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By Robert Freedman, senior editor, REALTOR® Magazine
Probably nothing is more important from a home sale standpoint than prices shoring up. That's how I interpret data NAR plans to release next week at NAR's 2009 Midyear Meetings & Trade Expo in Washington. NAR researchers are putting the finishing touches on the 2009 Member Profile, an 80-page report that looks at how much REALTORS® are earning, how many transactions they're closing, where their business is coming from, and so on. One set of data that jumped out at me is based on a question that wasn't asked in previous studies: what's the biggest roadblock to getting transactions closed. I expected the answer to be the difficulty households face in getting financing. That is in fact a major reason: 24 percent said that's the biggest problem. But 35 percent said the biggest problem is households' expectations that home prices will fall further, so they're waiting. What's clear, then, is that prices must stabilize and even start heading back up before households stop waiting and get back into the market. Other reasons transactions aren't getting to closing, according to the data, is low consumer confidence and concern about losing one's job.
As you would expect, the study shows that the market was pretty tough in 2008. REALTORS®' median sales volume for the year was only $1.2 million, down 37 percent from 2006, when it was almost $2 million. The drop in volume on a percentage basis was actually steeper for the most experienced practitioners. Those with 16 years or more in the business saw their volume drop 42 percent, to $1.5 million from $2.6 million. That suggests that the market slowdown has had an equal-opportunity dampening effect on sales.
Maybe it's because the market has been a tough ride that the share of REALTORS® who've only been in the business a year or two is dropping. In 2006, just before the downturn hit, 13 percent of practitioners had been in the business a year or less, and 10 percent had been in it two years or less. Compare that to last year: only 7 percent have been in a year or less and only 6 percent have been in two years or less. That suggests fewer people have been entering the profession, and, as a result, among those that have remained, the overall experience level has risen.
Looking ahead, more practitioners say they're not certain they're going to stay in the business. Predictably, the more they made, the more they expect to continue on. Of those who made $10,000 or less last year, 13 percent say they don't know whether they'll continue on. Those who made around $30,000 or less, 12 percent say they don't know. Both of these figures are up from 2007, suggesting an increased pessimism among low earners than before. By contrast, among those who earned $150,000 or more last year, only 2 percent said they weren't sure if they'd stay in the business.
What's clear is that, going forward, online social networking among those who stay in the business is going to become more prominent. We can't compare how things are trending because this is the first year NAR asked the question, but 71 percent of those 29 or younger use social networking sites in their business. These are sites like Facebook, Twitter, and LinkedIn. Only 19 percent of practitioners 60 or up have started using the sites. Overall, 14 percent who aren't using social networking sites said they plan to.
Meanwhile, despite the growth of foreclosures and short sales, those types of transaction remain a relative rarity among the bulk of practitioners. Almost two-thirds said they did no foreclosures last year and 72 percent said they did no short sales. Thirty-two percent said they did 1-5 foreclosures, and 26 percent said they did 1-5 short sales. Only a fraction said they did 11 or more of either type of transaction.
NAR will be releasing findings from the report next week. We'll be reporting on it at our Daily News site, which you can find on the home page of REALTOR® Magazine Online at REALTOR.org/realtormag.
By Stacey Moncrieff, Editor in Chief, REALTOR® Magazine
A New York Times story yesterday quoted former real estate broker Johnny Isakson, the Republican senator from Georgia, on the $15,000 homeownership tax credit amendment that had just passed in the Senate ("Senate Advances Tax Break for Homebuyer").
Isakson was responding to critics who called that amendment, as well as one to stimulate car buying, "pandering." The senator recalled a similar economic downturn in 1974 in which a tax credit brought balance back to housing inventory and stabilized values. "The only reason I know all of that," he told the Times, "is I was selling houses in 1974. That’s what I was doing to feed my family and make a living.”
Isakson's comment reminded me of a series we've undertaken at REALTOR® magazine to spotlight practitioners who've been through challenging times and lived to tell about it. In the coming year, senior editor Wendy Cole will be interviewing some of the association's REALTOR® Emeritus members (those who've been in the business at least 40 consecutive years). Our first interview is with 81-year-old Geary Jones) of Santa Cruz, Calif. Geary started the call with Wendy by saying he didn't know how much he'd have to offer; in the end, his comments were both uplifting and instructive.
So what questions would you ask a REALTOR® Emeritus? And what are your thoughts on the $900 billion stimulus package now working its way through Congress — and particularly on the "new, improved" homebuyer tax credit?
By Robert Freedman, Senior Editor, REALTOR® Magazine
President Barack Obama has a lot on his plate but if you could spend a few minutes with him, what idea would you put in his ear to help improve housing markets?
Trulia CEO Pete Flint recently posed that question to readers of the Trulia blog. The closest thing to a consensus opinion among the 28 readers who responded: Get the U.S. Treasury to do what it originally said it would do when it lobbied for the $700 billion in Wall Street rescue funds back in October 2008. As one reader says, "Get the mortgage companies that were given bailout monies to loan that money out to people to start buying."
