Upload
steven-pugh
View
215
Download
0
Tags:
Embed Size (px)
Citation preview
1
The Numbers that Drive Real Estate
2
The Numbers That Drive U.S. Real Estate
1. Home Sales
2. Home Prices
3. Inventory
4. Mortgage Rates
5. Affordability
3
1. Home Sales (In Millions)
Sales decreased 4.8% in 2010, mainly due to softer demand in the second half of the year.
5.18
7.08
5.16 4.91
Source: National Association of REALTORS®
4.96
4
In Q3 2010, all 50 states experienced a decrease in sales …
TX
UT
MT
CA
AZ
ID
NV
OR
IA
COKS
WY
NM
MO
MN
NE
OK
SD
WA
AR
ND
LA
IL
FL
GAAL
WI
VAIN
MI
MS
KY
TN
PA
NC
SC
WV
NJ
ME
NY
VT
MD
NH
CT
DE
MARI
AK
HI
Below 10%
Below 20%
Home Sales Direction
(Year-Over-Year Change)
OH
Source: National Association of REALTORS®
Below 30%
Below 40%
5
In Q4 2010, all states except for Virginia experienced an increase in
sales …
TX
UT
MT
CA
AZ
ID
NV
OR
IA
COKS
WY
NM
MO
MN
NE
OK
SD
WA
AR
ND
LA
IL
FL
GAAL
WI
VAIN
MI
MS
KY
TN
PA
NC
SC
WV
NJ
ME
NY
VT
MD
NH
CT
DE
MARI
AK
HI
OH
Source: National Association of REALTORS®
Sales Increased
Sales Decreased
Home Sales Direction
(Year-Over-Year Change)
6
2. Home Prices (Annual Appreciation)
Source: National Association of REALTORS®
If home prices actually grew by 4% every year from 1989, the median home price would be $211,082, which is
approximately 18% above where we are today.
7
2. Home Prices (In Thousands)
The median home price increased slightly by 0.3% in 2010, the first annual price gain since 2006.
Source: National Association of REALTORS®
Historical appreciation rate = 4%$153K
$222K
$173K
$211K
8
3. Inventory (Months Supply)Number of months it would take to sell all the homes on the market at the current rate of sales
Source: National Association of REALTORS®
Softer demand in the second half of the year kept inventory of existing homes at a relatively high level of 9.4 months at the end of 2010. However, months of inventory has declined substantially from its peak of 12.5 months reached in July.
9
4. Mortgage Rates (30-Year Fixed)
Source: Freddie Mac
Mortgage rates averaged 4.69% in 2010, an all-time low since Freddie Mac started tracking in 1971.
Mortgage rates ranged from 4.23% to 5.1% in 2010. At the end of December, rates stood at 4.71%.10.3%
6.0%5.0%
4.7%
5.05%
10
Let’s put this in perspective …
1989 2010 2011
Bread $0.67 $2.49 $2.49
Gas (gal.) $0.97 $2.73 $2.73
New Car $15,350 $28,400 $28,400
Existing Home $94,000 $173,000 $173,000
Mortgage Rate 10% 4.69% 5.05%
Monthly Payment $825 $896 $934
And you still wouldn’t get a mortgage as cheap as you could in 2010.
11
5. Housing Affordability (% of Income)% of mean family’s income required to make mortgage payments on a median-priced home
Source: National Association of REALTORS®
15%14%
40-year average = 21.9%
Housing affordability was the most favorable on record in 2010.
12
The Numbers That Drive Canadian Real Estate
1. Home Sales
2. Home Prices
3. Inventory
4. Mortgage Rates
5. Affordability
13
1. Home Sales (In Thousands)
Sales activity has cooled, closing the year at 3.9% below 2009, but remained the sixth highest annual activity level on record.
521K465K
447K
Sources: Conference Board/The Canadian Real Estate Association
431K
14
2. Home Prices (In Thousands)
Historical appreciation rate = 4.1%
Sources: Conference Board/The Canadian Real Estate Association
$189K
$305K
$320K
$339K
The national average home price was up 5.8% in 2010 to a new record $339,030.
