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  • Singapore Real Estate Market: Slow But Steady Recovery After Lockdown Lifted

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    GLOBAL TRENDS

    After containing COVID-19, Singapore is now opening up. Here’s how the real estate market is doing.

    Singapore, a country of over 6 million people, has been praised for how it contained COVID-19 due to the firm, decisive leadership, and a well-prepared healthcare system. Tough sanctions were imposed early to prevent community transmission. Most workplaces, including real estate offices and property showrooms, were closed and stay-at-home orders put in place. This resulted in less than 15,000 active COVID-19 cases, about 500 patients in hospitals, and 23 deaths as of May 2020. The majority of new cases are in foreign worker dormitories where migrant work permit holders reside, and very few cases were recorded amongst Singaporeans and permanent residents.

    Like most countries around the world, real estate was restricted in its activities, show units were closed, viewings postponed, and many activities went virtual, causing home sales to slump by approximately 40% over the last March and April. In the first quarter, home prices fell to a three-year low. Border closures and travel bans led to a decline in foreign buyers; thus, luxury home sales dropped dramatically in the absence of wealthy Chinese buyers who propped up the top end of the market in 2019.

    Lockdown, or circuit breaker, as it’s known in Singapore ended June 1 with the economy being opened in several stages. The government paid out over $6 billion over the last 60 days as a support measure for the 1.9 million local Singapore workers. Levy wavers and rebates were also provided to help firms meet their obligations to foreign employees.

    Residential Housing

    Over 80% of residential housing developments in Singapore are developed by the government and managed by the Housing Development Board to provide affordable housing for Singapore citizens. The other 20% is privately developed and consists of mostly upmarket apartments and homes owned by foreign investors and rented to ex-pats. Local homeownership is over 80%—one of the highest rates in the world.

    In April and May, home sales were low, but not as low as some months in 2008-2009 during the global financial crisis. Luxury new homes are still being sold. An example being a condominium of 4,700 sq. ft. in Hollard Hill sold for $8 million last month—just over $1,800 per sq. ft.

    The mood is expected to be cautious with buyers being price sensitive and focusing on completed home projects with unsold units. Sales of projects under construction feel the pressure from building suspension and may provide an opportunity for savvy investors to purchase units at favorable prices. The relatively safe health environment is expected to lead an influx of foreign buyers once borders are opened, leading to a projected real estate recovery in 2021.

    Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • CFPB Proposes Solution To GSE Patch Expiration

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    REGULATORY

    The Consumer Financial Protection Bureau (CFPB) announced two proposed rules on June 22 to address the Government-Sponsored Enterprises Patch (GSE Patch), which is scheduled to expire in January 2021.

    Under the authority of the Dodd-Frank Act, the CFPB published a final rule in 2013 that identified factors a lender must consider when assessing the consumer’s ability to repay a mortgage loan. This Ability-to-Repay rule also defined a category of loans called Qualified Mortgages (QMs) that are presumed to comply with the requirements. One of the standards needed to achieve QM status is a debt-to-income (DTI) ratio of 43 percent or less.

    The rule, however, allowed mortgage loans eligible for purchase by Fannie Mae or Freddie Mac (the GSEs) to be achieve QM status even if the DTI ratio exceeds 43 percent—a safe harbor that is commonly known as the “GSE Patch.” The GSE Patch is scheduled to expire on January 10, 2021. The CFPB announced in 2019 that it plans to terminate the GSE Patch on its scheduled expiration date, or possibly after a short extension.

    The Potential Impact

    According to the CFPB, almost one million mortgage loans could be affected by elimination of the GSE Patch. CoreLogic, a housing analytics firm, published in 2019 its own three-part analysis of how the expiration of the Patch can affect credit availability, based on data involving borrowers with DTIs of over 43%. It found that approximately 16% of total 2018 mortgage origination volume was QM-eligible solely because of the GSE Patch, and that removal of the Patch would be more pronounced for younger millennials, retirees, non-W-2 wage earners, Black or Hispanic borrowers, and low-income borrowers.

    The Proposed Rules: A Price-Based Approach and GSE Patch Extension

    The CFPB’s first proposed rule announces its intention to amend the QM definition in the Ability-to-Repay rule to replace the DTI threshold of 43% with a limit based on the loan’s pricing. Specifically, a first-lien residential mortgage loan could not be a QM if its annual percentage rate (APR) exceeds the average prime offer rate (APOR) by 2% or more.

