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Price Pressure Fueled by Limited Supply

 

 

 

CoreLogic Home Price Index (HPI®) has exceeded the pre-crisis peak and continues to grow with a strong and steady pace. With demand strong and inventory thin, the share of selling for the list price or more has also returned to pre-bust levels.

Share of SalesWith demand outweighing supply, homes are more likely to sell above the asking price. Figure 1 shows the share of homes that sold at a price above, equal to or below the list price. [1] The share of homes selling at or above list price has returned to mid-2005 levels. In Q2 2018 that share represented more than 40 percent of total sales – almost triple the level during the trough in January 2008. The share of homes selling for less than list price has made up the majority of sales over the past 10 years. Regardless of market conditions, there are always highly motivated sellers – including those who begin with unrealistic expectations – willing to drop their price.

Share of Sales

Housing markets are different across the nation. Therefore, sales and listing patterns also vary geographically. Figure 2 shows the share of homes that sold at, above, or below their list prices in 20 CBSAs during July 2018. San Francisco had the largest share of homes – 81 percent – that sold for at least the list price. Seattle and Minneapolis followed with 65 and 58 percent selling for the list price or more, respectively. Houston and Miami had the lowest share – 27 and 20 percent – of homes selling at or above the list price in July 2018. San Francisco was one of the metros with the highest home price growth in the U.S. in July. According to the CoreLogic HPI, home prices in San Francisco increased 11 percent year over year in July. On the other hand, Miami had a moderate annual home price increase of 4.6 percent in July.

Months Supply vs Service Premium

Price pressures rapidly increase as supply drops below 3 months. Figure 3 shows the price premium or discount and months’ supply for over 200 CBSAs in July 2018. In San Francisco and San Jose, where months’ supply was at 2 and 2.2, respectively, home buyers had to pay 9.7 and 5.4 percent more than the asking price on average. On the other hand, markets like Miami and Naples, where months’ supply are sufficient at 10 and 12, home buyers were able to negotiate below asking prices, with average discounts of 6.5 and 7.5 percent, respectively, in July 2018.

Note: The U.S. statistics are based on data for 65 CBSAs. Each of these CBSAs has at least 50 percent coverage since 2000. CoreLogic MLS data coverage usually increases over time, which might also contribute to inventory increases.

[1] Figures 1 and 2 use 65 CBSAs to aggregate national level statistics. The inventory has not been adjusted for growth in the number of households over time. As the number of households increases over time, the ‘equivalent’ level of inventory should rise as well.

© 2018 CoreLogic, Inc. All rights reserved.

Happy Sellers and Buyers,and Customers

As a Real Estate  for over 28 years, my ultimate goal is to let my experience and knowledge help my customers realize their goal, which is to sell or buy there home.  Do I get asked how  I differ from all the other agent’s out there? Well, the answer is my experience and my past record does speak for itself not only in what I do but how I do it! Most agents will do the minimum marketing to save a dollar in their pockets and never think “out of the Box”. My team is taught to always find new ways to get every unique customer’s home out to the largest population of potential buyers and sellers by concentrating not on the cost but to find the qualified buyers and sellers. All agents will do the general work as to put you in MLS (Multiple Listing Service} and send out postcards but what else do they generally do? Well if your working with our team you not only get the Standard marketing you get Worldwide Marketing with over 86 different websites as well as we as a team call your neighbors and our database of over 14,000 people to let them know you have placed your home on the market or you are looking for a particular home. In short, we always go above and beyond to help our customers not only get what they want but to save as much money as possible in the process and make everything very smooth all the way through closing.

https://youtu.be/aZ7Dc9cMHGU

 

What to Expect in the Homebuying Season

What to Expect in the Homebuying Season

Homebuyers will need to be on their toes this homebuying season if they are to snag their dream abode if the typical time taken to sell a home in 2017 is any indication. According to a report by Zillow, sold faster than ever in 2017, with a typical median-priced house flying off the market in 81 days. And this has been the case for the past three years, the report said citing data that indicated homes sold slightly faster at 80 days in 2016.

In 2017, the fastest-selling market was San Jose, California, with the typical home sold in 41 days. Homes in Miami, on the other hand, took 110 days to sell in both years, the report indicated.

What do these numbers indicate for 2018? “As demand has outpaced supply in the over the past three years, buying a home has become an exercise in speed and agility,” said Aaron Terrazas, Senior Economist at Zillow. “This is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do. Being prepared—working with a great , getting financing pre-approved—can help a buyer make a stand-out offer.”