15
2. Home Prices (Appreciation Rates by Decade)
1980s
1990s
2000sAverage: 9.12%
Average: 1.20%
Average: 7.73%
Sources: Conference Board/The Canadian Real Estate Association 16
Northwest Territories
Saskatchewan
Manitoba
Newfoundland & Labrador
Nova Scotia
New Brunswick
Prince Edward Island
Prices Increased
Prices Decreased
Home Price (Year-Over-Year Change)
Northwest
Territories
Yukon
British Columbia
Alberta
Ontario
Quebec
Nunavut
Sources: Conference Board/The Canadian Real Estate Association
All 12 markets saw an increase in prices in 2010 …
17
2. Home Prices (Annual Appreciation)
Sources: Conference Board/The Canadian Real Estate Association 18
3. Inventory (Sales-to-New Listings Ratio)
Sources: Conference Board/The Canadian Real Estate Association
52%
Seller’s Market
Buyer’s Market
Balanced Market
Canadian housing market remained balanced throughout 2010.
19
4. Mortgage Rates (5-Year Fixed)
Mortgage rates hit a new record low, remaining under 6% in 2010.
In December, rates stood at 5.19%.
Source: Bank of Canada
5.61%5.63%
8.4%6.9%
13.4%
5.44%
20
5. Housing Affordability (% of Income)Proportion of median pre-tax household income required to service the cost of mortgage payments (principal, interest, property taxes, and utilities)
Property Type
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Avg. Since
‘85
Q3/Q3 % Ch
Detached bungalow
40.1% 40.6% 41.1% 42.9% 40.4% 39.0% +0.3%
Standard two-story
46.0% 46.7% 46.8% 48.9% 46.3% 43.3% +0.3%
Standard condo
27.7% 28% 28.2% 29.3% 27.8% 26.8% +0.1%
Avg. Q3/Q3 Change: +0.23%
• Dropping mortgage rates and softer prices pushed housing affordability higher in the third quarter, bucking its rising trend since the middle of 2009.
• This reversed almost two-thirds of the cumulative deterioration in the preceding four quarters and returned the measures to their levels seen at the end of 2009. However, these measures continue to stand slightly above long-term averages.
• All provinces saw improvements in affordability, especially British Columbia.Source: The Royal Bank of Canada 21
Economic Snapshot
22
U.S. Economic Snapshot
1. Gross Domestic Product
2. Inflation
3. Unemployment
23
1. Gross Domestic Product(Year-Over-Year Growth)
Source: Bureau of Economic Analysis
Consumer spending and strong exports contributed the most to economic expansion in 2010.
24
1. Gross Domestic Product (Year-Over-Year Growth)
Source: Bureau of Economic Analysis 25
2. Inflation
Source: Bureau of Labor Statistics
1.6%
In 2010, inflation averaged around 1.6%. In the near term, inflation pressures are expected to remain subdued, allowing the Fed to stay the course of its loose monetary policies.
Unofficial Rate Target
26
3. Unemployment
Source: Bureau of Labor Statistics
9.6%
Unemployment is making slow progress, dropping from 9.9% in 2009 to 9.4% in the final month of 2010.
Long-term average: 5.6%
27
Canadian Economic Snapshot
Canada’s economy continues to build momentum, thanks to:
1.Policy response2.Increased consumer confidence3.Improving lending conditions4.Exceptionally stimulative financial conditions
Indicators %1. Real GDP (2010 estimate)
3.5%
2. Inflation Rate (2010 average)
1.6%
3. Unemployment Rate (December)
7.6%
28
The Events That Drove The Numbers
29
The Six Events That Drove the U.S. Numbers
1. The available sides per agent remained on par with 2009.
2. The extended home buyer tax credit boosted demand and stabilized home prices in the
first half of 2010.
3. Concerns about proper foreclosure procedure delayed the influx of distressed
properties into the market.
4. Monetary stimulus aid continued to lend support.
5. Credit conditions remain tight.
6. Uncertainty about economic outlook acted as restraint on business and consumer
spending.
30
1. The available sides per agent remained on par with 2009
Source: National Association of REALTORS®
In 2010, another 45,987 Realtors left the industry, leaving those remaining in the market with a steady share of business despite softer sales.