    The rule also proposes higher price thresholds for smaller loans, and a special APR calculation for adjustable-rate mortgages (ARMs). While a DTI limit would not be included as a QM factor, lenders still would be required to consider DTI or residual income and verify the consumer’s income and debts using “reasonably reliable” third-party records.

    In a second proposed rule, the CFPB said that it intends to extend the GSE Patch until the effective date of its revisions to the QM loan definition rule. It says that it does not intend for this effective date to be prior to April 1, 2021, and therefore does not intend for the GSE Patch to expire prior to April 1, 2021.

    The public has up to 60 days after Federal Register publication to comment on the proposed QM rule, and 30 days after publication to comment on the extension of the Patch.

    Sue Johnson is the former executive director of RESPRO, the Real Estate Services Providers Council Inc. She retired in 2015 and is now a strategic alliance consultant.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Epic Rebound In May According To Meyers Research

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    THE HOUSING MARKET

    Consumers were quick to re-enter the housing market once the stay-at-home orders were lifted.

    Meyers Research released the New Home Pending Sales Index (PSI) for May 2020. The New Home PSI, backed by data from Zonda and Metrostudy, shows pending sales decreased year-over-year but rose month-over-month across the United States. The index is a leading residential real estate indicator based on the number of new home sales contracts signed across the country.

    The New Home PSI came in at 101.6 for May, representing a 5.2% decrease from May 2019. On a month-over-month basis, new home sales rose by 16.7% from April.

    “Our homes became our sanctuary from COVID-19 during the lockdown, but in the process, many Americans realized there were things they wanted to change about their living situation,” said Ali Wolf, chief economist at Meyers Research. “Buyers came out in full force as local economies reopened.”

    Pending new homes sales showed significant differences by market, but all but one of the select 20 markets in the country posted a month-over-month increase. Sales in Seattle were down month-over-month and year-over-year due to three main reasons: tough comps from a strong May 2019 and April 2020, a higher-than-average unemployment rate, and a lower community count. New home communities in Seattle that cater to tech workers are still selling at a strong pace.

    In May, the best new home markets were concentrated in the South, led by Houston, Jacksonville, and Tampa. Houston is the standout market given the one-two punch of COVID-19 and depressed oil prices. However, builders in the market focused on pivoting their prices to better cater to first-time buyers over the past 24 months, and that bet has paid off.

    “The housing market posted a substantial rebound in May that has carried on through June,” said Wolf. “Low mortgage rates, pent-up demand, more flexibility of location due to the shift to work-from-home, and an elevated savings rate helping with the down payment all fueled new home purchases.”

    New home data is susceptible to outsized swings in contract activity based on shifts in the number of actively selling communities. As a result, Meyers Research normalizes the data to ensure consistency across the index. The New Home PSI blends the cumulative sales of active or recently sold-out projects with the average sales rate per community, adjusting for fluctuations in supply. Furthermore, the New Home PSI is seasonally adjusted based on each market’s specific seasonality and removes outliers. The index is baselined to 100 for June 2016. Today’s national New Home PSI is 1.6% below the base level.

    Methodology

    The Meyers Research New Home Pending Sales Index (PSI)is built on proprietary, industry-leading data covering 60% of the production new home market across the United States. The reported number of new home pending contracts are gathered and analyzed each month. Released on the 15th business day of each month, the New Home PSI is a leading indicator of housing demand compared to closings because it is based on the number of signed contracts at a new home community. Meyers Research monitors 18,000 active communities in the country, and the homes tracked can be in any stage of construction.

    The new home market represents roughly 10% of all transactions, allowing little movements in supply to cause outsized swings in market activity. As a result, the New Home PSI blends the cumulative sales of recently sold out projects with the average sales rate per community, which adjusts for fluctuations in supply. Furthermore, the New Home PSI is seasonally adjusted based on each markets’ specific seasonality, removes outliers, and uses June 2016 as the base month. The foundation of the index is a monthly survey conducted by Meyers Research. It is necessary to monitor both new and existing home sales to establish an accurate picture of the relative health of the residential real estate market.

    About Meyers Research

    Meyers Research represents the housing industry’s leading provider of rich data, backed by Zonda and Metrostudy, and the industry’s top advisors for residential real estate development and new home construction. With products and services geared for homebuilders, multifamily developers, lenders, and financial institutions, we provide innovative solutions to maximize opportunities in today’s real estate development landscape. To learn more, visit meyersresearchllc.com.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • May Home Buyer Activity Jumps Nationwide To Exceed Pre-pandemic Levels


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    MARKET WATCH

    Showing traffic sees year-over-year gains for the first time since February as the real estate industry turns to tech for virtual showings.

