By Maria Patterson
RISMEDIA, December 13, 2010—Dale Stinton, the no-nonsense CEO of The National Association of REALTORS® (NAR), brings a perfect blend of realism and optimism to NAR’s members. The future holds promise if you’re willing to confront the facts and offer consumers complete transparency, he believes. In this interview, Stinton offers his assessment of 2010 and his perspective on the future. The basis of success no matter which way the market turns? Education.
Maria Patterson: As we come to the close of 2010, how would you grade the year in terms of real estate recovery?
Dale Stinton: The best I can say is that we had a nice, quick start to the year but a slow finish. 2010 was all about the distressed market—we need to start clearing out that system before the market sees real recovery or any return to normal. There are currently upwards of 11 million distressed properties on the market, including short sales and foreclosures. People are still having a hard time financially and until we can clear out the distressed properties, the grade isn’t going to be too good.
MP: What were the most significant barometers of improvement this year?
DS: The media tends to report the problem story or the negative story, but the real estate market is so local. We have plenty of areas of the country where there is positive news to report. I’m not going to say that everyone’s doing just fine, but many areas are far more stable than other areas. Prices seem to be stabilizing as sellers have finally figured out that they have to adjust prices to meet the market in many parts of the country. Another very promising sign is how low interest rates are. The affordability index we put out is incredibly high. If we could just get people some jobs and some confidence, we would be well positioned for recovery.
MP: How do you anticipate 2011 unfolding?
DS: I think it’s going to look a lot like this year—maybe slightly better. But it will all depend on the job market to bring confidence back. Once you have that, you begin to plan again. If you’re comfortable and feel good about the economy, you start thinking about the future. And one of the first things people start thinking about is having a home. If we can just get the confidence index up, we will see home buyers come back to the market.
MP: Is there anything real estate professionals and the industry as a whole can do in the meantime to raise confidence?
DS: I don’t think it’s good to artificially raise confidence. You don’t want to be in a position of making up information to make people feel better. However, the more we can do to create a transparency around everything that’s happening in the market, the more people will have confidence in the real estate industry. People are smart—give them information in a clear, unfettered way and they can figure it out. There needs to be a call to action to provide accurate, timely information to the consumer. I think that will have a positive affect because people are searching for any answers they can find, provided they’re from a credible source.
MP: Even though no one expects to see the unsustainable numbers of the early to mid 2000s again, what are your predictions for a full real estate recovery?
DS: The long-term, 30-year average for home sales is around 5.0 to 5.5 million a year. This reached a high of 7.2 million in the boom years. This year, it’s trending at about 4.5 million. So a sustainable recovery will look like 5.5 to 6 million a year. Every year, a tremendous amount of new homeowner needs are added to the market by virtue of the population growing and reaching adulthood. There is somewhere in the neighborhood of half a million to a million new households that need shelter every year. If we can clear out all the negative activity and get the mortgage market functioning properly, I think you will see the demand push home sales again and continue to stabilize the environment. And, a full recovery doesn’t mean more members of NAR—whether there’s less or more, we’ll experience a recovery when we revert to the mean of 5.5 million home sales a year and this number remains steady year after year.
MP: In your opinion, what is the “new normal” of real estate that REALTORS® need to be equipped for?
DS: We ask ourselves this question constantly. It’s all about the consumer—everything now is about consumer behavior. The consumer is really doing their homework now. They walk into a REALTOR®’S office and they know almost as much about the property as that REALTOR® does in a lot of situations. They’re very demanding—incredibly demanding—and they’re abnormally sensitive to price, commissions and all the costs involved in the transaction. But that’s good news for professional, experienced REALTORS® because they can meet those demands. They’re well versed about the market and capable of addressing the consumer’s concerns. To borrow a famous ad slogan, an educated consumer is our best consumer. They are the ones who will see the real value that a REALTOR® has to offer.
MP: Where do REALTORS® need to focus their efforts in order to succeed in this “new normal”?
DS: They have to be really good at gathering the information and the data, but they also have to be able to analyze it. Information and data is just stuff; REALTORS®, however, are in the best position to provide the analytics and explain things and see things in a way that others don’t see it. They have to be incredibly responsive. Gone are the days of, “I’ll get back to you” or the shameful days of taking five or six days to return an e-mail. Today, REALTORS® must be incredibly more responsive and have a keen understanding of consumer behavior. And that’s something our members will need to stay on top of consistently. You can develop some norms and baselines for the consumer, but because of technology and the world we live in, you have to be constantly changing to adapt to consumer needs.
MP: What role does information and education play in a REALTOR®’S long-term success?
DS: In my opinion, education plays a huge role…specifically, real estate-related education. REALTORS® need to be well-educated and good at converting that education into knowledge. But the number-one capability they need to have is incredibly good communication—it may be 75% of the equation. It may not always be face-to-face communication, but it needs to be person-to-person and leverage the REALTOR®’S knowledge.
MP: How can REALTORS® best connect and form lasting relationships with today’s consumers?
DS: NAR looks at this in Strategic Planning a lot. In today’s real estate environment, it’s still about word of mouth, but words move a lot faster in the blogosphere and through social media. Today, it’s not about just doing whatever it takes to get clients through the transaction. The old marketing principle applies—it’s not enough to satisfy them, you have to delight them. REALTORS® must create a positive experience because that’s what people will remember.
I bought my first house over 30 years ago and have bought and sold homes probably five times since then. I remember every single one of the agents I worked with—the good and the bad parts stick with you forever because the purchase is so huge and so important. I haven’t lived in the community where I bought my first home for 10 years, but if someone from that community asks me to recommend a REALTOR® in that town, I still give them the name of the person I worked with all that time ago. The impression you make lasts forever.
MP: What are some of the most important initiatives that NAR is putting forth to help REALTORS® for today’s market?
DS: RPR—REALTORS® Property ResourceTM—ties into everything we are talking about by providing a tremendous amount of information, analytics and education, so that REALTORS® can know as much or more than the consumer does. REALTORS® need to take what they know from their own communities and merge that knowledge with the information available through RPR. The benefit of RPR will be felt to the member for a long time.
NAR is also starting the REALTOR® University. This is going to be an accredited institution in the Midwest that will offer a master’s degree first and then undergraduate work for the real estate professional. No current real estate educational program fully addresses what practitioners experience in their every day lives like REALTOR® University does. There is no degree-granting program that is practical, hands-on, and depicts what the business is really like. This will be strictly an online University, which has become an accepted educational medium and an ideal delivery mechanism for our membership.
We also have HouseLogic, our consumer-facing website, which we’re pushing very hard. We’re very proud of it and continue to promote it as our consumer face as we begin to engage the consumer more and more. Like we keep saying, “Homeownership Matters!”