31
National Association of Realtors Membership vs. Existing Home Sales
NAR Membership: 1.07 Million
Existing Home Sales: 4.91 Million
Source: National Association of REALTORS®
1977
1982
1990
19982008
20101414
777.97.9
13.813.8
8.28.29.29.2
Sides per AgentSides per Agent
32
Housing Economic Recovery Act of 2008 $7,500 temporary FTHB tax credit
Extended and Expanded $8,000 FTHB Tax Credit
Must sign contract by April 30Must close by June 30
Closing Deadline
Extended to
September 30
Gradual Recovery
without Tax Credit
American Recovery & Reinvestment Act of 2009$8,000 FTHB tax credit
2. Extended home buyer tax credit increased buyer traffic in the first six months of 2010
Source: National Association of REALTORS®
Jan ‘09
Jun ‘09
Oct ‘09
Nov ‘09
Apr ‘10 Jun
‘10Sep ‘10
Dec ‘10
33
Recession Began December 2007
Housing Economic Recovery Act of 2008
$7,500 temporary FTHB tax credit
American Recovery & Reinvestment Act of 2009
$8,000 FTHB tax credit
Extended and Expanded $8,000 FTHB Tax Credit
Must sign contract by April 30Must close by June 30
Closing Deadline
Extended to
September 30
Gradual Recovery
without Tax Credit
Source: National Association of REALTORS®
HOME SALESIn Millions
2. Extended home buyer tax credit boosted demand & stabilized home sales in the first half of 2010
34
Recession Began December 2007
Housing Economic Recovery Act of 2008
$7,500 temporary FTHB tax credit
American Recovery & Reinvestment Act of 2009
$8,000 FTHB tax credit
Extended and Expanded $8,000 FTHB Tax Credit
Must sign contract by April 30Must close by June 30
Closing Deadline
Extended to
September 30
Gradual Recovery
without Tax Credit
Source: National Association of REALTORS®
HOME PRICESIn Thousands
2. Extended home buyer tax credit boosted demand & stabilized home prices
35
3. Concerns about foreclosure procedure delayed the influx of distressed properties into the market
Source: RealtyTrac
The number of foreclosure notices and bank repossessions plunged in November and December, as banks halted tens of
thousands of foreclosures in the face of the robo-signing scandal.
36
3. Concerns about foreclosure procedure limited foreclosure sales and steadied prices
Source: National Association of REALTORS®
Distressed Sales % of Total SalesIn 2010, distressed properties accounted
for 34% of all sales, down from 36% in 2009 and 37% in 2008.
37
Rising foreclosure rates (% of U.S. Homes)remain a trouble spot for the housing market
Source: RealtyTrac
In 2010, foreclosure filings were reported on a record 2.9 million (2,871,891) U.S. properties despite a thirty-month
low reached in December due to foreclosure freezes.
38
4. Monetary stimulus aidcontinued to lend support
Source: Mortgage Bankers Association
Historically low rates fueled a surge in refinancing activity earlier in 2010, helping homeowners save billions of
dollars.
39
5. Credit conditionsremain tight
Source: Federal Reserve Board
Credit GrowthBank Credit (In Billions of Dollars)
2006 2007 2008 2009 2010
All Bank Credit 8,113 8,915 9,316 8,992 9,174
Commercial & Industrial Loans 1,190 1,436 1,565 1,284 1,224
Real Estate Loans* 3.394 3,608 3,805 3,776 3,606
Consumer Loans 730 791 857 825 1,111
*Includes revolving home equity loans, closed-end residential loans, commercial real estate loans
Residential Real Estate Loans
Bank lending is still down. However, the freeze in bank credit is beginning to thaw after two years, signaling more support for the U.S.
recovery in general, and the housing market in particular.
40
Supply and Demand forResidential Mortgage Loans
Source: Federal Reserve Board – the Senior Loan Officer Opinion Survey
Net Percentage of Respondents Tightening Standards for Mortgage Loans
Net Percentage of Respondents Reporting Stronger Demand for Mortgage Loans
Lending conditions have eased somewhat with fewer and fewer banks reporting tightened standards for mortgage loans.
SUPPLY DEMAND
41
6. Uncertainty about economic outlookacted as restraint on business and consumer spending
Source: Bureau of Economic Analysis
Heightened level of unemployment persists and remains the biggest risk to the recovery. Any meaningful improvement in consumer confidence and their purchase decisions is
contingent on a significant pickup in job growth.
Consumer Spending and Unemployment
42
The Five Events That Drove the Canadian Numbers
1. The available sides per agent slipped as home sales softened and number of agents rose.
2. Implementation of new, tighter mortgage rules in April and Harmonized Sales Tax in Ontario and British Columbia in July brought forward resale activity and fueled prices in first half of 2010.
3. Canada’s accommodative monetary policy continued to
drive the market.
4. Credit market saw some improvements.
5. Strong currency has hurt Canadian trade.
43
1. The available sides per agentslipped as home sales softened and number of agents rose
Sources: Conference Board/The Canadian Real Estate Association
Softer home sales and a steady rise in CREA membership pushed the number of sides available per
agent down 7% from the previous year.