    KEY POINTS:

    • National showing traffic was up 21.4 percent nationwide in May
    • All four regions tracked by the Showing Index® reported year-over-year gains; the South saw the most significant increase, with a 23.2 percent jump, followed by the Midwest’s 20.1 percent increase and a 19.6 percent boost in both the West and Northeast
    • ShowingTime has commenced with the rollout of its new live video showing product, ShowingTime LIVE Video, which lets agents take their clients through personalized, one-on-one interactive video showings from the comfort of their homes Spring’s pandemic-induced downturn in homebuyer traffic seems like a distant memory following May’s impressive nationwide 21.4 percent year-over-year increase in showing activity, according to data from the ShowingTime Showing Index.

    For the first time since February, U.S. showing activity was up year over year on the heels of increasing agent adoption of virtual showing technology to present listings. The loosening of local restrictions on showings throughout the country has also played a role in renewed buyer interest. Together, those two factors have contributed to impressive boosts year-over-year, showing activity in all four regions tracked by ShowingTime.

    The South Region led the country’s improving buyer activity in May, with a 23.2 percent year-over-year increase, the region’s most significant jump in more than a year. The Midwest saw the second greatest increase, with a 20.1 percent spike, while the West and Northeast followed close behind with 19.6 percent year-over-year growth in both regions.

    “The turnaround so far resulted in market imbalance with demand outstripping supply and pushing the prices up in many regions of the country,” said ShowingTime Chief Analytics Officer Daniil Cherkasskiy. “While showing traffic typically subsides mildly after Easter when it reaches a plateau for the summer months, this year looks drastically different as the busiest time is hitting us in early June. The increased buyer demand might be creating a feedback loop, inspiring sellers who would have previously given up on selling this time of year to make another attempt instead.”

    “Since it first became clear that COVID-19 would have an impact on real estate, we’ve been dedicating as many resources as possible to help agents operate effectively,” said ShowingTime President Michael Lane. “Stay-at-home orders are forcing agents to seek out creative ways to show homes to buyers. We developed ShowingTime LIVE Video to make their jobs easier.”

    The ShowingTime Showing Index, the first of its kind in the residential real estate industry, is compiled using data from property showings scheduled across the country on listings using ShowingTime products and services, providing a benchmark to track buyer demand. ShowingTime facilitates more than five million showings each month. Released monthly, the Showing Index tracks the average number of appointments received on active listings during the month. Local MLS indices are also available for select markets and are distributed to MLS and association leadership.

    showingtime showing index may 2020

    About ShowingTime

    ShowingTime is the residential real estate industry’s leading showing management and market stats technology provider, with more than 1.2 million active listings subscribed to its services. Its showing products and services simplify the appointment scheduling process for real estate professionals, buyers and sellers, resulting in more showings, more feedback and more efficient sales. Its MarketStats division provides interactive tools and easy-to-read market reports for MLSs, associations, brokers, agents and other real estate companies, as well as a recruiting tool for brokers. ShowingTime products are used in 370 MLSs representing one million real estate professionals across the U.S. and Canada. For more information, contact us at research@showingtime.com.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Analyzing The Market Leaders' Report - July 2020

    2020 Real Trends Market Leaders


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    REAL Trends breaks down the data to offer an analysis of the top residential real estate firms in various metro markets.

    The REAL Trends Market Leaders report is an extension of the REAL Trends 500 Brokerage Rankings and ranks the top residential real estate firms in various metropolitan markets. The newly released 2020 Market Leaders offers a substantial expansion from previous versions, adding several dozen new markets to bring the total over 160. Below are some observations from this year’s report (Note: firms needed a minimum of 1,000 transaction sides in the calendar year 2019 to qualify):

