CAAR Blog

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #7 The Tug of War has Started…Again
The Evolving and Changing Real Estate Business Model
 In trend #8 it was noted that the impact of new business models in real estate had not been death blow to the traditional model.  Instead, the traditional model was showing signs of adopting some of the new practices and adapting to new consumer expectations.  Now it is time for the next wave of innovative business applications to hit real estate.  Many of these new services are Internet based and may have the effect of reducing the cost of a transaction by 50%.  That reduction in cost would likely translate into a reduction in the fee listing agents charge.

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #8 Clash of the Titans
Power Brokers Flex Their Muscles
 In the last 10 years there have been a myriad of new business models introduced in the real estate industry.  Each of these new models has been proclaimed to be the idea that will change the way real estate will be sold.  But Swanepoel points out that “the impact of new real estate business models has been for the most part insignificant.�  Instead of changing the business completely, these new models have created niche markets and some have been very successful.He also points out that this lack of an industry killing new business model does NOT mean that the traditional business model is safe.  Instead, he reveals that “many traditional brokerage companies remain dysfunctional, burdened with layers of unnecessary costs, still struggle with the independent nature of their agents and cling to old vestiges, systems and ways.�  The trend, however, is for traditional firms to embrace change and learn lessons from the new business models.  Remember when the Internet was going to put REALTORS® out of business?  Instead, REALTORS® embraced the change, adapted it to their business, and became stronger. 

 This is, by far, the best time for a first time homebuyer to jump in and buy a home.  There are 590 homes on the market for under $200,000 and interest rates are low.  But where are these 590 affordable homes and what can you expect?  Here’s a quick breakdown.

399 of the 590 homes under $200K are detached, single family homes, so that should debunk the myth that ALL affordable home are condos.  27 of the detached homes are in Albemarle and 26 are in Charlottesville.  While those are not large numbers, they are much higher than just two years ago.  Of the 53 homes in Char/Alb, only 1 of them was built in this decade.  The other interesting breakdown is that only 4 of the Albemarle homes are in the growth area.

Most of the affordable units in the MLS are in Waynesboro, Fluvanna, and Louisa.  See chart below…

 

It is also imporatnt to note that the two best places to find affordable “new” homes are Louisa and Waynesboro.  See the chart below for the breakdown…

 

 Condo are centered in three places - Albemarle, Nelson and Charlottesville.  Clearly, the marketplaces in these three localities have determined that condos and other attached homes are important in providing affordable housing.  These three localities are the three highest priced parts of our community.  Here is a breakdown of where the affordable attached homes are located.

 

Once again the opponents of the Meadowcreek Parkway have taken steps to stall the process. The latest is a technical toe in the door that will do nothing more than delay the inevitable and cost us tax dollars - lots of tax dollars. I recently was given an article from the Daily Progress dated October 16, 1992 about locals fighting against the Parkway. While 1992 was a long time ago, we were already 30+ years into the debate on this road.

The latest attack by the anti-parkway gang is based on some nearby “historic resources.” Since these resources are “historic,” I’m guessing this is not a “new” issue that just popped up. In fact, the issue of the Parkway has now passed the magic 50 year mark that qualifies it has “historic.” We need to protect the Parkway as a historic resource.

Every month the project is delayed costs us a million dollars. That’s money that comes out of our pockets because of the actions/opinions of a few. Surveys have shown the vast majority of the people in both the city and county want the road and at least 7 different City Counsels and Boards of Supervisors have approved the project to move forward. Please stop with these futile and expensive tactics and allow the will of the people to move forward.

This is a cool idea.  I’m just mad I didn’t think of it first.  Bloggers make sure you enter and represent CAAR!!!

http://varbuzz.com/announcing-the-varbuzz-first-annual-real-estate-blog-brawl-ladies-and-gentlemen-lets-get-ready-to/

 

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox. I’m going to provide a trend by trend breakdown to create a 10 post summary of the report. To purchase the report for yourself, go to www.retrends.com.

Trend #9 – Thought Reform

The DNA for a New Breed of Real Estate Professionals

 

Keep in mind that these trends are not things that have already changed; rather they are things that are changing. All real estate agents are not alike – some have embraced some trends and a few have embraced all trends.

