Published: 13 January 2008
Lessons from America: Report from NYC
“I’m optimistic that we are no longer optimistic” said
Brian Boero summing up the mood at
Real Estate Connect in New York City last week. “I’m feeling really good about pessimism.”
With five million more US homes on the market today than in 2005, the gallows humour was understandable. The sense of hope was less so, given the backdrop of the worst economic situation since the 1930’s.
There are many things wrong with America but their determination to succeed, improve and innovate is not one of them. Although US real estate works very differently to Europe, there were some interesting insights and lessons for international agents and developers looking to steal a march on their competitors.
Innovation
Innovation was the big theme of Real Estate Connect. “This economy will wash out old practices and old people” said Inman News Founder Brad Inman, warning his generation of “boomers” that younger people were interacting with the world in a completely different way, referring in particular to the growth in popularity of social networks like Facebook and Twitter.
In the US, building your reputation on blogs and social networks is becoming a pre-requisite for winning instructions and building long-term business. The personality and reputation of the realtor is key.
However, there was little discussion on how social networking is affecting real estate buying behaviour in other markets. My view is that, in the UK at least, social networking has a long way to run until it becomes a mainstream way of generating leads or winning instructions.
Video was a hot topic of conversation and is perhaps the area where European agents and developers can best embrace new technology to steal a march on their competitors. There was an excellent session on online video but the big unanswered question was still how do you make professional quality audio-visual affordable to the average agent? We’ll address this issue in a special report on online video for Premium Members later this month.
International Business Development
All the international sessions were well attended. The appetite among US agents to reach out to potential partners in Europe is considerable. Tough trading conditions are no doubt forcing US agents to be more proactive in this area and many I spoke to from
New York,
California and
Florida had had success. Janet Choynowski from
Immobel quoted statistics showing that US agents who also worked internationally did 15% more business than those who did not. The MLS system, although fragmented, seems to have helped create a culture of referring business that is less prevalent in Europe.
Although Russia was talked about as a hot buyer destination, it did not appear in research published by
Second Space on the most popular sources of overseas buyers for US agents. In order of popularity, the most popular countries were: Canada, UK, Mexico, India, Germany and China.
The
Trans National Referral Certificate was much talked about by members of the NAR and by Peter Bolton King of NAEA and ICREA. Members of recognized national associations can sign up (after taking a short course) to common standards and practices. All parties sign legal documents which confirm referral payments. Although the legal documents have little cross-border legal duristiction, there is a mediator in each country and there have been no complaints so far according to Bolton-King.
International Perspectives
Conference organizers, Inman News, invited speakers from across the world to provide insights into global real estate markets.
US
Economist
Robert Shiller compared real estate bubbles across the globe. He demonstrated stable US real estate prices until 2000 followed by a boom and bust, with the effect much more acute among low-priced homes. He predicted prices had further to fall and it was difficult to find anyone willing to disagree with him.
Canada
Pam Alexander from RE/MAX Ontario- Atlantic Canada Inc said the Canadian real estate market is relatively robust as it hasn’t been affected by the sub prime crisis and only 0.25% of property is in foreclosure. She said Canada was often over-looked as a source of referral business but many Canadians were keen to buy abroad and had the means to do so.
Russia
Ivailo Jordanov said Russian real estate prices were currently stable but expected them to decline in 2009. To the surprise of many in the audience he said that the declining domestic market meant Russians would increasingly look abroad to buy real estate as they didn’t trust the banks and needed a home for their money.
France
Bernard Cadeau from
ORPI said the market was down and would get worse before it got better. The audience found it hard to fathom the idiosyncracies of the French system where 50% is For Sale by owner and only 20% of listings placed with agents are done so exclusively. The system means only a fraction of French property is shared with potential international partners.
Germany
Andreas Assum from
ImmobilienScout was positive on the long term outlook for German real estate prices. Unemployment is at its lowest level since the Wall came down, consumer confidence was high over Christmas and new home constructions are at their lowest since World War II, he said. However, he worried about the impact of declining exports as factories are now closing which will push unemployment back up. He encouraged investors to look at Berlin as it has the lowest per square metre prices of any major international city.
Netherlands
Boris Geheniau from the Netherlands said sales volumes were down 70% year on year in the final quarter of 2008. He compared the market to the UK and said it would be the end of 2009 when the market improves.
Spain
Gonzalo del Pozo from
Globaliza said Spain would win any competition as to who had the worst real estate market. With 1.5 million new homes currently sitting empty in Spain, there weren’t many willing to contradict him.
Further information
More information on Real Estate Connect can be found
here. The next event is in San Francisco on August 5-7, 2009
User Comments
Well said. This market separates the men from the boys, as it were. But it might also kill off a generation of builders and investors. Time will tell.
I look forward to Ashley Rigg's forthcoming piece on video marketing. So often real estate videos are like Chinese food: pretty good, or really, really bad.
Monique Smith,
Criterion Global
The beauty of US real estate market and business overall by the way is great flexibility. It always leaves you ways of making money one way or another. Even after real estate bust we had waves of further speculation - refi mortgage loan boom, now FHA mortgage boom, REO and foreclosure sales skyrocketing. The good thing - most amateur speculators and flippers are out of the picture at this time. Cash rules and easily multiplies in today's real estate if applied expertly.
Sal Antsipenka,
www.RealEstateFair.net
