RISMEDIA, Jan. 5, 2008-As another year begins, we still have many of the same questions and concerns that burdened us 12 months ago: Where is the market going? When will we see a turnaround? And, with the third quarter’s subprime mortgage debacle, 2007 also unloaded even more headaches for practitioners and unleashed even more fodder for the media to take hold of and run with. Here, in this two part series, two top real estate industry vets comment on the misleading, and often misinformed, media.
Part 1: Real Estate’s Still Local
The real estate business has been a gift and a pleasure for me. The opportunity to have been involved in helping people achieve their dream of homeownership has offered me some of the most enjoyable and fulfilling experiences of my life. I can also tell you that one of the most frustrating aspects of my position is continuously battling misleading stories regarding the health of our industry, which has directly caused unfounded anxiousness with our consumers. Primarily, this anxiousness is created by a misperception that we have a national real estate market. Real estate is local, and there is no national real estate market as many news stories have reported. However, properties continue to be sold in all markets.
One of the largest reasons for this misperception is that the media is comparing today’s market to the incredible record results we saw peak in 2005. What is being overlooked is that this year there are historically high volumes of home sales taking place. According to NAR and Fannie Mae, approximately 5.6 million existing home sales will still occur in 2007, along with approximately 800,000 new home sales. Speculative inventory is on its way to being corrected, which should result in more balanced levels of homes on the market. This, coupled with interest rates that are comparable to a 40-year low and reports of positive employment trends, portrays a more accurate picture of the real estate environment.
As stewards of this industry, it is our obligation to effectively communicate the actual health of the industry to our consumers. The reality is that housing has always been a solid long-term investment. According to NAR statistics, median home prices have had a 6.4% compound annual growth rate from 1972 to 2006, and existing home sales units have grown an average of 3.2% during the same time period. The number of U.S. households is expected to increase 15% during the next decade at a rate of 1.46 million new households each year, which should continue to fuel an ongoing demand for housing.
Consumer confidence has been shaken, but those real estate professionals who excel in their field have an incredible opportunity. The media will many times fail to acknowledge and report on local trends. Today, more than ever, real estate professionals must be ready to clearly communicate the actual local market conditions to their consumers. Those who are best equipped to do so will be in a position to succeed.
We are witnessing a complex and fast moving market place. As real estate professionals we must be prepared with the knowledge and resources to provide a competitive advantage for our consumers and organization. Those who can leverage the most innovative and effective tools to address industry trends and new market developments will have the clear advantage.
It is my charge to instill a culture within ERA Real Estate that understands and embraces today’s market conditions. Only then, can we be in a position to deliver the tools and training to accomplish any job in front of us and achieve our goals.
Next week, in Part II, hear from Steve Ozonian, chairman of the Board Realty Information Systems, Global Mobility Solutions, where he says, “the biggest misconception the media has about the real estate industry is that the entire market is frozen.”
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