According to an earlier Zillow report on Group Consumer Housing trends, a typical buyer spends around four months searching for a home and makes two offers before successfully closing on a home. But the latest data indicates that homes sold in lesser time than that in 2016 and 2017, making it imperative for homebuyers to be ready to move quickly when they find a home they want to purchase, the report said.

The report also indicated that homes sold the fastest in June when the typical U.S. home sold in 73 days flat. In San Jose, the report said, homes sold fastest last year in October within just 39 days of being listed.

Orlando-area home prices still on the rise

Home prices in the Orlando-Kissimmee-Sanford metropolitan statistical area increased by 6.8% in November compared with the year-ago period, a new report from CoreLogic shows.

On a month-over-month basis, home prices, including distressed sales, increased by 0.8% in November compared with October.

Nationwide, home prices nationally year over year by 7% from November 2016 to November 2017, and on a month-over-month basis home prices increased by 1% in November compared with October, CoreLogic reports.

Looking ahead, the CoreLogic forecast indicates that home prices will increase by 4.2% on a year-over-year basis from November 2017 to November 2018, and on a month-over-month basis home prices are expected to decrease by 0.4% from November to December.

“Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Frank Nothaft, chief economist for CoreLogic. “Growing numbers of first-time buyers find limited for-sale inventory for lower-priced , leading to both higher rates of price growth for ‘starter’ homes and further erosion of .”

Orlando-area home sales down despite record job growth

http://www.orlandosentinel.com/business/94337272-132.html

Home prices and sales in the core Orlando market were down in July from the month before during what is usually the peak summer buying season.

The midpoint price for an area that includes mostly Orange and Seminole counties was $220,000 in July, down from $222,500 the prior month, according to a report released Tuesday by Regional Realtor Association.

More dramatic than the slight softening in prices was the 14 percent, month-over-month drop in sales to 3,347 for July. Typically sales boom as families relocate prior to the start of the school year.

The association cited a slim inventory of listings as the culprit for what has been a less-than-spectacular summer.

“Would-be first-time homebuyers are being kept on the sidelines by limited inventory and rising prices,” said Bruce Elliott, president of the association and broker associate with Regal R. E. Professionals LLC. “However, rising prices have slowed some of the investor activity, which could mean slightly less competition for at the lower end of the market.”

Compared with a year ago, Orlando’s median home price for July was $14,000 higher.

Orlando real estate Serina Marshall said millennials in particular face a challenge as wages stagnate and prices rise for a group of would-be buyers who are affected by student loan debts, too. Renters in that age bracket also deal with rent spikes and find themselves with few options at lease renewal time.

“Those prices are being jacked up a lot and people are being forced to move out of their apartments to find something more affordable,” said Marshall, an agent with Re/Max Town Centre.

What has not grown from a year ago is the pace of monthly sales, which held flat from a year earlier. The flat sales growth comes despite record job growth for Orlando, which averaged 150 new jobs daily during a 12-month period that ended in June, according to a review of federal jobs numbers.

The headwinds facing newly employed Central Floridians are home prices rising 6.8 percent during a year-long period in which wages rose about 1 percent, according to the federal housing department. Making ownership an even more distant dream, financing has become costlier. July buyers secured average interest rates of 4.01 percent, which was up about a half point from a year ago and up slightly from a month earlier.

Within the four counties that make up Metro Orlando, only Lake showed strong sales growth in July from July 2016. Sales there were up more than 12 percent, while sales in Orange and Osceola counties were largely flat and Seminole was down more than 8 percent.

Florida’s Housing Market Continues to Show Rising Prices in Feb. 2017

ORLANDO, Fla. – Florida’s housing market continued to report a tight supply of   and rising median prices in February, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide remained relatively flat last month, totaling 18,033, down only 0.5 percent compared to February 2016.

“Florida’s is growing, with more jobs being created,” said 2017 Top Awarded Allyn Maycumber with Keller Williams Advantage in Lake Nona. “And a growing economy boosts the state’s housing sector as well. However, many local markets are reporting low inventory of for-sale homes at a time of increasing buyer demand. For sellers, it’s a good time to list their homes, as they continue to get more of their original asking price at the closing table. In February, sellers of existing single-family homes received 95.8 percent (median percentage) of their original listing price, while those selling townhouse-condo properties received 94.7 percent.

“In these kinds of market conditions, serious home buyers must be prepared to act fast, and work closely with a local Realtor to find the right home for their needs and their budget.”

