Top 10 Events impacting Real Estate for 2008
Posted in Alternative Business Models By Stefan Swanepoel, Wednesday, December 17, 2008.As part of the annual Swanepoel TRENDS Report that is published every year during the first week of February, the research team wraps their four month study of the real estate industry by announcing the top 10 Newsmakers, Events and Trendsetters for the year.
The second list to be released is the top 10 events that during 2008 had the largest impact and influence on the real estate brokerage industry. Events are defined as those occurrences that transpired during the previous calendar year (2008) that made headlines and captured the attention of the real estate industry. The selection of these events was based upon their potential future impact on the industry rather than only their 2008 impact.
The Top 10 Events impacting Real Estate for 2008 are:
1. The Bailout: September 17th
Most notably the one single event of the year was the announcement of the “Silver Bullet” designed to save the country from the subprime collapse itself and the failure/buyout of major Wall Street firms and national banks. Depending upon how effectively the Emergency Economic Stabilization Act’s $700 billion is going to be allocated and managed it may prove to be the beginning of the turning point in the current economic recession.
2. The Presidential Election
In one of the most competitive, contentious, divisive and yet historic political campaigns the country responded with the largest voter turnout in history to remove the incumbent president and elect an African American, Barak Obama as president. The “I have a dream” has taken a huge step toward fulfillment. However, the new administration will have little time to reflect on victory as it faces serious economic challenges and a trillion dollar plus debt that will take years to resolve.
3. In Memory Of: Countrywide, IndyMac, WAMU, Wachovia And Others
Barely one year ago in 2007 these companies were not only household names but were considered financial giants. In one short year they have become a factoid of history. Some filed for bankruptcy while others were acquired by the likes of Bank of America, the federal government, J.P. Morgan Chase and Wells Fargo. 2008 reminded us that nothing lasts forever and everything is replaceable.
4. Facing Foreclosure Frenzy
As a direct fallout of the subprime collapse, the foreclosure rate in the U.S. hit staggering levels in 2008. At the opening of the third quarter foreclosures were up 25% over the previous October with a reported one in every 452 of the country’s homes in foreclosure. RealtyTrac reported last October that there was a sharp decline in foreclosure filings but it still estimated that by the end of 2008 there would be more than one million REOs on the books.
5. Home Prices Spiral Downward
The recession devastated many real estate markets across the country with the worst-performing towns and cities in places like central California, Miami and Las Vegas posting declines of 40% in 2008. The stranglehold on financing continued to drive home prices in many other places back to 2000 – 2002 levels, with predictions of continued declines in 2009 as unemployment reaches record highs and the financial meltdown spills over to other industries.
6. NAR – DOJ Settlement
Finally the long and protracted 2½ year legal battle between NAR and the Department of Justice (DOJ) was put to rest as Judge Kennelly issued his final judgment in November. In the end, NAR’s longstanding Internet Data Exchange (IDX) policy was validated as NAR was deemed to have not admitted any liability or wrongdoing and no payments were made in conjunction with the settlement. In addition, NAR has been cleared to reinstate an updated version of its Virtual Office Website (VOW) and the MLS has been preserved and strengthened in the process. Now it’s back to business.
7. Brokers Go Bust
Changing names, merging, consolidating, filing bankruptcy and closing branches was on the order of the day throughout 2008 as literally thousands of real estate brokerages companies went out of business during 2008. This included many independents as well as franchises from just about every major brand including Century 21, EXIT and RE/MAX. Also filling for bankruptcy is national franchise Help-U-Sell and Web 2.0 newcomers such as Igglo. 2009 may see even more brokers closing up shop than 2008.
8. Keeping It Short
Founded in 2006, Twitter moved into the mainstream this year as the next evolution in the social networking and micro-blogging environment. By using short text-based posts (affectionately named “tweets”), staying in touch has been given a whole new meaning.
9. ActiveRain Explodes Past 100,000 Members
As we discussed in last year’s report (Trend #1 – Two Worlds; One Industry) ActiveRain has moved to the head of the social networking line in the real estate industry. With as many as 35,000 users logged on at the same time, no one else has even come close to reaching that many Realtors® at one time. It goes without saying that ActiveRain has proven that social networking has made a home in real estate.
10. NAR Celebrates 100 Years
In May 1908, 120 men gathered in Chicago with the goal to “unite the real estate men of America.” Today the National Association of REALTORS® (NAR) is America’s largest trade association representing more than 1.2 million members. For 100 years, NAR and its members have established homeownership as a cornerstone of the American Dream and advocated private property rights as one of the fundamental principles that unite us as Americans. 2008 marked NAR’s centennial birthday.
For more information 2009 edition of the Swanepoel TRENDS Report visit www.retrends.com.
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Submitted by RealEstateCafe on December 17, 2008 - 4:58pm.
Thanks, Stefan. Resorting your "Top 10 Events that impacted real estate in 2008" from different perspectives -- the Best of 2008 and Worst from the Professional's perspective versus Consumer's and the Best and Worst from Buyer's perspective versus Seller's -- reveals additional insights. For example, the credit crisis does not appear on your list, but more stringent lending standards had a negative impact on buyers, sellers, and professionals which will extend beyond 2008.
With prices falling back to 2000-2002 levels, then and now retrospectives are another way to reveal trends. Readers, particularly strategic planners, can use these wikis recollect their own Best and Worst of 2008 and project into the future.
Consumers win some, lose some: 2002
http://realestatecafe.pbwiki.com/Retrospective
Then vs Now template for Best of 2008
http://realestatecafe.pbwiki.com/Best+of+2007
Then vs Now template for Worst of 2008
http://realestatecafe.pbwiki.com/Worst+of+2007
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services for "do-it-yourself" homebuyers & FSBOs since 1995
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.blogs.com
Submitted by Chuck Marunde, J.D. on January 1, 2009 - 11:16am.