    • Keller Williams had more of its affiliates (45) lead their markets, by transaction sides than any other brand. The independents were close behind, with 42 independents leading their markets.
    • Realogy brands (Coldwell Banker, Century 21, ERA, Sotheby’s, Corcoran, and Better Homes and Gardens), both owned and franchised, took the top spot in 32 markets. This was followed by Berkshire Hathaway HomeServices (owned and franchised) leading in 21 markets and RE/MAX leading in 18 markets.
    • Most markets are closely contested at the top, but some have firms that dominate their closest competitors. Howard Hanna owns Cleveland, with a 20k+ transaction lead on No. 2. Berkshire Hathaway HomeServices Fox & Roach, REALTORS blows away the competition in the Philadelphia area with a 20K+ lead. In the San Francisco area, Compass is also lapping the competition, with a 7K+ lead.
    • Speaking of San Francisco, it took $2.1 billion in sales volume to make the top 10. Other higher-housing-price or higher-population-density markets took at least $1 billion in volume to make the top 10. Those were: Washington D.C. ($2.3b), Atlanta ($1.9b), Dallas ($1.5b), Los Angeles ($1.4b), New York City ($1.4b), Denver ($1.2b), Phoenix ($1.1b), Boston ($1.1b), Chicago ($1.1b), and Seattle ($1.0b).
    • There were 39 markets that had at least ten firms close at least 1,000 residential transaction sides.
    • Regional powerhouse Howard Hanna/Allen Tate was a market leader in 14 of the ranked markets. Compass was also among the leaders in 14 different markets.
    • The following markets had multiple 10k+ producers: Phoenix, San Francisco/San Jose/Santa Rosa, Southeast Florida, Atlanta, Greater Chicago, Minneapolis/St. Paul, New York City, Philadelphia/Wilmington (DE), Pittsburgh, and Dallas/Ft. Worth.
    • The following markets, in addition to those above, had multiple 5k+ producers:
      Birmingham
      Tucson
      Los Angeles
      Orange County/Riverside County
      Sacramento
      Denver/Boulder
      Hartford/New Haven/New London
      Jacksonville
      Pensacola/Panhandle
      Sarasota
      Tampa/St. Petersburg/Lakeland
      Boise
      Indianapolis
      Des Moines
      Baltimore
      Washington D.C./Arlington/Alexandria
      Boston/Nashua/Portsmouth
      Detroit
      Kansas City
      St. Louis
      New Jersey
      Buffalo
      Charlotte
      Cincinnati
      Cleveland/Akron/Canton
      Columbus
      Tulsa
      Harrisburg/York/Lancaster
      Knoxville
      Greater Nashville
      Austin
      Houston
      San Antonio
      Salt Lake City/Park City/Ogden/Provo
      Greater Seattle
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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • The Flight To Quality

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    LEADERSHIP

    Tough markets bring out the best in us all.

    It’s happening again! It happens every time there is a disruption in the market. Buyers and sellers flee to quality. They want sales associates with smarts, experience, and systems. Sales associates want companies with leadership, marketing, technology, and brand. Top associates build their business during times of chaos. Top companies grow market share. Tough markets bring out the best in both.

    When you ask the highest producers and best companies in our industry why they’re so good at what they do, they’ll tell you it’s because they do the basics better than anybody. Call them basics or fundamentals. I call them universals—the things that are important universally. Universals are the backbone of creating a strong foundation for your business. Universals work in any market.

    Focus on Relationships

    The most common universal among high-performing individuals and organizations is a focus on relationships. Why? Relationships endure regardless of the market. In times of uncertainty, such as the COVID-19 crisis, having a foundation of strong, well-nurtured relationships can mean the difference between still being in business or not.

    Relationships are a durable competitive advantage. They give you predictable results in every kind of market–especially tough markets. Your relationships with your sales associates and their relation-ships with their clients are your most valuable assets. Do you have a system for building and nurturing them?

    Frequency of Interaction

    Whether with your clients or your kids, relationships are built and maintained through the “frequency of interaction.” We call it flow. Live-flow is face-to-face and voice-to-voice interaction. Auto-flow is through mail, email, text, and social media. In hot markets, it’s easy to get busy and fall out of flow. It’s easy to chase leads and transactions and worry about relationships later. What happens when the market softens? There is a price to be paid for neglecting your relationships.

    In times of uncertainty, people turn to the professionals they know (are in flow with) and trust to deliver the goods. The key is to have a system that keeps you in flow with clients and associates in all markets. When a tough market hits, it’s too late to start building relationships. Dig your well before you are thirsty.

    Systems

    Do your associates have a system that keeps them in flow with their clients? Just as importantly, do you have a flow system to build and maintain your relationships with your sales associates? If you’re looking for guidance in building flow systems, check out Win the Race to Be Top of Mind in the April REAL Trends newsletter. Top sales professionals and top companies have these systems in place. In this market, they’re paying big dividends.