44
The Canadian Real Estate Association Membership vs. Existing Home Sales
CREA Membership: 101,606
Existing Home Sales: 447,010
1985
19902002
20072010
Sources: Conference Board/The Canadian Real Estate Association
8.38.3
5.35.3 6.96.9
9.29.212.612.6
11.111.1 8.88.8
Sides per AgentSides per Agent
45
2. Tighter mortgage rules and Harmonized Sales Tax brought forward home sales in first half of 2010
Sources: Conference Board/The Canadian Real Estate Association
Mortgage Rules Modifications
Effective April 19Ontario and BC HST
Effective July 1
2010 Avg Pace of Sales37,250
HOME SALESIn Thousands
46
2. Tighter mortgage rules and Harmonized Sales Tax fueled pickup in prices in the first half of 2010
Sources: Conference Board/The Canadian Real Estate Association
Mortgage Rules Modifications
Effective April 19Ontario and BC HST
Effective July 1
2010 Avg Home Prices$338,336
HOME PRICESIn Thousands
47
3. Canada’s monetary stimuluscontinued to boon the market
Date Target Rate % Change
January 2011 1.00% --
December 2010 1.00% --
October 2010 1.00% --
September 2010 1.00% + 0.25
July 2010 0.75% + 0.25
June 2010 0.50% + 0.25
April 2010 0.25% --
March 2010 0.25% --
January 2010 0.25% --
Source: Bank of Canada
Canadians continue to benefit from record-low interest rates thanks to continuing supportive monetary policy.
However, some of the policy stimulus is expected to be trimmed back as the economy strengthens.
Long-term average = 9.93%
Changes in Bank of Canada’s Target Overnight Rate influence other interest
rates, including those for consumer loans and mortgages.
48
4. The credit marketsaw some improvements
• Overall, total credit growth in Canada was steady in 2010 and remained stronger than in the United States.
• Improved financial market conditions have enabled Canadian businesses to continue to tap capital markets.
• The government’s measures to support access to financing during the financial crisis helped lift market uncertainty and supported a significant reduction in interest rates.
Credit Growth
Household and Business Loans Outstanding (In Billions of Dollars)
2007 2008 2009 2010
Total Household Credit
1,193 1,306 1,402 1,498
Consumer Loans 379 409 446 468
Residential Mortgages
814 897 956 1,030
Total Business Credit
1,153 1,204 1,195 1,235
Source: Bank of Canada 49
5. Strong currency has hurt Canadian trade
• As commodity prices elevated, appetite for Canadian currency strengthened, leading to Canada’s rising exchange rate against its major counterparts.
• Exports were dampened by gains in the Canadian dollar. • Canada's economy slowed in mid-2010 when imports increased (subtracting from growth)
and exports decreased. • Bank of Canada noted that about two-thirds of the widening of Canada’s trade deficit in
recent years is due to a stronger Canadian dollar.
2009:
1 CAD 0.88 USD
2010:
1 CAD 0.97 USDSource: Bank of Canada 50
What the Governments Are Doing
51
1.Extended Bush-era income tax cuts
2.Extended conforming loan limits
3.Started second round of Fed’s monetary stimulus
4.Halted new mortgage disclosure rules under the Truth in Lending Act
What the U.S. Government Is Doing
52
53
What: In July 2008, the housing recovery bill raised the limit on conforming loans in high-cost areas to a maximum of 125% of local median home price, up to an overall cap of $729,750 from $417,000 everywhere.
Why: To increase credit available in higher-priced markets.
When: These limits were set to expire in December 2010 and have now been extended through September of 2011.
2. Extended conforming loan limits
54
What: Fed announced the second round of quantitative easing program, known as QE2, in early November 2010 to jump-start the slowing recovery.
Why: The program aims at spurring business and consumer spending by keeping interest rates low.
How: Fed plans to purchase $600 billion in long-term treasuries over the next eight months. The Fed also announced it will reinvest an additional $250 billion to $300 billion in treasuries with the proceeds of its earlier investment.
When: The bond purchases aimed at stimulating the economy will total up to $900 billion and will be completed by the end of the third quarter of 2011.
3. Started second round of monetary stimulus
55
4. Halted new mortgage disclosure rules under the Truth in Lending Act
• Fed held off on finalizing pending rule changes under Regulation Z of the Truth in Lending Act that were proposed in August 2009 and September 2010 that would have mandated new consumer disclosure requirements for:
• Closed-end mortgage loans (2009)• Home equity lines of credit or HELOCs (2009)• Reverse mortgages (2010)
• The proposed new rules were initiated in response to claims that homeowners were signing up for unsustainable and unsuitable mortgages without understanding the terms of the loans during the boom years, which fueled unsound lending practices and led to the mortgage market meltdown in 2007.
