The sharing of property listings information will continue to be a pressing topic for the real estate industry in 2007, as real estate companies juggle client relationships, interactions with new business models, and multiple listing service rules, said Harley E. Rouda Jr., CEO and managing partner of Real Living Inc., one of the largest real estate companies in the country.
Companies such as HomeGain and HouseValues, Zillow and Point2Homes are playing a role in aggregating property data, he said, and it’s not clear where this trend is leading the industry. Among the questions, he said, is “How will the evolving business models here impact real estate agents and firms in a positive way and in a negative way? What are the right ways to take advantage of it on behalf of sellers and buyers … and truly understanding what are the positive long-term implications by each of these companies and the respective business models. My sense is as an industry we’re not taking enough time to talk about and understand those implications.”
He added, “There are just some significant issues out there,” and there are “decisions we are making at a micro level that could have a macro impact on the industry. Agents and firms around the country can all make individual decisions that sound good for each of us, but collectively that decision-making process could have unanticipated results. We’re still struggling to truly get our arms around the partnership opportunities out there and how they could be good or bad.”
MLS rules and agreements governing real estate data-sharing among MLS participants are also a key topic for the industry, as data-sharing rules approved by the 1.3-million-member National Association of Realtors are the subject of an ongoing antitrust lawsuit filed by the U.S. Department of Justice. And real estate brokerage company managers say that the housing-market slowdown and a shift in spending for real estate marketing are also big issues as the new year approaches.
Rouda said he expects a continued shift in real estate marketing dollars toward online media. “Brokers around the country and franchisors are directing more of their marketing spend into that (online) venue, and agents are going to follow suit in 2007,” he said.
The overall real estate market slowdown was faster and more pronounced than expected, though Rouda said that might mean that the slowdown has been “compacted” and will not last as long as expected. Rouda and others have said negative media coverage may be a contributor to the market conditions. The “pain” in the housing market “has been deeper than anybody has anticipated” in East Coast and West Coast markets, Rouda said.
But buyers are coming back into the market, he said, and he expects some of the pent-up demand to give a boost to the market. “I think the reality is the first half of 2007 is going to look a lot like the last half of 2006. In the second quarter we will see the market improve and improve quickly. Contrary to a lot of economists’ reports we are anticipating that 2007 is looking a lot like 2006 in totality,” he said.
Speculative activity has all but vanished from the market, he said. “Enough people got burned playing that game. I just can’t imagine that type of activity having much initiative at all in 2007.”
History suggests that the number of real estate agents will shrink with the cooling market, and Rouda said there seems to be more active Realtors than the market can support. “I think we need more rigorous standards” for real estate professionals, he said, as many Realtors participated in one transaction or did not participate in any transactions in the past year. That lack of performance, he said, “hurts the professional image of our industry and invites competition from other parts of the industry.”
Meanwhile, Real Living is poised for expansion, he said, and the company anticipates 100 percent growth in franchise offices in 2007 compared to this year. Real Living has 4,000 agents and employees and about 140 offices nationwide.
Joe Brown, president and chief operating officer of Silicon Valley operations for Coldwell Banker Residential brokerage in Northern California, said that the Silicon Valley real estate market is showing signs of stabilizing. “I think we have a balanced market,” he said.
He said that for-sale inventory levels have begun to back down from where they were at in previous months, and interest rates have remained low. That could bode well for first-time buyers into next year, he said. “If interest rates go up, all bets are off — but I don’t hear any indications that that’s going to happen,” he said. “The last few months are very promising. Our figures … are better in the last three months than what we anticipated.”
The market slowdown may not be at an end, Brown also said, but it has been flattening. The sales figures still show that this year will be one of the top sales years on record, he added.
Agents and consumers may have forgot, though, what a normal real estate market is, given the longevity of the boom. “Some of them all they have known is this screaming marketplace. Their measuring stick is a screaming market.” But companies are beginning to figure out how to adapt to the changing conditions and move through this market transition, he added.
The condo market typically offers the best chance for first-time buyers in the region, Brown said, adding that he expects that end of the market to continue to be strong.
On the technology front, Brown said that the industry continues to close in on paperless technologies for real estate transactions, noting that his company has invested in technologies to help clients view electronic versions of documents relating to their real estate transactions. Both Brown and Rouda said their companies are focusing on search-engine-optimization technologies to grow their online audience.
There are important discussions of MLS regionalization in the industry, Brown said, and he expects such discussions to progress. “I think (this effort) is going to expand. Where it’s going to go, I don’t know.”
Coldwell Banker is investing in improving its Web site and in offering multimedia features such as video, he also said, and the company prides itself in providing an array of tools to agents that companies with lesser resources are hard-pressed to provide. The Silicon Valley region that Brown oversees has about 1,300 agents and 16 offices.
In some markets, brokers are searching for a light at the end of the tunnel in this real estate slowdown. Ned Redpath, a broker for Coldwell Banker Redpath and Co. Realtors in Hanover, N.H., said that business in 2006 was “extremely slow in developing — we never really got off the mark until mid-April.” There is no question, he said, that the Hanover market was caught “right in the middle of this cycle,” as the area enjoyed a rise during the housing boom and has since felt the brunt of the slowdown.
There are some positive signs, he said, such as several properties that had multiple offers over the past couple of months. “We are very excited about where we’re going,” Redpath said. But while the market may have reached bottom, it still could be a long way up. “It doesn’t mean we’re going to skyrocket upwards. I think it could be 12 to 18 months to an equal marketplace where it isn’t a buyer’s market or a seller’s market.”
If the excess for-sale inventory does not begin to be absorbed in the spring, then the buyer’s market may extend up to two more years, he also said.
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