Markets & Economy

Real estate industry insights, hopes and predictions for the year ahead: Part 2

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Editor’s note: This is the second of a three-part series in which real estate industry leaders share their insights, hopes and predictions for the year ahead. Part 1 focused on issues affecting multiple listing services, Realtor associations and real estate brokerages. Part 2, below, provides insights about the outlook for real estate in 2014  from economists and consultants, and executives with top franchisors and listing portals.

Gregg Larson, president and CEO, Clareity Consulting

gregg_larson

Gregg Larson

What are your top New Year’s resolutions for real estate in 2014?

My New Year’s resolution for the industry is to stop the spending of “Realtor dollars fighting Realtor dollars.” This perennial waste happens on many levels and nobody wins except outsiders that capitalize on this “Realtor family” dysfunction.

Here are three examples:

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1. Two neighboring Realtor associations battle for members by trying to outmarket each other and/or offering services for less than their neighbor to woo new members. Don’t get me wrong, I am a huge proponent of competition, but in many cases, the two associations should just merge instead of compete. The associations can then cut redundant expenses and offer superior member services from the resulting scale of the larger organizations and their ability to hire more professional staff. How many members want their dues and fees going towards this kind of battle? Less than 5 percent. The other 95 percent would be appalled if they understood the money being wasted on association “fighting.” Association consolidation is happening at a glacial pace and needs to accelerate — no more excuses, egos and petty “rival” politics. And the “but we’ll lose our identity” argument? OMG! Do what’s right for the members! Consolidate in 2014 and become smarter, more efficient organizations.

2. Repeat example No. 1 but replace the word “Association” with “MLS.” Consolidate MLSs in 2014 and become smarter, more efficient organizations, too.

3. It became evident in 2013 that many large brokerage firms are fed up with their local associations and MLSs and are ready to secede from the union. The Realty Alliance has contemplated a future that would result in millions of dollars of member money being spent on duplicative MLS systems or “pre-MLS” systems and add another layer of complexity and expense without tangible benefits for the agent/member. The civil war resulting from something like this would be bloodier and more expensive than people can imagine and will further weaken “organized” real estate. Only outsiders will benefit from this type of civil war.

The industry needs to resolve to work together in 2014 to consolidate and stop spending Realtor dollars to fight Realtor dollars.

Rick Sharga, executive vice president, Auction.com

Rick Sharga

Rick Sharga

What are the top items on your real estate wish list for 2014?

At the top of my wish list for 2014 is an economy that creates more good-paying jobs for millennials. This cohort is still living at home with mom and dad in record numbers, so household formation is weaker-than-expected, and first-time homebuyer numbers are far too low to spark real strong growth in housing. Part of the reason for this is that unemployment, and underemployment, among 25- to 35-year-olds is still stubbornly high.

I’m wishing for private capital to re-enter the mortgage market, so there’s funding for non-agency, non-QM loans. Millions of potential homebuyers simply won’t qualify for loans under the new rules established by the Consumer Finance Protection Bureau, or because major banks are reluctant to make loans to anyone with less-than-perfect credit. There’s a huge market opportunity for nonbank lenders to offer low-risk loans to these borrowers, but they need capital in order to make the loans.

I’m also wishing for more inventory — but not too much more, and definitely not too much more distressed inventory. Getting back to a more balanced supply/demand ratio should help take some of the volatility out of the market, and keep home prices from appreciating too rapidly.

What do you expect to be the top trends and hottest issues in real estate in 2014?

I’m afraid we’re going to run into some mortgage issues in 2014 that are going to be major impediments to growth. Interest rates, especially in light of the Fed’s decision to begin tapering of the QE program in January, are likely to go up — probably to 5.5-5.75 percent by the end of the year. Credit availability will be extremely tight at the beginning of 2014 as the CFPB’s new lending rules go into effect. Major banks are likely to focus exclusively on QM loans — which many borrowers simply won’t qualify for — and jumbo loans to ultraqualified, high-net-worth borrowers who the banks would like to have as customers for other products and services.

Loans backed by Fannie Mae and Freddie Mac will be more expensive due to new fees being imposed across the board, and even higher fees for certain borrowers or borrowers in certain states. FHA-insured loans will also be more expensive, as premiums and fees have been increased on these as well. And the upper limits on all of these government-backed loans will be lowered, making it difficult for borrowers in higher-priced areas to get any loans at all. Ultimately, this will lead to the re-entry of nonbank lenders, who will offer non-QM loans but at significantly higher interest rates. All of this — higher interest rates, fees and insurance premiums — will take its toll on affordability, so it’s very likely we’ll see home price appreciation moderate significantly.

On a more positive note, I believe we’ll continue to see fewer delinquent loans and fewer foreclosures. This will help the market stabilize, and will help accelerate more new homebuilding as well.