• The newly created Consumer Financial Protection Bureau (CFPB) will assume general rulemaking authority for TILA, RESPA (which were previously overseen and enforced by Fed and HUD, respectively) and federal jurisdiction over consumer protections in July. The agency is required by the Dodd-Frank Reform Act to combine the mortgage disclosures required by both TILA and RESPA in a single form within eighteen months after the designated transfer date.
• The delayed implementation of any new disclosures adopted by the Fed will mitigate compliance difficulties which may arise with the issuance of multiple rules with different implementation periods. 56
1.Competition Bureau and CREA reached agreement
2.Department of Finance Canada announced third round of tightening mortgage rules
What the Canadian Government Is Doing
57
What: • After more than three years of debate and negotiation, in October 2010, delegates from Canada’s 101 local
real estate boards cast their votes for the settlement to resolve anti-competition charges with the Competition Bureau.
• The ratification inaugurated a ten-year, legally binding agreement through which CREA has agreed that it will neither create nor enforce any rules that would penalize or discriminate against brokers who want to offer nontraditional services to consumers while using the MLS system. CREA must also monitor member behavior to ensure compliance with the agreement.
Implications: • Homeowners who wish to sell their homes using the MLS system will be able to choose from a variety of
services that brokers may offer at different prices. While sellers are still not permitted to list on the MLS by themselves, they will now be able to pay a licensed broker a fee to have their property listed on the MLS system and then sell the property themselves.
• While brokers are not obliged to accept mere postings, they are now permitted to do so, and may also offer a range of unbundled services and fee-for-service arrangements, all while using the MLS system.
• It is also possible, as happened in the United States after an anti-trust lawsuit against the American equivalent of CREA, that the settlement agreement may accelerate the creation of discount or internet based agents, or other alternatives to the full service brokerages we are familiar with, since the MLS system will be accessible to CREA members who want to operate under those new models.
1. CREA ratified deal with Competition Bureau
58
2. Third round of tightening mortgage rules was announced by Department of Finance Canada
59
Luxury Real Estate
60
The strong rebound in the wealthy is a positive signal for the luxury market.
End of YearAverage Net
Worth of Billionaires
Number of Billionaires
2007 $3.9 billion 1,125
2008 $3 billion 793
2009 $3.5 billion 1,011Source: Forbes
17% increas
e
27% increas
e61
Source: Spectrum Group
Percent Change in Number Affluent, by Net Worth
62
Seller’s Market
18
54% Decrease
40
63
180
120
60
64
65
100%95%
90%
85%
80%
66
67
Greater Supply + Longer DOM + Greater Discount = Opportunity for:
1.Investors in luxury market for both flippers and holders of undervalued properties.
2.Move-Up buyers who were previously priced out of luxury market.
68
Commercial Real Estate
69
SectorUnited States Canada
2009 2010 2009 2010
Office 15.7% 17.4% 9.9% 9.4%
Industrial 13.2% 14.5% 8.1% 7.4%
Retail 12.0% 12.7% 5.5% 4.2%
Multifamily 7.4% 6.1% 2.8% 2.6%
Sources: NAR, CBRE, CMHC 70
Source: US CMBS Delinquency Rates, Trepp LLC. Graph scaled based on actual data for trend purposes only.
71
Moody’s/REAL Commercial Property Price Index (CPPI) National - All Property Types
2.0
1.6
1.2
0.8
Inde
x, D
ecem
ber
2000
=1
Source: Moody’s/REAL Commercial Property Price Index 72
2009-2011“Extend and Pretend”
to2012 and forward
“Extend and Amend”
63% Extend
with
Modification
16% Foreclose
14% Sell
7% Extend
withoutModification
Maturing Loans: Preferred Strategy for Lenders by Mid-2011
All Commercial Property TypesSource: Emerging Trends in Real Estate 2011 Survey 73
Flat Market
1.No new development means demand has time to catch up with supply2.Economy needs time to improve which will strengthen demand
New Commercial Loans (in billions)
Source: Commercial Mortgage Alert 74
Slow Growth
1.New development tempered by sluggish U.S. economy. 2.Lack of overdevelopment will allow for faster growth with an improved outlook in the U.S.
New Commercial Building Permits (in
billions)
Source: Statistics Canada
20
15
10
5
0
75
1.Distressed Assets (U.S.)
