The real estate industry is bullish going into 2016, according to an Inman survey of its readers. With economic and housing market signs pointing up, the vast majority of the 163 respondents are optimistic about the economy, the housing market and their own success this coming year.
This confident mood is pervasive despite a general sentiment that interest rates will move higher and that global events are uncertain and even threatening.
And we will cover all of these issues and more at Inman Connect New York later this month.
Are you optimistic about the 2016 economy?
Sixty-six percent surveyed said they are either extremely or somewhat optimistic about the US economy.
As one respondent said, “I believe and feel the market is making a good, slow, and steady recovery.” That sentiment explains why almost half of respondents are “somewhat” optimistic, while 20 percent were “extremely” optimistic and another 20 percent were on the fence. Eleven percent of respondents were pessimistic about the 2016 economy.
One respondent said, “with everything going on, I am just not sure what will happen in 2016.”
Are you optimistic about the 2016 housing market?
Predictions about the housing market in 2016 are equally bullish, with 30 percent extremely optimistic and 42 percent somewhat optimistic. Only 6 percent are somewhat or extremely pessimistic.
What accounts for this optimism? One respondent explained it this way, “After being somewhat reserved in my optimism in 2015, I do believe that 2016 will be very good. If interest rates continue to be under 6 percent, shadow inventory remains low and in check, unemployment remains under 10 percent, local economies continue to strengthen, and inventory is adequate, consumers will have the confidence to get off the fence and make their moves in purchasing and selling.”
Are you optimistic about your 2016 success?
Personal confidence in their own success was extremely high. Almost 70 percent of respondents were extremely optimistic, and 23 percent were somewhat optimistic.
One respondent said, “new tools make it easier to be successful these days.”
Many shared the sentiment of one respondent, who said, “I have the experience to navigate through change.”
That effusive spirit is generally the attitude of many commissioned real estate professionals, who often have only their positive attitude to persevere through the ups and downs of the industry.
Are you planning to expand, contract or maintain your business in 2016?
With that confidence, the vast majority of those surveyed plan to expand their business in 2016.
What are you worried about?
Spread across the United States, respondents offered a litany of issues that they were concerned with, including terrorism, competition, big upticks in interest rates, shortage of inventory, a slowdown in home price appreciation and their own personal quality of life.
The responses were almost an equal mix of the externalities that respondents cannot control — like global unrest — and the ability to execute personal business plans.
“Sometimes I get overwhelmed with all I must do to be successful,” said one respondent.
Another described it this way: “I’m worried about technological fatigue — where people get so tired of having new technology stuffed down their throats every five seconds that there’s a backlash. I’m worried that people will continue to not allocate enough funds toward investing in their online presence and all that entails. I’m worried that keyboard warriors will continue to have their days in the sun.”
Others were philosophical: “I’m worried that people will get so caught up in the continuous rush of negative news that they forget how to be human beings to each other (and they forget all the amazing attributes of being human, including empathy and forgiveness).”
How much do you fret about global events?
Global events are not lost on the respondents, with 64 percent fretting “a little bit” about these issues and almost 20 percent worrying a lot.
“Because real estate is no longer local, it is global. When I entered real estate in 1989 it was all about selling a home in a specific neighborhood. Now the events in the Middle East, international oil prices and the economic downturn in China among other factors now affects my market,” said one respondent.
Said another way, “I feel that everything that happens globally affects everyone. I feel this way because technology has made our world a very small place and as a result, news travels faster.”
Others tried to put global events in perspective. “It’s good to be concerned and educated about these events, but I’m not going to waste time on things I can’t change.”
Will mortgage rates go up or down in 2016?
Those surveyed were realistic about where interest rates are headed.
A vast majority of respondents believe interest rates will go up, while almost 30 percent did not expect them to “move noticeably either way.”
Will unit sales go up or down in your market?
There are high expectations that were be more home sales in 2016, and respondents were even more optimistic that home prices will continue to rise over the course of the next year.
Will home prices appreciate in your market in 2016?
Will agents be more productive in 2016?
The majority of those survey expect agents to be more productive in the coming year. Almost 70 percent leaned toward productivity and gave technology the nod as to why.
“More agents are being introduced to technology tools and services to help make their business more efficient,” said one of those surveyed.
“There are more and more off-the-shelf tools available to agents to increase their productivity and move the bar of top producers and their teams from an average of 7-10 transactions a month to 10-15,” said another.
And to do so, agents must invest.
“Only agents who invest in their marketing and lead generation will see increases in production.”
Productivity is also related to how agents organized their business, how focused they are, what they emphasize in their business and the the more active role consumers play in the transaction.
“I think agents are focusing more and more on working smarter, not harder. I think the increasing abilities of the consumer to be able to do things by themselves in the housing market challenges agents to prove their worth, and thus will make them more productive.”
To keep up, agents must restructure how they work. Part of this shift is driven by change as more agents give up working solo and begin to work in teams or even move away from the business.
However, some of those surveyed emphasized traditional approaches to the business.
“I think many agents are too focused on the wrong things: leads and funnels, rather than relationships. This will be a year of transition for many realtors. Some will get out of the industry, others will learn to adapt, but the adaptation will take time.”
Others predict an industry shakeout:
- “Agents either have to be more productive or exit the industry. The in-between is disappearing.”
- “As the business changes, greater skill levels to compete, survive and thrive will be needed. People skills, increased technology usage by buyers/sellers/agents, communication and overall business knowledge will push the bar higher for all residential players. Excellence is no longer optional to remain competitive.”