And I also believe we’ll continue to see the evolution of real estate transactions moving online as technology advancements and changing consumer behavior make more and more aspects of homebuying and selling easier, more transparent, more customer-friendly and more efficient.

Sherry Chris, president and CEO, Better Homes and Gardens Real Estate LLC

Sherry Chris

Sherry Chris

What are your top New Year’s resolutions for real estate in 2014?

To continue to educate the industry on the importance of seeing the real estate experience through the consumer’s eyes, and how service, technology and content all play into creating exceptional experiences for people.  In 2014, I will continue to challenge myself to identify and understand new trends and use technology to provide an exceptional consumer experience for the Better Homes and Gardens Real Estate network and end consumer. As part of my quest for learning, I will look both inside and outside of the real estate industry to broaden my purview, and take those learnings and reapply them back into our brand’s strategy.

What do you expect to be the top trends and hottest issues in real estate in 2014?

The informed consumer will continue to dominate, and millennials in particular will become an even greater force in homebuying.  The dream phase will become an even more significant part of the transaction process, and brands, companies and agents who can address this with content, education and service will more expertly capture consumers’ mindshare.

Richard W. “Rick” Davidson, president and CEO, Century 21 Real Estate LLC

Rick Davidson

Rick Davidson

What are your top New Year’s resolutions for real estate in 2014?

Supply, demand, price and affordability of the residential real estate marketplace is largely influenced by jobs, interest rates and consumer confidence. As an industry, we are dependent on our government’s ability to effectively manage the macroeconomic factors and the resulting trajectory of our nation’s economy.

The current sentiment for the economy in 2014 is bullish. According to many economists, job growth, income gains, a continued low interest rate environment, increased household wealth and household formations, and durable goods purchases are all expected to be positive. These positive influences will increase consumer confidence and, in turn, drive spending, increase economic activity, enhance job growth and create a healthier housing market, a prerequisite for a full economic recovery.

Immigration reform, the Affordable Care Act, budget deficits, the debt ceiling, GSE reform, to name a few, are important issues that can and will have a significant impact on our nation’s short- and long-term economy. While these incredibly impactful decisions warrant significant discussion and debate, a stalemate over party lines and a resulting lack of decision-making is just plain bad for any business, particularly real estate.

The market improvements we have seen in 2012 and 2013 are proof that the American dream of homeownership is alive and well. The psychological impact that the recession has had on consumers wanting to own or invest in real estate has improved. From millennials to baby boomers to immigrants and foreign investors, owning a home is something we all aspire to do.

My New Year’s resolution for our industry is that our government:

1) Moves beyond partisan politics.

2) Takes careful consideration in reviewing critically important decisions that need to be made.

3) Takes no action that harms our recovery and that has no unintended consequences.

Let’s have our lawmakers start making decisions that instill confidence in the American people, and not create false barriers to our market’s — and the nation’s — economic success.

Here’s to a robust real estate market in 2014. Happy New Year!

Pete Flint, co-founder and CEO, Trulia

Pete Flint

Pete Flint

What do you think will be real estate’s top trends and hottest issues in 2014?

The real estate industry has seen an incredible increase in the use of mobile technology and apps, and I expect that to continue in 2014. At Trulia, the majority of our traffic comes from mobile devices on weekends, and growth is still continuing at a rapid pace. The industry is at the tip of the iceberg, for what will be an even bigger year of mobile adoption and innovation.

I expect to see more technology consolidation in the industry during 2014. There is growing demand for technology partners who can provide complete solutions, versus using multiple vendors and the complexity that can arise from that.

2014 looks to be the year where the frenzied buying process will calm in hot markets and repeat buyers will become more prominent. Prices have increased enough to take investors out of some markets, while incenting more homeowners to sell. This should help ease the inventory problem we have been seeing. And with slightly increasing mortgage rates thwarting demand for refinancing, banks will be incented to start making mortgage credit more widely available. Overall, I think this means the steady, slightly uneven recovery of the market will continue, which is good for all of us.

What would be your top 2014 New Year’s resolutions for real estate?

It’s appropriate that Inman News has chosen partnership as the theme for its upcoming Real Estate Connect conference at the beginning of next year. As I look to 2014, I think we can all acknowledge that technology, rather than being just a topic for debate, has advanced to that point that it’s moving the industry forward and helping companies grow and be more efficient. That is why my resolution for the industry in 2014 would be for better collaboration, so that all of us can use technology to better serve our customers and partners.

Kuba Jewgieniew, founder and CEO, Realty One Group Inc.

Kuba Jewgieniew

Kuba Jewgieniew

What do you think will be real estate’s top trends and hottest issues in 2014?

With all the fluctuations we’ve seen over the past few years, I predict that 2014 will be a “breather year,” as the market gets back closer to “normal.”