The statewide median sales price for single-family existing homes last month was $225,000, up 12.5 percent from the previous year, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in February was $167,500, up 11.7 percent over the year-ago figure. February marked the 63rd month in a row that statewide median prices for both sectors rose year-over-year. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in January 2016 was $230,400, up 7.3 percent from the previous year; the national median existing condo price was $217,400. In California, the statewide median sales price for single-family existing homes in January was $489,580; in Massachusetts, it was $330,000; in Maryland, it was $261,868; and in New York, it was $250,000.

Looking at Florida’s townhouse-condo market, statewide closed sales totaled 7,949 last month, up 4.1 percent compared to February 2016. Closed sales data reflected fewer short sales and cash-only sales last month: Short sales for townhouse-condo properties declined 39.6 percent while short sales for single-family homes also dropped 39.6 percent. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“Florida’s market for existing single-family homes in February continued to perform in line with what we’ve seen over the past year and a half,” said Florida Realtors® Chief Economist Dr. Brad O’Connor. “Due primarily to fewer distressed properties on the market, sales of single-family homes edged down. However, non-distressed sales of single-family homes were up almost 10 percent year-over-year, showing that the traditional market – as opposed to the niche distressed market – is healthy and continues to grow.

“Meanwhile, Florida’s condo and townhouse sales are off to very good start in 2017. Coming off a 6.2 percent year-over-year increase in January, condo and townhouse sales rose 4.1 percent year-over-year in February. For perspective, the last time statewide condo and townhouse sales rose on a year-over-year basis for two consecutive months was in August and September of 2015.”

For the second consecutive month, inventory remained at a tight 4.2-months’ supply in February for single-family homes, and was at a 6.4-months’ supply for townhouse-condo properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.17 percent in February 2016, up significantly from the 3.66 percent average recorded during the same month a year earlier.

Home prices rise as listings disappear

Scant listings of houses for sale in the core Orlando home prices rise by 2.6 percent during the one-month period of February, according to a new report by Orlando Regional Realtor Association.

The midpoint sale price in February for an area that includes mostly Orange and Seminole counties was $205,000, which was up about 11 percent from a year earlier.

Despite limited options for buyers, rising prices and interest rates edging up, association members closed 2,423 sales in February. Sales were up 10 percent from a month earlier and basically flat from a year ago.

“We are headed into peak home-buying season with high demand but significantly fewer on the market compared to last year,” said Orlando association President Bruce Elliott, an with Regal R.E. Professionals LLC.

Central Florida’s job and population growth has been depleting the available listings, even as the appetite for rentals has grown in recent years.

One Orlando-area real estate agent said he listed a three-bedroom, one-bath house without central heat/air in the west Winter Park area for $219,000. Immediately, he said, seven investors offered cash with the hope of tearing it down to make way for new townhomes.

During February, Osceola had the greatest increase in sales among Central counties with 10 percent growth from a year ago. Orange County also had an increase in sales during the 12-month period while Lake and Seminole counties both experienced declines.

Orlando’s housing market wades further into 2017 with markedly fewer houses listed . Listings in February were down 21 percent from a year earlier and the area had a 3.5-month supply — about a month less than February 2015.

Overall for the area in February, houses sold within 69 days of hitting the market — almost two weeks faster than sales a year ago.

Looking ahead, families may be in trouble as orlando home prices rise because association members reported 5,849 pending sales. That is an increase of 8 percent from a year ago and 14 percent from a month ago. Orlando’s pipeline of pending sales in February had about 400 more houses and condos than it did last February.

Elliott said current market conditions make it particularly conducive to sell for owners who have been contemplating getting into the market. And for buyers, he added, getting professional help structuring offers is especially key leading into the most active sales season of the year.

Orlando ranks No. 2 in Forbes’ fastest-growing cities list

PHOTO VIA JOE SHLABOTNIK ON FLICKR.

  • Photo via Joe Shlabotnik on Flickr.

The results are in: Orlando is one of the fastest-growing metro areas in the country.
According to Forbes, Orlando is No. 2 in the country, just behind Cape Coral, in its ranking of the country’s fastest-growing metropolitan cities.

 Every year, Forbes compiles a list of America’s fastest-growing cities in an effort to give a “holistic picture” of places on the upswing.
 The magazine uses data provided by Moody’s Analytics to compare the country’s 100 largest metropolitan statistical areas in measures such as population, employment, wages, economic output and home values, coming up with a ranking of the top 25.

cities dominate the list with nine out of 25, more than any other state. Six of those cities are included in the list’s top 10.
The Cape Coral-Fort Myers area took the top spot, with a population increase of 3.39 percent and a projected growth rate of 3.61 percent for 2017.
The Orlando-Kissimmee-Sanford area ranks No. 2 on the list, but was No. 1 in job growth for 2016 at 4.57 percent. That growth is expected to decrease a bit this year however, with a projected rate of 3.54 percent.
The Deltona-Daytona Beach-Ormond Beach area, Jacksonville, the North Port-Sarasota-Bradenton area, and the Tampa-St. Petersburg-Clearwater area also made the top 10.