    Having the universals of strong relationships and systems that deliver predictable results in all kinds of markets does three things for your organization:

    1. You survive and thrive in the downturns. Your people build their business, and your company builds market share.
    2. You provide certainty to your people in an uncertain time. You have systems that produce predictable results regardless of the market. Strengthening an individual’s sense of confidence and control is a fundamental of great leadership.
    3. You build a great culture. As Peter Drucker said, “Culture eats strategy for lunch.”

    Keep your universals as your top priority. Focus on building relationships, implementing systems that give predictable results, providing certainty, and creating an invaluable culture. Then, prepare for the flight to quality as you attract and keep the best associates and clients.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • What Should Brokerage Leaders Focus On?

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    Now that the worst has passed, what should you focus on for success?

    When the pandemic first hit the housing market, and few knew just how bad it might become, we stressed that brokerage firms, teams, and agents should focus on only two things.

    1. Get closer to your people
    2. Preserve cash

    We shared this with many firms and agents in more than 100 webinars over the past ten weeks. During those webinars, we reminded real estate professionals that the desire of consumers of all ages to own homes is unabated. Housing consumers use agents at the highest levels in 20 years, and consumers value their agents’ help with negotiation, navigation, and the establishment of a trusted relationship.

    We based this on input from real-world data (see Against All Odds) and our experience researching leading brokerage firms through every recession of the last 40 years. These two focuses are vital for every brokerage firm, team, or agent. These two critical areas of focus are essential to the health and future success.

    Now that the immediate danger of a collapse in housing sales has passed, what else should brokerage industry leaders think about and plan? There are a few that we would recommend.

    • The segmentation of the market for securing the services of agents and teams is fragmenting further and will continue to put pressure on incumbents. We’ve written about this before, but given data we’re seeing from The Thousand and America’s Best Real Estate Professionals (more than 14,000 ranked in 2020), the trends are moving faster.
    • The battle for supremacy through the use of technology will intensify among national real estate organizations, brokerage firms, teams, and agents. The backdrop to this trend is that there isn’t proof that any single technology platform will deliver a sustainable, competitive advantage to any single realty organization. It does not mean it won’t happen, only that there’s no proof that any single platform will produce a clear winner. One only needs to look at the first-quarter results from five of the largest national realty organizations, it will likely be a challenging second quarter for them. Despite the investment of millions into tech platforms, none is showing that they’re pulling away from the field in any meaningful metric.
    • The general workforce will move away from centralized workspace requirements. How much of this short-term trend will become embedded in the economy is anyone’s guess, but there will be a shift of some magnitude. Should the brokerage industry move in the same direction? Should incumbents move away from retail office environments and more towards work-at-home for their agents and staff? Should they shrink their office space? There are numerous opinions on how far this may go. There’s a good counterargument that culture is hard to build without some recurring interaction between agents, staff, and leadership of a realty company. However, we can point to the growth of organizations such as eXp and Side, Inc. to suggest that having offices for agents remains a highly valued and attractive asset.
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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • What Happens Next?

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    FIRST PERSON | HOUSING MARKET

    Will we have a complete housing sales recovery by the end of the year?

    Currently, the number of showings across the country is equal to or exceeding showings on the same date a year ago, according to the ShowingTime Index. When the ShowingTime Index started trending up in most markets in early April, it rightly predicted the strong return of written contracts that have taken place since mid-April.

    During the end of March and early April, written contracts predicted a substantial decline in closed sales for late April and May. The level of closings in the period from mid-May through the end of June will be off from where they were a year ago by a smaller amount than any forecasters thought just a month ago. If the Spring surge continues for another month, July and August may be down about the same level.

    What Will Prevent a Housing Recovery?

    Two issues will prevent a full-scale housing sales recovery. There are nearly 40 million Americans out of work, and not all of them will be back at work soon, which means most of those will not buy a home anytime soon. Further, these are not all waiters and retail workers, as some assume. Many white-collar managerial jobs were lost and will not be quickly recovered, if at all.

    This is the fifth housing recession since 1980. I’ve had a front-row seat to them all. One thing that occurred, anecdotally, in each downturn is that the high-priced segment of the housing market gets quiet for a period, even after a recession ends. This segment of the market tends to hibernate for 12 to 18 months after a recession. Yes, there are transactions, but historically not at the level before the start of a recession.

    A Complete Recovery?