Paperless technology will become more prevalent for its ability to streamline the transaction process, as well as internal operations. We pioneered a proprietary paperless transaction software that has greatly simplified the process for agents.

The hottest issue for us will be our continued growth.

What would be your top 2014 New Year’s resolutions for real estate?

The reason I created the Realty One Group’s successful model was because of my frustration with “mediocrity.” Our organization aligns with other like-minded professionals who have the drive for success. My resolution is to continue to lead the culture of Realty One Group in a way that everyone embraces these ideals.

My motto, so to speak, both personally and professionally, is “Stick with winners, avoid time wasters, avoid hassles and make it easy.” When we all work together, everyone wins, and these values permeate the organization.

Margaret Kelly, CEO and director, Re/Max LLC

Margaret Kelly

Margaret Kelly

What are your top New Year’s resolutions for real estate in 2014?

I would like to do all that’s possible to advocate for the many honest, hardworking and creditworthy Americans who encounter difficulties obtaining a mortgage. Strict lending standards have forced a lot of potential homeowners out of the market, and the process needs to become more reasonable.

Now that the housing market is turning around, I think it’s important for our industry to establish a higher level of professional standards for those who earn a living helping others buy and sell homes. We owe that to our clients. They deserve the very highest-quality service when seeking real estate assistance.

What do you expect to be the top trends and hottest issues in real estate in 2014?

Everyone knows it because everyone does it. We all use our smartphones and tablets to seek out information online. As real estate professionals, we need to understand what this means in our business and provide consumers what they want: relevant information in accessible formats.

It may be a cliché, but it’s true: The world is becoming a much smaller place. We know that many foreign buyers like real estate in the U.S. because it provides a sound investment at a great value. Many of our colleagues are now marketing themselves to specific foreign buyer groups, and this trend is likely to not only continue, but grow even stronger.

One of the most significant issues we must address in 2014 is mortgage accessibility. Whether it’s an FHA loan for a first-time buyer or a jumbo loan for a real estate-savvy individual, mortgage lending needs to be reasonable and accessible. If we can achieve this, the market will certainly be better off, and the cherished American dream will be within reach of all who aspire to homeownership.

It’s critically important that the National Flood Insurance Program is economically sound with realistic premiums. This is the only resource available to most homeowners after a traumatic disaster. Before an undue burden is placed on homeowners, the process must be well-considered and thought out. Industry and government leaders must work together to create the most efficient program for all.

Budge Huskey, president and CEO, Coldwell Banker Real Estate LLC

Budge Huskey

Budge Huskey

What are your top New Year’s resolutions for real estate in 2014?

  • Ensure a mindset of growth among the Coldwell Banker team and network to fully capitalize on the real estate recovery.
  • Focus on simplicity, integration and user engagement in brand value proposition.
  • Embrace diversity in all we do to ensure future performance and relevance.
  • Leverage our international presence to foster greater cross-border opportunities.
  • Promote the importance of real estate as a higher calling with enormous impact on individual lives and national economy.

What do you expect to be the top trends and hottest issues in real estate in 2014?

  • Content and data rights/access among brokers, associations and MLS organizations.
  • Online reputation management ratings.
  • Future relationship between real estate brokerages and online aggregators.
  • Developing the next generation of real estate talent to confront aging workforce.
  • Government and private decisions shaping the future of mortgage lending.
  • The growth in mobile.
  • Learning, once again, how to operate in a “normal” real estate environment.

Alex Perriello, president and CEO, Realogy Franchise Group

Alex Perriello

Alex Perriello

What are your top New Year’s resolutions for real estate in 2014?

Among the New Year’s resolutions for the Realogy Franchise Group, I would have to say that a continued focus on innovation and the willingness to challenge the status quo are at the top of my list. In addition, I always start each day — not to mention each year — by reminding myself of our company’s mission to help our franchisees and their affiliated agents be more successful.

What do you expect to be the top trends and hottest issues in real estate in 2014?

1)      Further industry consolidation.

2)      Resurgence of first-time buyers.

3)      Institutional residential property investors begin to liquidate their positions.

4)      Importance of diversity at the broker and agent level.

5)      Leveraging global business relationships.

6)      Emerging “big data” marketing solutions and strategies.

7)      Evolving role of MLSs and third-party aggregators.

8)      An enhanced realtor.com.

9)      Proliferation of video content.

10)   “Selective syndication.”

Spencer Rascoff, CEO, Zillow

Spencer Rascoff

Spencer Rascoff

What do you expect to be the top trends and hottest issues in real estate in 2014?

In 2014, home shoppers will continue to flock to their smartphones, tablets and PCs to make real estate decisions around homes and agents. And ad budgets will follow, as agents and brokers shift their time, attention and resources to where the consumers are. Advertisers follow audience, and the sites with the largest audience will be the most relevant to the most real estate professionals.