Should you pay for a home warranty?

Orlando average price per square footPublished: February 22, 2017

If you’re going to get one, here’s how to use it correctly

If you’re in the process of buying a home, selling a home or will be in the near future, one of the costs you’re likely considering is a home warranty. But, as this is an optional expense, you have to decide if it will really be worth it to you.

“Home warranties [typically] cost between $300 and $700 a year and have a service call fee that ranges from $60 to $100, depending on the company,” Pam Maycumber of Keller Williams Realty Advantage III in Orlando, Florida.

What is a home warranty?

“A home warranty will repair or replace…covered systems and appliances when they break down from normal wear and tear,” Pam said. “Most often, home warranties cover the mechanical components of these appliances.”

Pam pointed out that these warranties are often part of a real estate transaction, but can be purchased by a homeowner at any time. However, consider the expense of that repair item. Whether it comes at the seller cost or the buyer cost having a home warranty is a terrific tool for peace of mind, and a real cost savings. Speaking from personal experience, Allyn and Pam Maycumber, point out hundreds of satisfied customers that have had a wide range of maintenance items covered by a home warranty.

Remember, if you are selling your home you can cover yourself during the listings time period AND it will cover the new home buyer for one year after their closing. Our customer in the Lake Nona area of Orlando, Florida had their home on the market . One of the air conditioning units failed, and then was replaced by the home warranty company. This covered nearly $4,000 in expenses, and when the prospective buyer knew it was a brand new unit it was a tremendous plus and allowed the seller to focus on more cosmetic touch ups to enhance the property. It was a “win WIN” situation.

Is it worth it? that depends…

For a “buyer to renew or for a homeowner to purchase their own warranty is a total waste of money,” Adriana Mollica, a Hello for Teles Properties in Beverly Hills, California, said. However, she added that it depends on the situation, as it may be “a great idea for a seller to purchase [a warranty] for a buyer when selling their property” as an added feature to sell their home.

On the flip side these warranties can be great — and save you money — when they’re used correctly.

“As long as you hold up your end of the home warranty contract by making sure your systems and appliances are clean and taken care of, when they fail from normal wear and tear, a home warranty will cover the repairs and replacements,” said Chelsea of Fidelity Title. “Even if a home warranty doesn’t cover all parts of the system or appliance that needs to be replaced, the out-of-pocket costs that a homeowner pays versus what they would pay out of pocket without a home warranty translates to huge cost savings.”

Pam relayed, for those who purchase a newly built home with new appliances, “getting a home warranty probably doesn’t make much sense as long as they are already covered under a builder warranty. She said that a “home warranty makes the most sense when you have moved into a new home and the systems and appliances have been used previously” or when you’ve had your own items for two or more years.

“Before you buy a home warranty…make sure to read through the contract,” Pam advised. “Home warranties will explain in detail which parts of their systems and appliances they cover and which they don’t within their contract. In order to get value out of a home warranty it’s vital to know and understand what the plan covers and doesn’t cover.”

Deciding what you want the warranty for

According to Allyn Maycumber, a broker associate for Keller Williams Realty Advantage III in Orlando, Florida, it’s all about perspective. If you’re looking to get a warranty that will land you brand new items if yours break, you may be severely disappointed. But if you’re using it as a safety net, you may find comfort in your warranty.

“I look at home warranties as a way to buy insurance [so] that you have time to rebuild your emergency fund after purchasing your home,” Allyn said. “It can give you peace of mind that you will have heat all winter and hot showers for a year. But it is rare that a homeowner hits the jackpot and gets a new furnace from it, although I’ve seen that. If you do get a new furnace, it is going to be similar to the old one in terms of efficiency, so that won’t save you money either.”

Paying for home repairs

Unexpected home repairs can certainly do big damage to your bank account — which is one of the reasons it’s important to regularly feed that emergency fund. If you’re faced with a pressing expense, a balance-transfer credit card, low-interest personal loan or home equity line of credit could help you cover costs (and possibly spare you some interest.

Special Report: 2017 real estate industry outlook

2017 will be all about being nimble, responding quickly to market changes and keeping your clients informed

  • There is solid optimism about the housing market in 2017 percent of respondents saying they are extremely optimistic.
  • More than half of this survey’s respondents (52.21 percent) expect President-elect Donald Trump to have a positive effect on the U.S. housing market.
  • A strong majority (71.24 percent) of respondents have plans to expand their businesses next year.
  • Nearly 50 percent of respondents think unit sales will go up in 2017, and 75 percent of those surveyed think that prices will go up.

