Real estate trends

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Real estate trends is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This phenomenon can be a result of the economy, a change in mortgage rates, consumer speculations, or other fundamental and non-fundamental reasons.[1]

A real estate trend is the catalyst for the change, and it is usually a concept, a belief, a philosophy, or an event. Sometimes a real estate trend evolves to meet a specific need, while others evolve when new products or solutions are launched. For example, when more lenders began offering creative financing products, more borrowers were able to afford a mortgage (at least on paper). At other times, a trend from another industry spills over into the real estate industry and is adopted.

Therefore, a trend must have substance and be based on fact. Over time, it will cause pattern of change. Monitoring changes and tracking trends is a not an exact science and can be very hard to predict.

The residential real estate brokerage industry is approximately half way through a 10–15 year industry transition.[2] This major shift is creating a fundamental change in the way homes are being bought and sold and the role the real estate agents are playing therein.

Contents

[edit] U.S. Government Involvement

The United States of America (U.S.) Department of Justice Antitrust Division announced the launch of a new web site in October 2007 to "educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition." Among other findings, they report that certain new sales models can reduce consumer home sales costs "by thousands of dollars. For example, in states that allow open competition, some buyer's brokers rebate up to two-thirds of their commission to the customer, and some seller's brokers offer limited-service packages that let sellers list their homes on the local multiple listing service (MLS) for as little as a few hundred dollars."[3]

The DOJ web site, Competition and Real Estate, includes a link to the real estate laws of each U.S. state and how they support or inhibit real estate brokerage competition.

[edit] Real Estate Broker and Agent Trends

The only annual report detailing real estate trends impacting the residential real estate brokerage business lists the following 10 trends as having the largest impact on residential real estate brokers and agents over the next 12 – 18 months. [4]

Trend #1 - Growth of Social Media and Virtual Communities

Trend #2 - The Sub Prime Lending Collapse Driving Rise in Foreclosures

Trend #3 - The Importance of Information in Real Estate Business

Trend #4 - The Changing Borders and Structure of Multiple Listing Services

Trend #5 - The Search for Productivity in a Declining Housing Market

Trend #6 - Growth of Identity Theft in MLS and Increased Data Security Concerns

Trend #7 - Evolving and Changing Real Estate Business Models

Trend #8 - How Existing Large Real Estate Brokers are Expanding

Trend #9 - The Changing DNA of the New Breed of Real Estate Agent

Trend #10 - Rise of Women, Gen X and Minorities in Leadership Roles

[edit] Trends in FSBO sector

For Sale By Owner is a real estate term which describes the situation in which a property is offered for sale directly by its owner and without that owner having solicited the help of a real estate broker, implying that no real estate commission is associated with the sale.

More and more owners selling their own property are using online marketing companies to advertise their properties. FSBO web sites are now a real part of the real estate market, as the Internet becomes vital in the home-selling process.[5]

According to a NY Times article from December 2007, "Nationally...real estate companies are spending 26 percent more on online advertising this year, even as total real estate ad spending declined 3 percent, according to Borrell Associates, a research company." [6]

According to a press release by the National Association of Realtors (NAR) regarding their most current annual survey of real estate consumers, 2005 Profile of Home Buyers and Sellers [7]:

  • 12% of 2006 US real estate transactions were FSBO.
  • 13% of 2005 US real estate transactions took place via FSBO (down from 14% in 2004).
  • The record percentage of 20% of US real estate transactions (since tracking started in 1981) took place in 1987.

According to the Canadian Real Estate Association, which claims that 75% to 80% of homes in Canada were sold through brokers, it would appear that "Sale by Owner" accounts for some 20% or 25% of the remainder.[8]

[edit] References

  1. ^ "What is a Trend?"
  2. ^ "New Report Offers Brokers Guidance in an Evolving Market"
  3. ^ Antitrust division launches web site on competition in the real estate brokerage industry. Retrieved on 2007-10-17.
  4. ^ "Swanepoel Trends Report (2008 edition)"Retrieved 1 Feb 2008
  5. ^ Swainson, Gail, "Cheaper ways to sell gaining ground", Toronto Star (Toronto), Sept 15, 2007Retrieved 29 Jan 2008
  6. ^ Martin, Antoinette, "Home Searches That Click," New York Times, December 16, 2007Retrieved 8 Feb 2008
  7. ^ National Association of Realtors, "Home Buyer & Seller Survey Shows Rising Use of Internet, Reliance on Agents", January 2006, Retrieved 19 Jun 2006
  8. ^ Adkin, David, "Conducting the ultimate yard sale", Globe and Mail (Toronto), Sept 25, 2004Retrieved 29 Jan 2008

[edit] See also

[edit] External links