2.Quality Yield Properties
3.Tenant Representation4.Owner Occupants
76
Worldwide Real Estate
77
1. Mission: • To connect the real estate world into one successful
community, and• To expand our Profit Share opportunities for real estate
agents worldwide
2. Goal: To add 75,000 agents outside of North America in the next 10 years.
3. The Global Opportunity: This is as challenging as it is exciting.
78
4. Strategy: To expand by following our core philosophy that everything rises and falls on leadership.
Where and when we go will be dictated by finding the right partners. We will use the Master Franchise Model for opening countries/regions. The right partners will help us create the right models for their country.
79
5. What the World Wants: The overwhelming feedback is that agents around the globe want what we do best ... training and education. Our opportunity will be to deliver our training and education around the world. This will require an International Faculty that can share our courses and culture. The other U.S. franchises have not succeeded because they have not been able to deliver anything other than a brand and some weak models.
80
How Do We Recover?
81
The Four Keys to Housing Recovery
82
83
First-Time Home Buyers
84
Primary Reason for Purchasing a HomeAll Buyers
First-time Buyers
Repeat Buyers
20052009 2010 2009 2010 2009 2010
Desire to own a home 39% 35% 31% 62% 53% 11% 10%
Desire for larger home 20 9 9 2 2 16 15
Change in family situation * 9 8 8 7 10 10
Home buyer tax credit * 3 8 6 13 1 3
Job-related relocation or move
11 9 7 2 2 16 12
Affordability of homes * 8 6 10 8 6 4
Desire to be closer to family/friends/relatives
8 4 5 1 1 7 10
Desire for a home in a better area
*4 5 1 2 7 7
Desire to be closer to job/school/transit
* 3 3 1 2 5 5
Desire for smaller home 6 3 3 * * 5 5
Retirement 3 3 3 1 * 4 5
Establish household * 2 2 2 4 1 1
85
Tenure in Previous Home
2009 2010
1 year or less 4% 3%
2 to 3 years 18 8
4 to 5 years 21 16
6 to 7 years 12 18
8 to 10 years 15 17
11 to 15 years 12 17
16 to 20 years 8 8
21 years or more
11 13
Median 7 8
21%
38%
55%
86
Buyer’s Expected Length of Tenure
2009 2010
1 year or less 1% 1%
2 to 3 years 3 3
4 to 5 years 12 12
6 to 7 years 3 3
8 to 10 years 14 13
11 to 15 years 5 5
16 to 20 years 22 22
Don’t Know 39 42
Median 10 10
22%27%
40%
87
First Step in Home Buying Process
All Buyers First-time Buyers Repeat Buyers
2009 2010 2009 2010 2009 2010Looked online for properties for sale
36% 36% 31% 32% 40% 41%
Contacted a real estate agent 18 19 14 16 21 22
Looked online for information about the home buying process
11 11 16 15 7 8
Contacted a bank or mortgage lender
8 8 11 10 6 6
Drove by homes/neighborhoods 8 7 6 6 10 9
Talked with a friend or relative about home buying process
7 7 11 11 3 3
Visited open houses 4 4 2 3 5 5
Looked in newspapers, magazines, or home buying guides
3 2 2 2 3 2
Attended a home buying seminar 1 2 3 3 * *
Contacted builder/visited builder models
2 1 1 1 2 2
88
Number of Weeks in Home Search
2001
7
2003
8
2004
8
2005
8
2006
8
2007
8
2008
10
2009
12
2010
12
89
Info Sources Used in Home Search2009 2010
Internet 90% 89%
Real estate agent 87 88
Yard sign 59 57
Open house 46 45
Print newspaper advertisement
40 36
Home book or magazine 26 23
Home builder 18 16
Relocation company 4 3
Television 8 7
Billboard 6 5
Every source was used less except one – YOU!90
2001 2003 2004 2005 2006 2007 2008 2009 2010
Real estate agent 48% 41% 38% 36% 36% 34% 34% 36% 38%
Internet 8 11 15 24 24 29 32 36 37
Yard sign/open house sign 15 16 16 15 15 14 15 12 11
Friend, relative or neighbor 8 7 7 7 8 8 7 6 6
Home builder or their agent 3 7 7 7 8 8 7 5 4
Directly from sellers/knew the sellers
4 4 5 3 3 3 2 2 2
Print newspaper advertisement 7 7 5 5 5 3 3 2 2
Home book or magazine 2 1 2 1 1 1 1 * *
Other 3 6 4 * * * * * *
Where Buyers Found the Home They Purchased
91
Value of Website Features
Very Useful
Somewhat Useful
Not Useful
Did Not Use / Not Avail
Photos 85% 14% 1% 1%
Detailed information about properties for sale
83 16 1 1
Virtual tours 61 27 5 6
Real estate agent contact information 45 35 10 10
Interactive maps 43 35 10 12
Neighborhood information 40 43 9 8
Pending sales/contract status 33 35 16 16
Detailed information about recently sold properties
30 39 16 15
Information about upcoming open houses 21 34 22 23
92
Websites Used in Home Search
2005 2009 2010
Multiple Listing Service (MLS) website 50% 60% 59%
REALTOR.com 54 46 45
Real estate company website 38 46 43
Real estate agent website 31 45 42
Other website with real estate listings 11 30 41
For-sale-by-owner website * 17 15
Newspaper website 15 9 8
Real estate magazine website 6 4 4
Social networking websites (e.g. Facebook, Myspace, etc.)