Stefan, you're right on. I think 2009 will be the most interesting year in real estate since I started 30 years ago, and I mean interesting in the context of seeing what will happen to real estate agents. Having been a real estate lawyer for 20 years and a broker now, I've seen so much nonsense and unprofessionalism, I really do think consumers will be far safer and better off with half the agents we have now, and that still doesn't resolve all the issues for consumers. I hope consumers begin to do more due diligence on their own before they hire agents. I'll tell you the truth--whenever I write posts on my blog about the truth in the lack of competence and professionalism in the real estate profession, other agents get testy. Hmmm. Wonder why?
Chuck Marunde, J.D.
Real Estate Attorney (Ret.)
Broker/Owner/Realtor
www.SequimRealEstateNews.com
www.SequimPortAngeles.com
Submitted by Jean Powers CRS on January 1, 2009 - 11:34am.
I agree with Chuck. I find it very frustrating when sellers and buyers work with incompetent agents. I have to say that a majority of agents in my area are incompetent. It is difficult because we talk about another agent and their practices. For buyers this is the largest investment of their lives. The public needs to do more diligence in hiring an agent. First of all to see if they have a valid license. I lost a listing to a newer agent whose license was not valid. The sellers didn't even know it. In our area some people are writing offers and do not even have a license. We directors at the California Association of Realtors wanted the state to make it more difficult to get a license but the governer wants people to have the opportunity to get jobs. I wish I could figure out a way to get the public educated. I am very anal about protecting my clients, knowing the contracts and the laws inside and out. I have been a broker for 24 years and I am still out their educating myself to do the best for my clients.
Jean Powers CRS, e-PRO, PMN
Broker Associate
Kane & Associates
Alameda, CA.
510 908.9002
Homes@JeanPowers.com
www.JeanPowers.net
Submitted by Carmen Multhauf on January 1, 2009 - 12:39pm.
When NAR began 100 years ago it was based upon providing fiduciary duties to the "seller". Only one client was represented. Then we fell into the trap of implied agency and became obligated to fiduciary duties to the buyer. That created the risk of dual agency. Even though our Code of Ethics preamble aspires to "exclusive representation" and NAR has been promoting the ABR we have not made the case to the buyers for committment. So, Chuck, the sellers hire us, in writing, but in most transactions the buyers do not make that written committment (yet we owe them the same agency duties). All this by way of saying, we need to change our business model to eliminate dual agency (at least single person dual agency) and make the case to the buyers for a written committment.
Submitted by Bruce Hahn on January 1, 2009 - 1:04pm.
American Homeowners Grassroots Alliance
Good points by Chuck, Jean, and Carmen. Your profession would be much improved if dual agency were outlawed and future professional entry standards were raised substantially.
There would be far fewer misunderstandings with consumers and fewer lawsuits. Homeowners would get higher quality service from a smaller, but more than adequate, number of better qualified professionals. Real estate professionals would be able to spend more of their time doing what they were trained to do instead of having to spend most of their time looking for clients, and they would make more money as a result.
Much higher professional entry standards should also be applied to mortgage lending professionals.
Consumers and consumer organizations would certainly support you in such efforts.
Bruce Hahn
President
American Homeowners Grassroots Alliance and
the American Homeowners Foundation
Serving the interests of the nation's 75 million homeowners and future homeowners since 1984.
The American Homeowners Grassroots Alliance is a nonpartisan consumer advocacy organization dedicated to assisting the nation's 75 million homeowners understand significant policy issues affecting homeowners and homeownership, and empowering homeowners to make their voices heard by state and federal officials.
The American Homeowners Foundation is an educational and research foundation providing information and tools to help consumers make wiser decisions when they buy, sell, remodel, finance or invest in homes.
Visit our web site http://www.americanhomeowners.org. Contact us at: 6776 Little Falls Road, Arlington, VA 22213-1213. Direct Dial: 571-214-1013; Headquarters: 703-536-7776
Submitted by Jim Lee, Knoxville TN Realtor on January 1, 2009 - 1:09pm.
I believe Carmen if you'll look around you'll find that many of us practice single agency already.
My company does not do dual agency as a matter of company policy.
Further, real estate agency laws differ greatly from state to state.
In my state of Tennessee for example, the default position is facilitator, a non-agency status until you have a written employment agreement signed by both broker and client.
Jim Lee, CRS, ABR, GRI, NAR Certified e-PRO Trainer
Realty Executives Associates, Knoxville, Tennessee
www.KnoxvilleHomeCenter.com mailto:Jim@JimLee.com
(865) 693-3232, My Personal Toll Free # 1-800-662-2488 ext. 163
**********************************
Submitted by Carmen Multhauf on January 1, 2009 - 4:58pm.
I agree that each state has different laws about real estate agency but I think these can be greatly influenced on a national (NAR) level if we have the will. How would you feel if your attorney said " I will explain the law to you but I will only facilitate your law suit. I will not advocate for you or be required to act in your best interest to the exclusion of others." I think we need to decide our role and our obligations as a group.
Carmen Multhauf ABR,CRS,GHS,GRI
Submitted by Jean Powers CRS on January 1, 2009 - 8:21pm.
I wish we could change dual agency as far as the listing agent selling their own listings. In California it is difficult to change anything. The state has control and we cannot even get the governor to make it tougher to obtain a real estate license. NAR does not have that much power as every state is different.
Jean Powers CRS, e-PRO, PMN
Broker Associate
Kane & Associates
Alameda, CA.
510 908.9002
Homes@JeanPowers.com
www.JeanPowers.net