Special Report survey respondents and some of the industry’s top executives were nearly unanimous in believing 2017 will be another strong year for real estate.

The first quarter especially is expected to start with a hiss and a roar as buyers and sellers hasten to make a move now that the election is over and interest rates have undergone the first in a series of rises.

Download the full report with complete findings

Overall, 2017 will be an unorthodox, non-traditional and unpredictable year, both nationally and globally. Those who are nimble will manage it best.

“What most people think they know about real estate will have to be re-educated. Low interest rates will no longer be the driving reason for home purchase, building personal wealth and stability will,” said one respondent.

A bird’s-eye view

Those surveyed for the 2017 Outlook Special Report expressed the hope that higher interest rates might free up inventory as more buyers and sellers, previously holding back, are galvanized into taking action due to the new market conditions.

Thanks to the momentum driving the housing market — good employment, rising salaries, high-earning millennials with an interest in homeownership who are unhappy with high rents — our research found there is good optimism about the housing market in 2017, with 27.43 percent of respondents saying they are extremely optimistic and a further 45.13 percent describing themselves as somewhat positive, while 11.95 percent are ambivalent.

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Meanwhile, more than half of this survey’s respondents (52.21 percent) expect President-elect Donald Trump to have a positive effect on the U.S. housing market. They are looking to Trump to ease regulations and to look after an industry he knows well.

Said one upbeat respondent: “Trump will be running the country like a businessman versus a politician — he will be lifting some of the regulation that stifles the industry.”

A common sentiment expressed by respondents was that because Trump has an understanding of real estate, he will be reluctant to harm the industry.

“I am going to remain optimistic. Trump likes real estate so I hope he makes the conditions conducive for our industry to succeed,” said one respondent.

Added another glass-half-full respondent: “Trump understands the vital role that real estate plays in the health of the economy. I believe his administration will work not to negatively impact our business.”

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Business has picked up for a number of respondents, including this Virginia respondent, since the election. “Millennials are starting to buy, interest rates are going up, which will get fence sitters off the fence. My showings and sales have picked up noticeably since the election.”

Explained this St. Louis, Missouri, : “I am optimistic because of my business. I have more buyers and sellers at this time than at any other time in the last 10 years. This gives me hope.”

All the signs are good, added another respondent: “I believe the economic outlook will be very positive, consumer confidence will be up, regulations in real estate will be softened and possibly Dodd-Frank repealed or modified. All that can have nothing but positive effects on real estate.”

Agents making expansion plans

Our survey found that almost 70 percent of those surveyed are optimistic or somewhat optimistic about the economy.

As a result, a strong majority (71.24 percent) of respondents have plans to expand their businesses next year.

chart_q17_161220

More than half said they were optimistic about their own business, with more than 55 percent extremely happy with the way their business is heading into 2017 and a further 30-plus percent somewhat happy about the outlook.

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And while respondents felt that Trump, with his real estate development background, would be good for the housing market, they were less sure about what a Trump presidency might do for foreign investment in the U.S.

Our research found that 23.01 percent thought he would be positive, 22.57 percent thought he would be negative and a further 40.27 percent were just not sure.

“It depends on what he does. If he clamps down on the international investment portion of real estate, mainly Asia, it will impact the markets with a large influx of Asian investors. They will pull their money out of the U.S. and take it to countries that are more welcoming,” said one respondent.

The seeming isolationist stance taken by the incoming President is not going to do the American market any good, added one San Diego respondent.

“We live in a global society. Although some prefer to believe that we’re isolated, we are very much a part of the world economy and need to act accordingly.”

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Top industry figures agree: Optimistic outlook for 2017

As well as polling our readers, we also went to the heads of some of the country’s top real estate companies for their expectations on 2017 to see how they tallied with other respondents.

Their overview endorsed optimistic sentiments coming through in the Special Report, despite the level of uncertainty provided by what Pacific Union International CEO Mark McLaughlin called a “surprise election.”

Still, a decision either way was good news for real estate, putting people in a position to make housing decisions again, industry heads concluded.

Howard Hanna president Hoby Hanna said there had been an uptick already in activity since the election, which he sees continuing.

“Whether it’s the result of a Trump presidency or just the end to the divisive election, we’ve seen an increase in consumer confidence and buyer activity on the high end, which had come to a standstill through the summer and early fall,” he said.