* 1 2
Video hosting websites (e.g. YouTube, etc.) * * 1
Warning: Get Better or Get Left Behind!!!93
Method of Home Purchase
Page 94
2001 2003 2004 2005 2006 2007 2008 2009 2010
Through a real estate agent or broker
69% 75% 77% 77% 77% 79% 81% 77% 83%
Directly from builder or builder’s agent
15 14 12 12 13 12 10 8 6
Directly from the previous owner
15 9 9 9 9 7 6 5 5
Through a foreclosure or trustee sale
1 1 1 * 1 1 3 10 4
Buyer Rep. Arrangement with Agent
2009 2010
Yes, a written arrangement
43% 40%
Yes, an oral arrangement
19 17
No 28 29
Don’t Know 11 13
95
What Buyers Want Most from Agents
Help with the price negotiations
14%
Help buyer negotiate the terms of sale
12%
Help with paperwork
10%
Determine what comparable homes
were selling for6%
Help determining how much home buyer can afford
3%
Help find and arrange
financing2%
Other3%
96
How Buyers Found Their Agent
2005 2009 2010
Referred by (or is) a friend, neighbor or relative 44% 44% 48%
Internet website 7 10 10
Used agent previously to buy or sell a home 11 10 9
Visited an open house and met agent 7 6 7
Saw contact information on For Sale/Open House sign
6 7 6
Walked into or called office and agent was on duty
4 4 5
Referred through employer or relocation company
4 4 3
Personal contact by agent (telephone, email, etc.)
3 3 3
Newspaper, Yellow Pages or home book ad 2 1 1
Direct mail (newsletter, flyer, postcard, etc.) 1 * *
Other 6 6 7 97
Number of Agents Interviewed by Buyers
2002 2005 2009 2010One 59% 64% 66% 64%Two 22 20 19 21Three 19 10 10 10Four or more
-- 5 6 6
98
Reputation of agent20%
Agent is friend or family member
17%
Agent’s knowledge of the
neighborhood12%
Agent has caring personality/good
listener11%
Agent’s association with a particular firm
3%
Professional designations held by real estate agent
2%
Other5%
Most Important Factors When Choosing an Agent
99
2005 2009 2010
Good financial investment 94% 87% 85%
Better than stocks * 54 47
About as good as stocks * 26 30
Not as good as stocks * 7 9
Not a good financial investment 1 3 4
Don’t know 5 10 11
Buyer’s View of Home as a Financial Investment
100
Only 9% did!!!
Would Buyer Use Agent Again or Recommend to Others?