The current real estate market is challenging for the profession of real estate. The number of sales has dropped nationally and here in Charlottesville by 20%, but the number of REALTORS® - competitors – has only gone down slightly. In 2007, CAAR had 1160 REALTOR® members and now we have 1118. So the pie got smaller, but the number of mouths to feed did not.

This is a time where REALTORS® will have to upgrade their skills to survive in this competitive environment. Clichés like “when the going gets tough, the tough get going� and “this is where we separate the men from the boys� (sorry gals) apply in real estate today. So what are REALTORS® doing to make themselves more competitive? They are turning to education.

This is not a new trend that came about because of the tough market – there has been a rise in educational demand and requirements for the past 10 years. The slower market simply adds sunlight to the trend.

There are two areas that REALTORS® are turning to for self improvement – designations and coaching.

Designations have been around for several years, but the number and variety have exploded recently. We use to have a handful of designations that were all developed by the REALTOR® organization. Now we have over 70 designations and certifications that have been developed by a variety of sources. NAR now has 21 official designations/certifications and the rest are from private enterprises.

To see a complete list, go to http://www.redesignations.com. Here are the top 5 most popular designations:

ABR – Accredited Buyer Representative

GRI – Graduate, REALTOR® Institute

CRS – Certified Residential Specialist

ePro – (designation recognizing Internet skills)

SRES – Senior Real Estate Specialist

 

In addition to designations, coaching has increased in popularity in recent years. REALTORS® can hire a personal coach, a group coach, or use an on-line service to self-coach. Swanepoel lists the top national coaching organizations as follows:

Brian Buffini & Co.

Mike Ferry Organization

Your Coach (Tom Ferry)

Coach Ken (Ken Goodfellow)

By Referral Only (Joe Stumpf)

Craig Proctor’s Home Selling System

Real Estate Champions (Dirk Zeller)

Star Power (Howard Brinton)

Sanford Systems and Strategies

 

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #10 – Shattered Glass
Women, Youth & Minorities Step Up to Leadership Roles
This trend identifies a shift that has been brewing for a while but has just reach critical mass to make the top ten.  Shattered glass is a reference to the glass ceiling that has symbolically held women, youths, and minorities from being significant players in the real estate business. 

Women – Real estate has always been better than most industries for offering women and equal chance to be successful, but leadership is just now changing to women.  The first female president of NAR was Virginia’s own Dorcas Helfant from VA Beach in the early 90’s.  Since then there have been 3 other female NAR Presidents. The last 3 CAAR presidents (including the 2008 President Judy Savage) have been women and the current State President in Charlottesville’s own Patricia Jensen.  We still have a little way to go because 65% of REALTORS® are women, but only 50% of brokers are women. 

Women make up 52% of the population, but according to census data, they buy 85% of everything and start a business every 60 seconds.  Single women home buyers are increasing rapidly and now account for 20% of home buyers. 

Youth – Gen Y (also known as the Echo-boomers) are as large of a mass of people as the boomers.  The first Gen Y’ers turn 30 this year.  Over the next 10 to 15 years, boomers will transfer a great deal of wealth and power to Gen Y.  Already, Gen Y have leverage web 2.0 to establish great power.  Members Gen Y created YouTube and Facebook.

The Y’ers are definitively into home buying.  They value the solid long-term investment that real estate offers and they are a bigger portion of the total home-buying population than ever before.   In addition, they are not putting home buying off until they are married. In 1993, less than 15% of buyers were under 25 – today 25% of home owners are younger than 25.  42% of people between 25 and 29 years old are now home owners.  These younger buyers are responsible for the resurgence of the popularity of living downtown and in condo sales (up 110% in the last decade).

Minorities – There are 80 million multicultural Americans already and 1 million new immigrants entering the US every year.  Immigrants made up 40% of the new households formed between 2000 and 2005.  By 2050, half the population is expected to be of minority status.  Immigrants allocate a larger percentage of their income (39%) than natives (28%).