“And with a double-digit increase in new sales activity for November and so far in December, we believe this consumer confidence will carry through the first quarter of next year and create a great start to 2017,” he added.

Another positive effect of a Trump presidency might be boons for construction, said Windermere Real Estate president O.B. Jacobi.

“The Trump presidency may also remove some obstacles for builders in the form of tax breaks and state incentives that limit regulations and encourage additional lending. Since an estimated 25 percent of the cost to build a home is considered ‘regulation,’ these changes would presumably help builders and consumers,” he said.

One possible downside to the big infrastructure projects that President-elect Trump has talked about in his campaigning is that it could cause a labor shortage for construction companies, said one survey respondent.

“If the government starts capital projects as per plan, there will be a significant labor shortage. This will put new home builders at a great disadvantage, resulting in higher home prices.”

Sales up in 2017

Our respondents and the chief economists of two large brokerages were united in the belief that unit sales and prices would go up in 2017.

chart_q12_161220

Nearly 50 percent of respondents to our survey felt that unit sales would go up, while, 37.17 percent didn’t think the number would change and 16.37 percent said they would go down.

chart_q13_161220

Almost 75 percent of those surveyed thought that prices will go up next year.

Windermere’s chief economist, Matthew Gardner, believes existing home sales should rise to 5.548 million units in 2017. He is also forecasting that existing home prices in 2017 will rise by 4.5 percent to a median of $242,700.

Pacific Union’s chief economist, Selma Hepp, also believes house prices will continue to rise, especially in markets that are already supply-constrained.

“Supply is still the largest contributor to continued elevated price appreciation since inventory of remains at historical lows,” she said.

One Santa Clara county respondent is living this right now: “Inventory is still really tight here in Santa Clara County. That, coupled with job growth, it is looking like 2017 will mirror 2016’s market conditions.”

Hepp added there was the possibility of a very hot market in the next few years if certain elements fall into place.

“If the stronger growth expectations from lower taxes and more spending do realize, and there is deregulation in housing finance along with some Dodd-Frank repeal, we may be looking at a very heated market in the next few years.”

She said she would watch to ensure mistakes from the last housing crisis are not repeated, especially when it comes to alternative mortgage products and mortgage-backed securities.

Agents should be more productive in 2017

We asked respondents how they saw agent productivity progressing in 2017, and almost two thirds (63.72 percent) said agents would be more productive in 2017.

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It will be a year when successful agents will have to work for their business, said one L.A. respondent.

But be warned: “The low-hanging fruit will be gone, and there are too many agents in our market who do not know how to consistently find and build business.”

ERA president and CEO Sue Yannaccone added: “I expect to see agent productivity increase for those who have a business plan and execute upon it. A renewed focus on listings and conversion and adopting technology will also be critical to increased productivity.”

McLaughlin said he was expecting to see a rise in productivity of his agents in 2017, but that the industry as a whole would be seeing decreasing productivity.

Technology predictions for 2017

Technology will be an important tool for improving agent productivity in 2017, said the industry heads.

“Technology and big data will continue to have a major impact on agent productivity in 2017,” said Coldwell Banker CEO, Charlie Young.

“Our most innovative sales associates are experimenting with virtual reality in their open houses, meaning soon they can show multiple listings to multiple people from one location,” he added.

More tech innovation is expected in 2017. On Keller Williams’ Chris Heller’s wish list is continued innovation in artificial intelligence (AI) and virtual reality.

This Atlanta respondent believes pressure from millennial buyers will drive the continued momentum of tech in real estate: “We are on the cusp of some insanely interesting virtual reality aspects. VR and live touring from home will be the next thing to disrupt the industry. As the average age of agents reduces from the boomers retiring and more millennials entering the field, the tech will become more and more involved.”

One North Carolina respondent predicted: “Twitter will rule since that is Trump’s favorite way to communicate. Also text communication will become the mainstay — more and more cloud technology.”

This comment staring into the crystal ball combined thoughts from a number of respondents:

“3D tour/ modeling will make big gains, but not quite make it to full market potential. Predictive analysis will also make good gains. New artificial intelligence ideas will start to bloom and Zillow will continue to push, maybe unveil some big surprises, maybe begin to offer contract support.”

There are still those out there doing it their own way without the help of social media.

This L.A. respondent said fervently: “There will be the beginning of a return to real estate as a person-to-person business because there is now too much competing technology and its effectiveness is being diluted. I had a great 2016 without doing any internet marketing besides allowing my listings to be on major portals.”

Some respondents are watching their local MLSs to see how they pick up on new opportunities.