101
Method Sellers Used to Find Agent
2005 2009 2010
Referred by (or is) a friend, neighbor or relative 43% 40% 41%
Used agent previously to buy or sell a home 28 24 23
Personal contact by agent (telephone, email, etc.) 5 5 4
Visited an open house and met agent 4 5 4
Referred by another real estate agent or broker 3 4 4
Internet website 2 3 4
Saw contact information on For Sale/Open House sign
4 3 3
Referred through employer or relocation company 3 5 3
Walked into or called office and agent was on duty 2 3 2
Direct mail (newsletter, flyer, postcard, etc.) 3 3 2
Newspaper, Yellow Pages, or home book ad 2 2 2
Advertising specialty (calendar, magnet, etc.) * 1 1
Other * 5 6
102
2002 2010
One 76% 66%
Two 16 19
Three 8 10
Four -- 3
Five or more -- 3
Number of Agents Contacted Before Deciding Who to Sell Home With
103
What Sellers Most Want from Agents
2005 2009 2010
Help price home competitively 17% 22% 23%
Help find a buyer for home 28 21 21
Help seller market home to potential buyers * 19 20
Help sell the home within specific time frame 27 19 19
Help seller find ways to fix up home to sell it for more
12 10 7
Help with negotiations and dealing with buyers 5 5 5
Help with paperwork/inspections/preparing for settlement
7 3 4
Help seller see homes available to purchase 3 1 1
104
2005 2009 2010
Reputation of agent 57% 36% 35%
Agent is honest and trustworthy * 21 23
Agent is friend or family member * 16 16
Agent’s knowledge of the neighborhood
17 13 12
Agent has caring personality/good listener
* 6 4
Agent’s association with a particular firm
6 4 4
Professional designations held by agent
3 1 1
Other 17 3 4
Most Important Factors in Choosing an Agent to Sell Home
105
Negotiating Commission Rate or Fee
2009 2010
Real estate agent initiated discussion of compensation 44% 44%
Client brought up the topic and the real estate agent was willing to negotiate their commission or fee
25 25
Client brought up the topic and the real estate agent was not willing to negotiate their commission or fee
9 9
Client did know commissions and fees could be negotiated but did not bring up the topic
10 10
Client did not know commissions and fees could be negotiated
13 11
106
Only 24% of sellers use the same agent they used previously to buy or sell a home.
Would Seller Use Agent Again or Recommend to Others?
107
Method Used to Sell Home
2001 2003 2004 2005 2006 2007 2008 2009 2010
Sold home using an agent or broker
79% 83% 82% 85% 84% 85% 84% 85% 88%*
For-sale-by-owner (FSBO) 13 14 14 13 12 12 13 11 9**
Sold to home buying company 1 1 1 1 1 1 1 1 1
Other 7 3 3 2 3 2 2 3 3
* Highest Level in 9 Years!** Lowest Level in 9 Years!
108
Incentives Offered to Attract Buyers
2009 2010
None 58% 56%
Home warranty policies 21 25
Assistance with closing costs 18 20
Credit toward remodeling or repairs 6 5
Other incentives, such as a car, flat screen TV, etc.
3 4
Assistance with condo association fees 1 1
Other 5 4
109
Annual KW MLS StudyTop 5 Full Service vs. Top 5 Limited Service
110
22% Less
21% Less
34% Less
15% More
11% Less
27% Less
111
5% Slower
2% Faster
16% Slower
5% Faster
13% Faster
5% Faster
112
113
7% Increase 34%
Decrease
18% Decrease
4% Decrease
16% Increase
114
115
Median Commission Rates
Overall commission rates softened slightly in 2010, averaging 5.42%.
Source: KWRI Internal Commission Studies
Median Commission Rates – Seller Side
Seller side commission rates decreased slightly by less than a tenth of a point.
Source: KWRI Internal Commission Studies
Median Commission Rates – Buyer SideBuyer side commission rates decreased more than a
tenth of a point to 2.86% in 2010.
Source: KWRI Internal Commission Studies
Median Commission Amount – Seller SideMedian commission amount on the seller side
increased by 26% due to a substantial 23% gain in the median price of homes in the sample.
Source: KWRI Internal Commission Studies
Median Commission Amount – Buyer SideOn the buyer side, commission amounts increased by approximately 11% due to a 4% increase gain in
the median price of homes in the sample.
Source: KWRI Internal Commission Studies
121
Marnie Bennett
1. Have a business plan/ know your goals and numbers2. Invest in yourself through education and training. Set aside
time and money specifically for that purpose3. Be willing to adapt and embrace change / Internet, Social
Media4. Recognize what’s working for you, and more importantly
what’s not working – What is your Unique Selling Proposition?
5. Be aware of your weaknesses and work to overcome them – or hire smartly to complement your skill set
Bennett Real Estate Professionals Ottawa, Ontario260 units $3.9M GCI$73M closed volume
122
Chris Heller
1. Create the habit of discipline to do your job every day2. Focus on the two E’s: efficiency and effectiveness3. Desire – “Be willing to do whatever it takes”4. Improve your versatility, the ability to deal with a
wide variety of people5. Absolute commitment to having a schedule and
following a schedule
The Heller Real Estate Group San Diego, CA149 units $2.2M GCI$86.5M closed volume
123
Ben Kinney
1. The market should dictate your activity2. Take listings and focus on pricing3. Market for cheap4. Leverage the Internet5. Focus on the activity not the result
Bellingham, WA278 units$1.6M GCI$64M closed volume
124
“Persistence and determination alone are omnipotent. The slogan ‘Press On’ has solved and always will solve the problems of the human race.”
- Calvin Coolidge125
PRESS ON!126