A nationally recognized expert on the real estate industry told the Real Estate Services Providers Council (RESPRO) audience Wednesday that there will be a “sharp contraction in the real estate market next year and into 2006, when mortgage rates rise above 7 percent.”
Weston Edwards, PhD., a consultant to some of the largest real estate brokerage firms, title companies and mortgage lenders in the nation, pointed out that the “contraction in home sales” will occur as interest rates rise and current “homeowners won’t want to give up their low-rate, non-assumable mortgages.”
“Major realty firms and homebuilders will use this period to dramatically improve market share, taking advantage of failed competitors and making acquisitions,” Edwards said. “Realty firms will push for improved mortgage lending services, title and homeowners insurance to offset their realty brokerage losses. And, many marginal agents will leave the business, which may result in a slowing of the current commission erosion.”
Presenting at the opening general session of RESPRO’s Annual Fall Seminar, Edwards discussed his yearlong, landmark study on the consolidation of the real estate industry in which 220 of the nation’s top real estate brokerage firms, 51 of the nation’s top 150 builders and 3,000 recent home buyers were interviewed on the concept of “one-stop real estate shopping.”
Edwards sees clearly a changing dynamic in the industry in which “successful one-stop shopping,” that is the consolidation of real estate brokerage, title services and homeowner and other personal insurance services, “will determine the winners in the industry.”
Edwards’ study showed that 35 percent of recent home buyers are “highly likely” to use one-stop shopping, and nearly 50 percent would use a realty agent to manage the entire process.
He noted that with this strong preference on the part of home buyers, the nation’s leading homebuilders are seeing mortgage capture of up to 90 percent, up to 100 percent of title insurance capture and up to 50 percent of homeowner insurance capture; all of which add considerable value to the bottom line in the sale of a new home.
Edwards’s study found that 35 percent of recent home buyers said the mortgage process took too long; 32 percent said it comprised too much paperwork. The study also found that home buyers under 34 years old were the least satisfied with the purchase process in terms of service.
Homebuilders focus on minorities and therefore minorities are buying new homes at twice the frequency rate of whites, the study found, and the Internet has a significant impact on the real estate industry as 90 percent of agents report that it has made them more productive, and 70 percent of home buyers use the Internet extensively before even meeting a real estate agent.
The Real Estate Services Providers Council (RESPRO.) is a national non-profit trade association that aims to promote the efforts of all home-services providers to deliver convenient, innovative and cost-effective services to home buyers and homeowners through strategic alliances across industry lines.
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