“Technology is changing our industry fast. My biggest fear is that my MLS won’t play ball with [Broker Public Portal] and Upstream. I want to be ahead of the curve with the way search is changing. I hope that we do move towards a national MLS,” said this Chapel Hill respondent.

There is still a lot of “what’s that?” confusion about BPP and Upstream among agents, we found in our survey. More than 40 percent of respondents (Q19) didn’t know what BPP was, and 35 percent were mystified by Upstream.

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Several of the companies we talked to, including Pacific Union and Keller Williams, were on the boards of BPP and Upstream and excited about what they would mean for the industry.

Said Hanna: “We do hope and believe that Upstream could be a real game-changer in helping brokers of all sizes better manage and transfer their data amongst multiple technology platforms. We’re investors in both the Broker Public Portal and Upstream and optimistic that both companies could create wonderful advantages to the industry benefiting agents, brokers, and supporting new initiatives of technology.”

We asked respondents where they believed their leads in 2017 would come from, and the majority said referrals (61.5 percent) with 9.29 percent saying from Zillow and 4.42 percent from realtor.com.

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Young added, “Our biggest source of leads in the coming year will be our new digital platform, Zap, which Coldwell Banker has been actively rolling out for its brokers, agents and consumers.” Zap is a tool that generates leads by connecting agents with prospective homebuyers in their area.

How to ride uncertainty

Yannaccone addressed how real estate businesses should operate during the initial uncertainty of a new Trump government in 2017: “One thing that is for certain as we enter into 2017 is that there will be a great deal of change as the President-elect challenges the status quo,” she said.

“I’m always optimistic about change and the opportunities to capitalize on it, so I am looking forward to navigating through whatever is to come.”

Rising interest rates should not be viewed negatively, she said.

“The Federal Reserve continues to signal that rates will rise in 2017, a positive sign of a stronger economy.”

She believes the interest rate rises may well trigger more buying, a sentiment also coming through in our survey. She said: “As mortgage rates rise, you will likely see a subset of the buyer pool decide to act sooner than they may have out of a concern that continued increase in rates will make their affordability levels change.”

On the other hand, there will be potential move-up buyers who are locked in at historically low rates and who may be unwilling to take on a mortgage for a new home at a higher rate, thereby impacting existing home inventory levels, she added.

It’s important for agents to stay calm and keep doing what was working for them, said Heller.

Heller was sanguine about the upcoming change of government.

“I’ve been an agent for 30 years. I’ve sold a lot of homes during Republican administrations…and I’ve sold a lot of homes during Democratic administrations. There’s always business for agents willing to work.”

Hanna allayed any fears that rising interest rates would change the market as long as they are kept to a certain level, which the Federal Reserve is proposing at this point.

“Interest rates would have to go to 6 percent to see a real slowdown in the market. Taking that into consideration, fear of interest rates increasing should drive at least the first half of the year in tremendous sales activity,” he said.

Heller added that this expected activity in a changing environment will be a great opportunity to advise clients and share their market expertise.

Stay informed and educate clients

One of the prevailing themes coming through in our research is that well-educated agents will be worth their weight in gold to their clients as they help them read fast-changing markets.

One respondent emphasized becoming better informed: “I’m concerned about keeping on top of providing my clients with the best and most timely information and counsel. I plan to increase communication with my lenders and add to the variety of the lending programs I’m familiar with working with.

“I will be keeping buyers apprised of what’s happening,” said this respondent, who covers the Virginia and North Carolina markets.

And on the other hand, “I might be possibly getting sellers to accept price adjustments due to buyer hesitancy,” said a San Diego respondent.

Yannaccone said, “It is important that as an industry we focus on educating buyers about perceived barriers to homeownership and providing alternative solutions to assist them in achieving their goals.

“No change occurs in a bubble; any movement in rates and the subsequent impact on housing occurs in conjunction with other economic factors, such as whether income levels throughout the country are growing or not, whether credit restrictions are loosening, for instance,” she added.

According to Hanna, Howard Hanna is aggressively going after buyers, with a lot of education on buying versus renting and explaining how an increase in interest rates will impact buying power.

Jacobi is expecting a rise in first-time homebuyer activity in 2017.

“While we’ve seen some improvement over the past year among these buyers, I think rising interest rates will encourage even more of them to jump off the fence and into homeownership,” he said.

“And it goes without saying how important first-time buyers are to the overall health of the market, so this would be a definite positive for U.S. housing.”

And this Houston respondent is putting on a good face no matter what. “If I’m not positive and determined, then how will my customers and clients be? I’m going to be sharing the vision, live it out loud and continue to work hard.”