The fact is, REALTORS® were concerned with banks' intentions from the very beginning. When lawmakers were debating the rescue package, two leaders of our industry—Gary Keller of Keller Williams Realty in Austin, Texas, and Ken Riggs of Real Estate Research Corp. in Chicago—told me and other REALTOR® Magazine editors in a conference call we hosted that bank actions needed to be monitored carefully because banks were under no obligation to pass their money through to borrowers. "Although the intent of the legislation is to free up capital for lending on homes, cars, college, and business inventories, the government doesn't have a mechanism in the bill for making the banks turn around and lend the money back," Keller said at the time. "So no one knows what will actually happen once a bank has its capital freed up."
Here we are several months later, with half of the funds spent, and real estate professionals are still waiting for the banks to plow assistance into credit markets.
Other responses to Flint's blog post fell into three broad categories:
1) Help households become homeowners
2) Help home owners at risk of default stabilize their position
3) Help the industry help itself.
Top among the suggestions for helping households become owners is allowing people to save for a downpayment using tax-free dollars, what one person called a home savings account. Other actions recommended are in line with what NAR has been advocating for months: Increase conforming and FHA high-cost area loan limits, bring down interest rates, and make the homebuyer tax credit a real credit rather than a loan in disguise.
One person said getting interest rates down to 4 percent would make a real difference in getting people off the fence. NAR doesn't advocate aiming for a certain rate—that would encourage prospective buyers to stay on the fence waiting for the target rate—but it did applaud the Federal Reserve's actions last month to begin buying mortgage-backed securities. The move helped bring down rates to just under 5 percent for a time without the Fed having to lower its short-term target rate, which is already just barely above zero.
There were all sorts of suggestions for helping troubled home owners, but a recurring theme throughout was the need for the federal government to get lenders to rethink overly tight underwriting standards and take whatever steps are necessary to get lenders to take loan modifications seriously. Replacement loans with 40- and even 50-year maturities should be an option as well.
Suggestions for the industry to improve itself really don't fall into President Obama's portfolio. Many commenters said the industry must make it harder for practitioners and mortgage brokers to get licensed, but that's a state issue. All the federal government can do is encourage, recommend, or cajole states to take action. Stricter enforcement mechanisms for violations are needed, too, some readers said.
A few people weighed in on the stimulus bill now making its way through Congress. Here the focus needs to be on long-term investment that will produce a real payoff in future increases in economic activity and new jobs. One person pointed to the ideas being generated at a think take called the Davinci Institute, which is touting investment in future-oriented technologies like a national wireless Internet grid, massive data storage libraries, self-navigating on-demand automobile systems, a "whole earth" genealogy project, digital upgrading of community libraries, a space elevator, a transcontinental freeway, and space-based power stations. Few of these ideas have anything to do with real estate but they could conceivably pave the way for the kind of economic expansion that really does growth the pie, making home ownership possible for more people.
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
Gary Vaynerchuk — best-known for his viral videos on wine tasting, in which he encourages viewers to "spread the thunder" — took the stage yesterday as the keynote speaker of Real Estate Connect NYC ’09. The self-made millionaire detailed how he was able to transform his family liquor store from a $4 million business into a $50 million national industry leader.
Vaynerchuk takes a no-holds-barred approach to reviewing wine — an approach that has won him more than 100,000 fans on YouTube — and says the real estate business could use the same candor and passion he displays at Wine Library TV. He urged practitioners to redirect their ad dollars and efforts toward social media. “Twitter is the new fax machine,” said Vaynerchuk. He told the audience he receives more than 20 times the response from a Twitter promotion than he gets from a traditional billboard.
Vaynercuk said practitioners trying to overcome a slow market should think about other revenue streams by carving out a niche and exploiting their expertise. He’s used his online platform, for example, to garner high speaking fees, book deals, and even a potential television show. You can see Vaynerchuk’s unique brand of online pitchmanship at Wine Library TV or at http://garyvaynerchuk.com .
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
More than 1,200 hungry real estate professionals gathered for Real Estate Connect NYC, Jan. 5–8, at New York City’s Marriott Marquis to talk about the future of the business.
Real Estate Connect was more or less my formal introduction to the real estate business—I’ve been with REALTOR® magazine for just one month—and it was both a sobering and an exhilarating three days.
It was sobering because it was hard to find anyone who’d had a particularly good 2008, and many practitioners are uncertain about their prospects for 2009. Speakers said there was room for optimism in terms of the number of transactions expected for 2009. However, they warned that recovery prices would likely take the form of an L shape, not a V shape. Among the speakers were NATIONAL ASSOCIATION OF REALTORS® chief economist Lawrence Yun, Yale Professor Robert Shiller, and New York Times business reporter and columnist Andrew Ross Sorkin.
The exhilarating part was witnessing all the innovation that’s taking place in this business. The conference set a strong tone that it’s time for the real estate industry to embrace social media — such as Twitter, Facebook, and, most important, blogs — as a way to network and establish your expertise. In fact, the conference was teeming with social networkers who were blogging about the sessions and communicating through Facebook, LinkedIn, and other online communities.
