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While no one has a crystal ball about what is coming in 2014, it’s pretty safe to assume that there will be new business models, exciting new technology and apps, plus a host of changes that no one could have ever predicted.
1. A flattening market in 2014
Real estate markets tend to run in 10-year cycles. To illustrate this point, the most recent downturn began in California in 2006, which began climbing out of the downturn in 2009 and has leveled off in 2013. If this market follows past patterns, look for this flat or transitioning stage to continue for approximately 12 to 24 months with the beginning of the next downturn arriving sometime in 2016. Since California is a bellwether state, the rest of the country should follow suit 12-24 months later.
2. Boomers seek sand and sunshine
Ice and snow are particularly dangerous for senior citizens, not only due to slower reaction times while driving, but also due to the risk of falls. Given the record snows and low temperatures in many areas recently, it’s easy to see why an increasing number of seniors are heading for places where there is no ice or snow. If the winters in 2014 and 2015 are especially cold, look for another major exodus to the “sand and sunshine” states.
3. “Gen rent” becomes entrenched
The churn in the Gen Y job market may not bode well for homeownership. Gen X and Gen Y often stay in jobs for a couple of years and then move on to something else. This appears to be especially true in both the creative and high-tech fields. This sense that your job is a relatively short-term proposition and that you may have to make a major geographical move to find your next job means that many of our young people will continue to be renters.
The downside of the churn in the Gen Rent job market means that it will be much harder for these buyers to obtain mortgages. Fewer mortgages mean fewer sales. This in turn could lead to a strengthening of the trend of fewer owner-occupied homes and more investor-owned single-family residences.
4. Employees give way to independent contractors
Many baby boomers are bumping into age discrimination. A common refrain among boomers is, “I can’t afford to lose my job — who would hire me at my age?” The upshot of this is that many boomers who retire from a long-term job or who have been laid off are electing to create their own companies or moving into self-employed careers such as real estate. This will translate into more private office space in the homes of tomorrow. It also means that many will be stuck in their current residences since being self-employed makes it extremely difficult for them to qualify to purchase.
5. Agent rating systems are ubiquitous
NAR and Realtor.com are already late to the agent review party. A few days ago LinkedIn announced a five-star rating system that you can use to rate anyone in your LinkedIn database. For the time being, Yelp is still considered to be the “gold standard” for ratings. Nevertheless, ratings shared by people in your LinkedIn database will probably be more influential than even sources such as Yelp, since the recommendations come from people you know and trust. Also, scamming LinkedIn will be much more difficult to do compared to other rating systems.
6. A new franchise brand launches with perfect branding and a super-smart business model
The real estate industry continues to create brands based upon people’s names rather than what they do: sell real estate. The most recent addition to this long-standing trend is Berkshire Hathaway Home Services. As one of their competitors put it, “We were delighted when they launched their real estate brand with a very 1980s look.” In 2014, look for a new franchise that nails the branding and will be highly attractive to up to 80 percent of the market.
7. New opportunities in often-ignored places
Even though NAR is predicting there will be 5.1 million residential sales in 2014, brokerages are scrambling to find alternative revenue models. Look for an increase in brokerages offering property management services, corporate housing services, plus charging agents for value-added services such as transaction coordinators or showing assistants.
8. Everyone’s an educator
Agents are bombarded daily with ads for webinars, e-books and other types of education designed to sell vendor products. Not only are the Realtor associations and continuing education providers in this game, we now have Zillow, Trulia, mortgage companies, and a host of other vendors all using this same model. Agents are sick and tired of all the email promotions and are looking to personal endorsements from people they trust as to what is worthwhile. Look for increased competition in this already crowded field, as well as a continued shift to more live events.
No matter what lies ahead, 2014 should be an exciting — maybe even unpredictable — year.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, “Real Estate Dough: Your Recipe for Real Estate Success.” Hear Bernice’s five-minute daily real estate show, just named “new and notable” by iTunes, at www.RealEstateCoachRadio.com.