Hispanics are the largest minority and the fastest growing.  Half of the people being added to the US population are Hispanic and by 2050 they are expected to comprise 25% of the population.  Hispanics are almost 10 years younger than the average population and are expected to make up 40% of the first time buyers over the next 20 years. 

In an effort to better serve the significant number of REALTORS in Greene and Fluvanna, CAAR is adding a part-time staff person in each county to rally the troops, attend Board of Supervisor meetings and be the eyes and ears for CAAR in these counties.  Assuming this works, CAAR will add staff to Nelson and Louisa.  If you know anyone who lives in Greene or Fluvanna who might be interested, please let us know.

Here is a teaser for the article in the Real Estate Weekly that will appear in early March.  I just finished the article yesterday and couldn’t wait that long to share.  This is based on an annula report from REALTOR Magazine and Remodeling Magazine on the value created by remodeling and add-ons.  Here is a section of the article:

 

Top 5 Cost to Value Projects

1. Replacing your siding with upscale siding is the best remodeling project of the 29 projects surveyed.  The report rates this project an 88.1% cost recuperation rate.  Specifically, this project is for fiber-cement upscale siding as compared to the foam backed vinyl that only rated a 79.7% cost recovery.  The average cost of this project was $13,212.  (Note: mid-range replacement siding also scored well at 83.2%.)
2. Adding a wood deck rated the second best project with an 85.4% cost recovery rate.  This project also had the single highest score on the regional breakdown with a whopping 108% return in the Pacific region.  The average cost of the project was $10,347. (Note: an upscale composite deck retuned 77.6%.)
3. A minor kitchen remodeling (spruced up cabinet fronts, new appliances, floors and countertops) was the third ranked project at 83% return on investment.  The average cost of the project was $21,185 and it ranked the second highest on the regional breakdown with a 103.5 return in the Pacific region.  This was also the highest ranked interior project in the survey.  (Note: a major kitchen remodeling project also ranked high at 78.1%.)
4. The 4^th ranked project was replacing windows (wood).  This project, which also has potential energy savings, was rated with an 81.2% return.  The average cost of this project was $11,384. (Note: an upscale window replacement (vinyl) scored a respectable 81%.)
5. A midrange bathroom remodeling project showed a 78.3% value return according to the report.  The cost of the project came in at $15,789.  (Note: other bathrooms projects in the report did not rate as high – upscale remodeling 68.4%, midrange addition 66%, and upscale addition 69%.)

 

Several CAAR members visted our local politicians in Richmond this week.  The big issue at the Assembly is a bill introduced on behalf of the home builders.  The bill would eliminate proffers that are charged to developers during the re-zoning process and replace them with a standard impact fee of $7500 per new home ($12,000 in northern VA).  These impact fees would apply to ALL new homes and not just the ones that are part of a large development project.

The philosophical question on this issue is a choice between a policy that is fair, equal, and understandable (read simple) to a policy that is varible, unequal, and unpredictable.  The current proffer policy is applied differently from county to county and from development to development.  In addition, it does NOT deal with homes being built outside the “re-zoning” process (referred to as by-right development).  Proffers require some homes to carry the financial impact of all homes being built.  Poffers are also complicated and unreliable.  Many times a developer agrees to pay these voluntary proffers based on other things happening (i.e., I’ll pay $million if VDOT decides to widen the road in the next ten years).  Sometimes, things change and these proffers are never obtained.

Impact fees, on the other hand, are very easy to understand - if you build a new home, you are charged a standard impact fee.  Because it is understandable, reliable and predictable, it can easily be built into the cost of the home.  It is also a very fair fee because it does not target just certain new homes. 

Any marketplace benefits from simplicity and I think this legislation will help the struggling new home market.  The bill passed the Senate 21 to 19 (Senator Deeds voted against it) and has moved over to the house.   When we visited our local representatives (Bell, Toscano, and Abbitt) they all wanted to know what REALTORS thought of the bill.   The original bill contained a nasty 300% increase in the grantors tax.  The REALTOR organization opposes such sneaky taxes and lobbied to get that removed.  Since that provision was removed, we now support the bill as a fair method of paying for the cost of growth.  Some local governments are concerned that the net revenues will be reduced under this bill, but it is hard to argue with the simplicity and fairness of this tax.