It’s the economy, stupid

Though politics has had everyone transfixed this year, Hepp reminds the industry that it’s the economic factors that are driving the largely buoyant real estate market as it goes into 2017, not anyone in the White House.

“The housing market is on its own path,” she said.

“Irrespective of the election outcome, the economic cycle was already showing increased signs of strength, which suggested 2017 would be a good year for the U.S. economy. Also, continued strength in employment and the technological revolution underway promised some interesting years ahead for the global economy and consumers in general.”

This Sonoma county respondent agrees: “The sun is still shining on real estate. For our market, baby boomers and wealthy millennials are keeping it moving along at a good clip.”

From a markets and economics point of view, there is little doubt that the uncertainty people are feeling could have an impact, said Hepp.

“In the very least, I’m concerned about what higher uncertainty and volatility does for consumer and business confidence,” she said.

What are real estate professionals worried about?

Despite the overall optimism, no one is expecting next year to be without its surprises — and some of these could impact the lives of real estate agents.

What are respondents worried about? Heller said he would find it worrying if interest rates went up too quickly, and he is joined by other respondents.

A combination of high interest rates and low inventory would not be welcome, said one respondent. Affordability remains a concern especially in the hotter markets, said others.

A mercurial federal monetary and housing policy or loose lending would be worrying too, added another respondent.

Then there are elements out of our control — global market incidents or terrorist attacks, said another.

Some of the same old concerns will roll over into 2017. As one Hawaiian respondent puts it: “I worry about costs going up and commissions going down as newer models promote higher agent splits and lower fees to sellers, making it more difficult for traditional companies to compete.”

The Trump presidency could coincide with some big changes in the industry, which smart agents will respond to quickly, suggested one respondent.

“I believe that this is the year the real estate industry will be finally disrupted by platforms and consumers will realize that the current commission structure is absurd. The economy will surge due to the new Trump policies and those agents and brokerages that are able to quickly adapt to the changing commission structure will reap the benefit.”

And not all buyers around the country are going to move on homebuying; some may hold off because they are unsettled by the new man in the White House.

This L.A. agent had cause for concern recently: “I had two clients back out of escrows within the month of the presidential election.”

The biggest challenges in 2017

When asked what the biggest challenges would be in 2017, respondents listed rising interest rates, low inventory, helping their clients find affordable homes, the changing commission structure, finding leads and recruiting as aging agents leave the industry, among others.

Some around the country are already seeing the signs of an easing market and are starting to think what a next recession might look like after 2017.

Said this Atlanta respondent: “2017 to me is the last year to make out like a bandit. With the election just transitioning and Trump not having a political background, I assume politics will fall short of swaying housing while he uses 2017 as a year to transition into being President.”

In Atlanta, builders are missing new home sales projections and resorting to big incentives already, he added. “Barring some catastrophic event, we won’t see a decline like we did post-Lehman, but I personally don’t like where things are headed for the housing market starting 2018. We have a lot of things propped up with twigs and glass giving off false impressions, but people are starting to throw rocks.”

“We have a lot of things propped up with twigs and glass giving off false impressions, but people are starting to throw rocks.”

This New Jersey respondent has not had a good end of year — and it’s possible some markets might move into a slowdown before others:

“My phones went silent since October 28 when the FBI issued the election bombshell refocusing attention on Clinton’s email. Then 75 percent of my active buyer pipeline withdrew from market activity. The lead and showing activity on my listings is likewise off more than 80 percent. I haven’t seen any positive measurable signals since the election.”

And this Hawaiian respondent can see things playing out in two ways: “The Fed controls inflation and manipulates the economy. If rates stay under 5 percent and pent up demand continues, I expect a leveling out in our market. However if there are major setbacks due to chaos in the government under the new presidency, consumers and markets may react and spending stalls and we head out faster than expected in this real estate cycle.”

Conclusion

To sum up, it looks like it is going to be a productive 2017 — but you would be wise to make the most of it and get off to as strong a start as possible in the New Year.

This L.A. respondent has the right idea: “I’ll be hitting the ground strong in January and keeping the intensity up all year, while responding rapidly to market changes caused by catastrophic events and mercurial leadership.”

Agents and brokers will have to work smarter in 2017 and roll with the punches.

“2017 will be an unorthodox, non-traditional and unpredictable year both nationally and globally and those who are nimble will manage it the best,” said another L.A. agent.

“I think this is going to be the last boom year of the recovery. I think 2018 will be slower and the election honeymoon may be over,” concluded a Florida respondent.

Inman conducted the survey between Dec. 1 and Dec. 11, 2016. There were 226 respondents.