What are your top New Year’s resolutions for real estate in 2014?

My “real estate resolutions” for 2014 will be:

1) Clean out my garage.

2) Sell my investment property, which is currently rented out.

3) Help my in-laws sell their investment property.

My Zillow resolution will be to extend Zillow’s lead as the largest real estate site on the Web and mobile.

Matthew Shadbolt, director of interactive products and marketing at The Corcoran Group

Matthew Shadbolt

Matthew Shadbolt

What do you think will be real estate’s top trends and hottest issues in 2014?

I think that software efficiency, information transparency and mobile technology will continue to question and challenge the value proposition of real estate professionals in ways that enable and empower customers to act independently for longer.

What would be your top 2014 New Year’s resolutions for real estate?

I’d wish for more digital real estate experiences to deliver discovery, rather than search. There’s a huge contextual experience that’s missing from what happens online, and therein lies an enormous opportunity.

Chris Smith, co-founder, Curaytor

Chris Smith

Chris Smith

What do you think will be real estate’s top trends and hottest issues in 2014?

Big data, and who should have access to the data, will continue to dominate discussions. The “arms race” between Zillow, Trulia and realtor.com will heat up, and I would expect to see franchises start to compete as well. Watch for a couple of the larger brokerages to acquire a tech startup or two and to also deepen their partnerships with the vendors who “get it.”

What would be your top 2014 New Year’s resolutions for real estate?

To take the focus off of pixels and to put it back on people. Stop stressing out about being behind the technology curve. People are the answer. Whether it’s hiring the right people to help you or partnering with the right technology companies, 2014 should be about people, not platforms for agents and brokers.

Philip White, president and CEO, Sotheby’s International Realty Affiliates LLC

Philip White

Philip White

What are your top New Year’s resolutions for real estate in 2014? 

My goals for 2014 are to expand the Sotheby’s International Realty brand’s footprint, add new markets on our priority list, and continue to drive qualified leads to our affiliated companies on a global scale through our media partners and relationship with the Sotheby’s auction house.

What do you expect to be the top trends and hottest issues in real estate in 2014?

I believe foreign buying will remain strong in 2014 for the luxury real estate market, with those buyers seeing the United States as a safe haven for their wealth. I expect to see many of those foreign buyers continuing to come from Asia, as they seek secure, tangible assets to invest in. In 2013, we saw many second-home markets stabilize. In fact, it was the best year in quite some time for several markets across the United States.  As we embark on 2014, I think we will continue to see the luxury sector outperform the overall market, leading the way for housing’s recovery.

Charlie Young, president and CEO, ERA Franchise Systems LLC

Charlie Young

Charlie Young

What are your top New Year’s resolutions for real estate in 2014?

Always be prospecting. It’s easy to operate on the assumption that real estate is seasonal, but we know that people move all throughout the year based on lifestyle changes. We are entering 2014 with great momentum and it is critical to leverage that momentum throughout the entire year by prospecting for clients all year long, not just in the traditional “high season.”

What do you expect to be the top trends and hottest issues in real estate in 2014?

More people will make big moves. As home prices rise, many homeowners are coming into positive equity on their home and are finally in a position to move.

We have found that 1 in 3 people would consider making an out-of-market move to take advantage of lower housing prices, lower cost of living, better job opportunities and better weather.

And U.S. Census data indicates that “migration” is on the rise, particularly among people in their 30s, as people ask themselves, “Where do I want to build equity?”

Lawrence Yun, chief economist, National Association of Realtors

Lawrence Yun

Lawrence Yun

What do you expect to be the top trends and hottest issues in real estate in 2014?

I anticipate gains in vacation/second home sales next year. The accumulated stock market wealth from the past few years will extend into real estate as high-net-worth households open their wallets. Mortgage accessibility remains the wild card. There is market incentive for banks to increase their lending, as they are flush with cash and recent years’ well-underwritten mortgages have performed outstandingly well. But new mortgage regulations in 2014 and the threat of lawsuits against lenders might cause them to stay conservative and continue to restrict lending.

What are the top items on your real estate wish list for 2014?

That interest rates won’t rise at an alarmingly high rate as the Fed tapers its bond-buying program.  I also wish for a fast recovery in housing starts to help relieve low housing inventory pressures and tame the dramatic home price growth we saw in 2013.

Bruce Zipf, president and CEO, NRT LLC

Bruce Zipf

Bruce Zipf

What are your top New Year’s resolutions for real estate in 2014?

My top 2014 New Year’s resolutions are to continually focus on identifying quality leadership and the most effective technology offerings in order for our sales associates to excel.

What do you expect to be the top trends and hottest issues in real estate in 2014?

The top trends and hottest issues in real estate in 2014 will be a focus on lead generation and lead management. Technology will continue to help us work more efficiently and effectively, especially as it relates to managing our business and creating business opportunities.