10 Trends For 2012—And Beyond
As a real estate professional, it’s important to stay abreast of market trends.
Changing consumer demographics, the importance of leads, and the use of
integrated technology platforms are just some of the things determining the
future of real estate. Keep your sights on the following ten trends:
1. A slow recovery in housing sales and prices
Although the US economy, the stock market, and the housing market
continue their daily ebbs and flows, professionals in all areas of the real estate
market are cautiously optimistic that the amount of new and existing home
sales will continue to slowly climb as we enter 2012. Although buyers remain
hesitant, the low home prices, high inventory, great deals available with short
sales and foreclosures, and rising rental prices are still tempting
buyers into the market. And although market experts are predicting an increase
in mortgage rates, buyers in 2012 will still be benefitting from historically
low rates.
The National Association of Realtors’ most recent data backs up this forecast.
Existing home sales in August 2011 rose 7.7%, and are almost 19% higher than
August of 2010. The total housing inventory fell 3% over the summer of 2011,
and more buyers are seeking out small, regional banks and credit unions for
financing, as larger banks aren’t offering credit terms as favorable, and many
are tied up in distressed home loan processing.
2. Changing demographics and housing demands
For the first time in modern history, industry experts are able to categorize
the majority of American buyers into four distinct demographic groups. Each
of these groups has different needs and wants, different buying and selling
styles, and wants different characteristics in their real estate agent. Consider
specializing in one demographic area among these four:
The Traditionals (age 66+). The traditionals are buyers who are already
retired, or approaching retirement. These buyers are looking for smaller,
more efficient living spaces. The oldest of this demographic group may be
looking for low-maintenance or assisted living options, but on the younger
end, these buyers still make up a large portion of clients buying second or
vacation homes.
The Baby Boomers (ages 47–65). Much has been said about the baby
boomer generation, but as a real estate demographic group, they
have wide ranging needs. Some may be looking towards retirement,
but some may have been hit hard by the recession and are looking to
downsize because of a decrease in the equity of their current home. Some
more may be “empty nesters” who find themselves in a home that’s too
large, while others may be ready to invest in a vacation property.
The Generation X (ages 35–47). Generation X can also be considered a mixed
bag. Most clients in this group have already purchased their first home, and
may be ready to “trade up” for their growing families. Consider the importance of suburban amenities like good schools and parks, and also remember that
many of these buyers have had the equity in their first homes damaged by
the recession.
The Millenials (under 35). Millenials will make up the majority of home
purchases in the coming years. Most tend to marry later, and although
some are looking for detached, single-family homes, many are in search of
condos, townhomes, lofts, or apartments. While it is true of most
demographic groups, the Millenials specifically tend to gravitate towards real
estate agents in their same age group.
3. Pressure on commission levels.
As you may well know, commission levels dropped dramatically between 1991
and 2005—from 6.1 to 5.02%. They’ve now stabilized between 5.3 and 5.4%,
a trend we expect to continue. Many real estate agents blame the Internet for
the drop in commission levels. However, numerous studies have shown that,
in fact, high numbers of competitive agents and relatively few listings are to
blame. Many agents agree to drop their commission levels in order to win listings,
and some buyers are foregoing the use of traditional agents and working
directly with a listing agent in exchange for a discount on their purchase price.
As the housing market begins to stabilize over the next few years, many
real estate professionals expect commissions to rise. However, the savvy
professional needs to recognize that brokerages operating on alternative,
100 percent commission models and websites like Redfin that offer
commission rebates through their site will challenge them to manage expenses
effectively and be creative about lead generation.
4. The advance of new business models and industry segmentation
For many years now, the cycle has been this: Brokerages come up with new
business models of various types. Some are successful, and some aren’t. Real
estate agents, not surprisingly, gravitate towards the type of business model
that benefits their personal business the best. For example, big producers can
afford the high desk fees at 100% commission brokerages. But, most agents
lean towards a capped commission model, allowing lower overhead. And,
more agents are moving towards a virtual brokerage, where the costs are
even lower.
What does this mean for brokerage leadership? Don’t try to be everything to
everyone. In the past, traditional brokerages have tried to be flexible enough
to accommodate traditional model agents and agents looking for newer
business models. Experts recommend choosing one path and focusing on
attracting and retaining agents who are looking for your type of business.
Focus your energy and resources on one business model.
5. Growing importance of lead generation.
As mentioned above, with low inventory and many real estate professionals
hoping to capture listings and buyers, competition is stiff. Yes, lead generation
has always been important, but in a highly competitive environment, successful
lead generation is the difference between success and failure. Luckily, technological advances have given the industry quick, easy, and incredibly
affordable tools for capturing leads. Search engine optimization (SEO), search
engine marketing (SEM), the use of contact management and lead cultivation
platforms, and social media are all popular ways to increase and streamline
lead generation.
6. Increased importance of integrated technology platforms.
In this fast-paced industry, using your time efficiently is crucial. It’s important
to streamline the important parts of your day as much as you can. Many real
estate agents use disparate systems for lead generation, contact management,
and marketing strategy. Integrating these processes can free up more time to
spend with clients, find new listings, and close deals.
Take advantage of this time and cost-saving approach to your real estate
business. For example, Market Leader offers a complete click-to-close, cloudbased software that offers an integrated suite of tools to generate leads, engage and nurture them, and convert them into clients. This, in combination with a sharp focus on lead generation opportunities and the training and coaching
you need to maximize your business, provides everything you need within one
holistic solution to make your real estate business more rewarding than ever.
7. Evolution of how consumers select real estate professionals
In a world where nine out of 10 consumers research homes online, how do
you generate referrals? With search engines, referral sites, social media, and
more, how do you become the real estate agent that people think of for referrals? Although the technological advances in this arena are ever-changing,
perhaps the referral process itself hasn’t changed that much. Sure, clients
are finding you by asking their friends on Facebook for a great agent, but the
bottom line is still, “Am I building a referral-worthy business?”
Offering your clients quality, friendly, and efficient service is still the best way
to garner referrals. Treating customers with respect, operating your business
with high morals and integrity, and becoming an expert in your local market
will keep you top of mind whenever someone asks a past client for a referral—whether they’re asking via Facebook, email, text message, Yelp, Craigslist,
or in the old-fashioned way—in person or on the phone.
8. The importance of leadership
It’s no coincidence that brokerages with capable, ethical, and talented leadership are the most successful. Leadership becomes exponentially more
important in tumultuous times. Great brokerage leaders should dedicate
significant time to developing a game plan for the coming year that includes
measurable goals, anticipation of potential challenges, and an acute understanding of the way their specific business model can adapt to the changing
landscape. Attention should also be paid to recruiting, retaining, and training
future brokerage leadership.
9. The emergence of real estate teams
As real estate professionals gravitate towards profitable and advantageous
agent-centric business models, these professionals are considering the benefits
of working with a team. For example, respected high performers are expanding
their lead generation efforts, and assembling a team to work the leads. And,
many team members are pooling marketing and branding resources to get
more for their money.
Whether the team is small or large, attention to process, specialization, and
clear role definition are paramount to success.
10. A stiffening regulatory environment
Since the real estate crash, both financial organizations and government
officials have been pushing regulatory reform. From tightened lending
requirements to the Truth in Lending Act and Consumer Protection Act, it’s
clear that the home buying process will only increase in complexity in the
coming months and years. Staying updated on recent policy changes and
becoming involved in the political process are important ways to adapt quickly
and easily.
I help agents address these concerns!
Comments(0)