Several sessions were geared toward helping practitioners build international business during a time when exchange rates are still favorable for foreign buyers. One tip: Those who want to break into the international arena should list prices in foreign currencies and state dimensions in meters instead of square feet. Learn about NAR’s International programs at REALTOR.org.
By Kitty B. Stockton, ABR, CRS
Editor's Note: I received this poem back in June from Kitty, a member living in Chapel Hill. I hoped to put it in the magazine, but we too have been belt tightening. Pages have never been lower. Kitty, even though gas prices have come down, your poem is more timely than ever. I feel your pain!
Momma's got the blues in Real Estate
In the year 2008,
It ain't like the old days--it's inconceivable
The only way to describe it is unbelievable.
So much time is being spent
My kids are wondering where Mommy went.
All her efforts to sell a house
Leave little time for them or the spouse.
So many listings which don't seem to sell,
So many features and not one to tell.
Brochure boxes which keep eating the flyer,
Sometimes it feels the situation is dire.
Open houses where I'm home alone,
Just me, REALTOR mag and my cell phone.
Sellers with unrealistic expectations,
Giving my poor heart palpitations.
I try to tell them about the pink and blue tile.
They won't believe me--I have to smile.
Six cats I say, makes buyers allergic;
They don't get it--making me liturgic.
Dear God, could you please bring me a buyer with money:
My two little cubs need some honey.
Preferably one willing, ready and able
To meet me at the closing table.
Oh they can't sell their house, you say.
They'll buy later, but not today
Please could you help us find a rental?
Sure, I say, slowing going mental.
Finally a buyer--but she has an alpaca.
(That's about as popular as smoking tobacco.)
Didn't sit well with the covenants,
Much less the local government.
No deal to day, but I'll keep trying.
It's all I can do to keep from crying.
Keep the faith; a better day is coming.
Better be soon or I might start rumming.
No you won't--you're a pro
Who understands how the cycles go.
Remember back in '82,
19% made us even more blue.
Short sales, credit crunch, mold and mildew,
Disclosure issues you mustn't eschew.
Subprime, foreclosures and gas oh so steep,
Altogether the climate could just make you weep.
NAR says the bottom is near
So we should go forward without any fear.
I'll do it I will-- I can take this and more.
That's what I do. I'm a REALTOR.
Respectfully and with tongue in cheek,
Kitty B. Stockton, ABR, CRS
By John N. Frank
Many years ago, when I was dealing with a profound personal tragedy, someone recommended I read a book that started out with a Buddhist guiding principle, “life is suffering.” The book wasn’t trying to be maudlin or to get me more depressed. Rather, the author was making the point that difficult things happen in life. That’s a given; what’s up to us is how we deal with and go on from them to have happy and fulfilling lives.
I’ve been hearing just that message again recently as I interview real estate professionals for a story I’m working on for the June issue of REALTOR® magazine. The article will talk with five
Continue reading "Lessons from My Generational Kin" »
By Wendy Cole
As a major subprime lender, behemoth California-based Countrywide Home Loans quickly devolved from one of America’s most successful mortgage companies to perhaps its most tarnished. But the company sure isn’t hiding in the corner waiting for its reputation to repair itself.
While Bank of America’s bailout will certainly help the lender write its next chapter, Countrywide is taking steps at a local level to help real estate practitioners and their clients navigate today’s challenging markets. Nearly 100 Chicago area real estate pros gathered Wednesday at the tony East Bank Club at a panel organized by Countrywide where the topic was: Protect Your House: Resetting Expectations for Sellers in your Marketplace.
It makes sense in a way. Why shouldn’t a company at the heart of the lending crisis
Continue reading "Countrywide Tries to Boost Housing Confidence" »
BY STACEY MONCRIEFF
Many REALTOR® Magazine Readers are telling us they’ve never experienced a more challenging time to be in residential real estate. One reader wrote to say she opened the newly redesigned magazine and asked herself, “Is this all you’ve got?” She urged us to dig deeper to find strategies to help her and her fellow practitioners weather the slow market.
So I did just that, finding an article I wrote back in 1990 when my last name was still Waldron. The country was in a recession, and NAR membership had dropped below 700,000. California was seeing significant home price declines, the “Massachusetts Miracle” was derailing, and the Gulf States were still recovering from the 1980s oil bust.
Much of the advice that brokers and salespeople offered at that time is still germane today, so I’ve posted the text of the article, “Turn Up the Heat on a Cold Market” here.
One point you may find refreshing: In 5,000+ words, there's nary a mention of the Internet!
Of course, we're also working on more modern-day guidance for you — but still with a focus on the fundamentals.
Just after the NAR Conference in Las Vegas in November, long-time practitioner John Mayfield, CRB, posted this entry at the Council of Real Estate Brokerage Managers blog: "If there was
Continue reading "Surviving the Slowdown" »
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