While the real estate market is still rosy, HomeServices of America President and CEO Ron Peltier said it’s uncertain whether the market is approaching full bloom. Rock-bottom interest rates, tax law changes in the late ’90s, and a growing acceptance of housing as an investment rather than shelter have contributed to this state of real estate nirvana, he said during an Inman News audio conference last week, though he expressed cautious optimism that these good times will continue to roll.
Peltier characterized the market as overheated in some areas, with double-digit home-value appreciation as a danger sign.
“We do have hot spots in the country where…we have appreciations that might be close to running out of control” and that can be unhealthy for the industry as a whole, he said.
“Moderate interest and moderate appreciation is really preferred, even though as investors and homeowners we love to see tremendous growth. We are clearly going to reach a point where we’re pricing potential homeowners out of the market,” he said.
Peltier said interest rates seem to have “defied economic gravity” as they have weathered warnings over the past few years that what goes down is bound to go up again. And even if the rates do eventually begin to rise, Peltier said he doesn’t foresee a problem unless the rise is very sudden and dramatic, with rates climbing above 9 percent or even 10 percent in a short span. The other half of this equation is the overall health of the economy, he said. If the economy continues to lag, a jump in interest rates could stall this home-buying spree.
Critics of outsourcing contend that U.S. jobs can be threatened when companies hire overseas workers to cut labor costs. Peltier views the outsourcing trend as a possible win-win if it leads to the creation of new jobs and improved service and efficiencies for consumers. Personal relationships and interactions are still as vital as ever to the real estate industry and cannot as of yet be replaced by technology or remote interactions, he said. Internet technologies have reduced companies’ response times to customers by aggregating information that was previously fragmented among several sources.
As the pool of real estate agents has grown exponentially to a current total of about 1 million, Peltier has seen a new breed of agent emerge. These new agents are a highly educated and ambitious bunch who bring a serious mindset to the booming, entrepreneurial frontier of real estate, he said. Newcomers who lack ambition likely will be weeded out. Peltier added that there will likely be plenty of room for the upstart Realtors as many of their graying predecessors are fast-approaching their retirement years.
HomeServices, the second largest real estate company in the nation and the largest provider of settlement services, owns 16 real estate brands and employs more than 16,000 agents in its network of 319 branch offices, with operations in 16 states. Unlike some competitors, HomeServices preserves the brand names it acquires and is not a franchisor.
Peltier said HomeServices focuses on providing a full range of services to its customers. Services relating to title transfer, mortgage, escrow and property and casualty insurance, which some consider to be ancillary business, are actually at the core of HomeServices operations, he said.
A full-service brokerage can retain business that otherwise might be scooped up by competitors, he stressed.
“It’s our customer to lose. I don’t think we can be catty about it, and I don’t think we can be comfortable. If we don’t get the customer first, somebody else will,” he said.
While senior citizens are a very active population of home buyers, it is also very important to push for business among young couples, who will buy an estimated seven to 10 homes in their lifetime. Peltier also noted a tremendous “velocity” in the ownership of multiple homes. It isn’t uncommon these days for people to own two or three homes, he said, and this phenomenon could be sucking away the inventory for first-time home buyers.
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