Cycle


• Ed Krafchow, Pres. Prudential CA/NV/TX Realty– Credits: 5,000 agents, 139 offices, $14 Billion sales, 8th largest privately held

company in USA• Stop trying to “train” the customer• No industry ever re-invented itself in an “up” cycle• We’ve become “generalists”

– New appeal is to the niche markets, • “specialists” starting to prevail

– Are you prepared to niche down? • Positioning is key!

– Can you meet the experience expectation?• From “content” to “context”

– From text to mapping, Google Earth is “contextual”– Crafting the consumer experience…less onerous and more like entertainment

• What is the secret to Car Max’s success?

– Where does the professional sales associate fit in this picture?


• Ken Jenny, CEO TranCen.com, consultant– Credits: former Sr. VP PREA, COO Coldwell Banker, NA

• “In times of change, it might be a good time to change.”• Market goes normal (60% of the old market is still there)• Cycles are a reality and predictable• Lending with Caution! (lax lenders penalized)• Consumers freeze! (industry adopts a “deer in the headlights” posture)• Painfully operated brokerage (many sins uncovered, kingdoms expensive to operate)• Industry shrinkage (it’s all about the math!)• Media evolution (online, offline vs. inline) consumers transition speedy• Enie, meanie, minie, GO!

Internet calls are not LEADS!• The never ending transaction: taking

customers for life to a whole new

level.


• Shannon McIntyre Skousgaard, Ph.D., George Mason Univ– Credits: US Chamber of Commerce, NAR, IBM, Xerox, AT&T, German Marshall

Fund, “Decision Making for Incompetent Persons: The Law and Morality of Who Shall Decide”

– “We are what we repeatedly do.” This is our culture. – In Western culture all persons have infinite worth and dignity.– Integrity is the foundation of culture– What is a Profession?

• Body of knowledge• Knowledge that serves the good of individuals and the common good• Standards of excellence are elected and set by the practitioners• These standards are enforced by the members

– If the standards are not enforced by the group…someone else will!


• Shannon McIntyre Skousgaard, Ph.D.,

Knowledge, skills(short term)

Ethics (long term)


• Richard Mendenhall, Chairman International Consortium of Real Estate Associations

– Credits: former President NAR 2001, owner three real estate offices, family business since 1894

• Is the Realtor at the center of the transaction?– “The Realtor must be at the center of the conversation, not the center of the transaction.”– “If you wait until the transaction, it’s too late. Consumers are establishing relationships earlier online.”– A trusted advisor is at the center of the conversation about real estate well before someone lists or buys.

• “Get your mind right!”– $36 billions spent annually on our pets, $1 billion spend annually on cancer research

• Information is the oil of the New Economy!• Separation of Board and MLS for tax purposes deters us from evolving new data

strategies• Future of MLS being defined right now…property data will be aggregated, if not by

Realtors, then by __________.• From “sales associate” to “business associate” (think “Trusted Advisor”)• No one can drive into the future on cruise control!


• Richard Green, Ph.D., Oliver Carr Chair of Real Estate Finance and Professor of Finance, George Washington Univ.

– Credits: Ph.D. University of Wisconsin, Economics, AB Economics, Harvard, A Primer on US Housing Markets and Housing Policy

• Movement away from government-guided mortgage systems to market-based systems

• Monetary policy fights inflation; nominal interest rates fall• Mismatch of deposits location to housing need• ARMs to the rescue in the 1980’s• Corruption of the Secondary Market during the 90’s and beyond. No regulation!• Who will buy this “crap”?• Mortgage securitizers have no skin in the game• Lessons learned:

– Mortgage markets linked to capital markets function better, but with regulation– Stability of economy crucial to stable mortgage market. Deficits kill!– Underwriting is key! Must be accurate & responsible. Get skin in the game!


• The Cycle of Change– “No one needs a reminder that this is a cyclical market. But it’s

important to understand that changing conditions present opportunities to reexamine your business model and define your own future.”

Economy & Finance

Real Estate Trends Session 2008