- “A lot of baby boomer agents who were really successful as single agents have been struggling. They will retire. Teams will grow as a result.”
What will be the biggest source of real estate leads in 2016?
Speaking to the caliber of agents surveyed, almost half expect the bulk of their business to come from referrals, and only 16 percent said most of their business would come from Zillow or realtor.com. More than a third depend on “other sources.”
What will be your biggest challenge in 2016?
Market conditions, recruitment, technology adoption, lead generation and training are identified as the biggest challenges for many agents. But the challenges of this very diverse and fragmented industry are many.
- “Systems to handle increased volume and ensure top-notch client experience.”
- “We have added several new technology tools for our agents to use and the challenge is reaching all of our agent populations with training. We offered more than 160 live training events in 2015 and will exceed that in 2016. We also train through webinars and recorded videos, but we still find it challenging to ensure that every broker receives the information.”
- “My biggest challenge is always ignoring the irrelevant chatter that goes on in the industry. Too much focus on portals, the next shiny object, lead generation and content marketing. Not enough on how we can better serve our clients. It triggers my need to respond and make my case and that distracts me from focusing on my clients and on the agents who seek my help in living more fulfilling lives.”
The most frequently identified challenges are below:
Will the Broker Public Portal be launched in 2016?
Those surveyed did not have many strong opinions about insider industry issues, like the Broker Public Portal or the Upstream project — nearly 20 percent were not familiar with these big broker initiatives.
Only 10 percent said they thought the Broker Public Portal would get off the ground this year, 22 percent said it would not, and half of those surveyed were not sure.
Will Upstream be launched in 2016?
Upstream followed more or less the same sentiment as the Broker Public Portal, with 20 percent expecting it to be launched this year, 20 percent saying it would not and 41 percent unsure.
What are your technology predictions for 2016?
Inman readers have an interesting and diverse view of technology and what role it will play in real estate. Here is a cross-section of predictions (and frustrations):
- “The portals will advance their foothold.”
- “With the Consumer Financial Protection Bureau launching a pilot program for a start-to finish electronic transaction, there will be less dependence on ink signatures, and physical closings will obliterate outdated, antiquated real estate contract systems.”
- “Technology will continue to get cheaper, but only the agents that can appropriately leverage new tech and innovative approaches will actually benefit. Large brokers and franchises are finally seeing that their value proposition is less about brand and more about service to the individual agent and providing sources of business for agents unable to prospect for their own.”
- “A wider embrace of video and more mobile-based technologies being released for existing platforms and new technologies both.”
- “The technology will continue to focus less on real estate and more on the big data that everyone is clamoring to get their hands on.”
- “I think we are slowly entering a new era in which people are realizing the harmful effects of our always-online world. Slowly, people are beginning to understand Internet addiction and the real cost to our culture and economy caused by the lack of presence. It’s already happening. It is far from mainstream, and many people in the real estate industry will continue to ignore it while lighting the fires of ‘content marketing’ and ‘social marketing.’ We are in an age of content overload. What clients want is real connection and a filtering of the content. Technology must be used as a bridge to help us better serve clients.”
- “I have been studying online social networks since the mid-1990s (when Usenet groups were popular). In 2015, a concussion forced me off of technology for a long time. I took a four-month break from Facebook. I stopped checking email so often. And I had my best GCI (gross commission income) year ever. I’m not a technophobe. I love my technology. I just believe that we need to be focused more on the relationships and service, and less on the portals and platforms.”
- “More real estate ‘disruption’ attempts from technology companies.”
- “Auto-management of viewing properties with auto-mapping for the daily viewing schedule.”
- “Augmented reality will become a part of the real estate industry. The investor will be able to see his future building and site as it is being built, as if he is standing right there looking at it.”
- “More self-showings without agent, better apps that allow buyers and sellers to save time and connect more efficiently.”
- “Content is the kingdom — it’s not about the fancy new product, but it’s about how defined and personal your content marketing is.”
- “Technology that will allow for more transparency with real estate transactions and access to data to make even more informed decisions.”
- “As we continue to be more mobile and paperless, I would hope that at some point our closings will contain a little less paper. It’s unimaginable how much paper title companies go through at closing!”
- “More ways to use big data and targeting.”
- “More ‘toys and tools’ to make our homes smarter than ever.”
- “Tech that doesn’t even exist now will be invented. We do not even know what it is.”
- “We will slowly move back to more voice-to-voice and face-to-face communications instead of emails and social media.”
- “Social will continue to grow in influence.”
- “More consumer-based real estate auctions.”
- “More on-demand technology. Less friction.”
- “Virtual reality will be increasingly popular.”
- “Cloud offices will become common.”
- “More and better technology, integrated on many levels, forming patterns that are usable, helpful and profitable.”
- “Twitter. Twitter. Twitter. This will be the year for Twitter and real estate.”
- “Technology has always been major piece of my business, but I’m excited to see all the competitive real estate start ups and improvements being rolled out.”
- “Brokers give up again on managing the data. Upstream fails.”
- “More transparency.”
- “Transition from lead forms to click-to-call systems.”
- “Realtor.com will find a ‘dotloop’-type partner to spar with Zillow.”
- “Mobile tech will become even bigger.”
- “Drone and 3-D viewing of property videos will become more popular.”
- “A new social network will start to take hold.”
- “Many more gadgets.”