    This means a complete recovery in housing sales might not happen this year. We’ve reviewed several economists’ forecasts, including those from NAR, Zillow, and Mortgage Bankers. Their projections for 2020 housing sales go from 4.5 percent in the rosiest prediction (MBA) to down 25 to 28 percent. While averaging these are unrealistic, it appears that housing sales units for 2020 will be down 15 to 20% for the year. The good news is that the worst is likely behind us, and the annualized level of housing sales will be better in the third and fourth quarter than it was in the second. Generally, these economists believe that full recovery will occur later in 2021.

    Economists from outside of housing believe that the general economy will get hit hard in the second quarter, with GDP falling between 25 and 30 percent in the second quarter—an unprecedented decline—while GDP will recover from growing in the double-digit ranges in the third and fourth quarters of 2020. However, none believe the loss of output from the March to June period will be made up by year-end.

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • The Future Of The Brokerage Industry

    paper airplanes flying above paper houses


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    We analyzed several recent surveys to give you a pulse on the market.

    Virtually all businesses are now quickly pivoting to meet the expectations of their consumers amid the Coronavirus pandemic, and the land brokerage industry is no different. This industry has been impacted by technological advancements and changing consumer behavior.

    Technology’s Disruption and the Coronavirus Pandemic

    Before COVID-19, the impact technology was making on both our personal lives and businesses was palpable. We knew technology had forever changed us: How we receive our news and information, communicate, shop, bank, receive our education, get entertained, and now, visit with our doctors. But we didn’t fully understand how quickly the benefits of technology would shift from convenience to becoming an absolute necessity.

    Before the pandemic, 40% of both blue- and white-collar jobs were predicted to be lost to technology over the next 15 years. Since the onset of COVID-19 and the shutdown of our economy, it’s evident that the loss of American jobs to technology is going to take place at a much faster pace than initially predicted.

    Disruption in Residential

    Real estate companies that are leveraging technology, data, Google rankings, artificial intelligence, and social media were covering ground quickly. Land brokers should learn from these residential companies, who are changing their industry’s message with marketing slogans such as “Real Estate, Made Simple” and “Finally, the Way Real Estate Should Be.” Some of these businesses are demonstrating how the residential real estate industry has been ripe for disruption. All companies are seeing consumers demand more transparency. Consumers expect relevant, accurate, free-of-charge data to be at their fingertips to assist them with their decision-making processes. If you’re unable to give it to them, they are on to the next vendor.

    The Future of the Land Brokerage Industry

    An Oxford University study predicted that 86% of real estate agents would be replaced by robots over the next 20 years. The truth to this statistic remains elusive. However, regardless of the actual number, the question is, will you be part of the percentage pushed aside, or will you be a part of the elite portion who are taking the time to learn how to stand out, stay relevant, and remain valuable? If we can better serve clients by providing what they need on a personal, emotional, and technological level, while saving them time and money, we become invaluable.

    As real estate brokers, our path ahead may not be as easy as it has been in the past, but it’s essential to seek opportunity in every challenge. Do not sit victim to the changing circumstances. Be coachable and seek mentorship from others who can provide valuable tools and insight into changes and updates in our industry.

    As consumers take the lead in telling us what they want from land brokers and our services, it’s essential to go above and beyond to protect our brands and reputations. Take caution: Enabled by tools such as Yelp, Google, and Facebook reviews, the service industry is now placed under a microscope more than ever before. Consumers will have access to how well or insufficiently we’ve performed, and they’ll base their buying decision on that information, and for many of them, that information alone.

    The Bottom Line

    There is no way to slow the pace of technology. We need to embrace the impact it’s making on our industry and the changes in how we connect with consumers. Brian Buffini said it best when he said: “We are the advocate, educator, and advisor, not the decision-maker.”

    The consumer decides who will win and who will lose. Only those companies that can reach and provide the best consumer experience will win. Participation trophies in the brokerage business are a relic of the past.

    Aaron Graham is President of National Land Realty and is a licensed real estate broker in NE, IA & KS. Since he entered the real estate business after retiring from a successful NFL career, he’s brokered over $300 million of land transactions throughout the Midwest. More information at nationalland.com

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    This article originally appeared in the July 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • South African Real Estate Market

    photo of colorful buildings in South Africa


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    GLOBAL TRENDS / COVID-19 UPDATE

    March draconian lockdowns and other policies put a damper on all business activities. How is the economy doing now?

    South Africa is the second-largest economy in Africa. Despite its highly developed infrastructure and extensive mineral wealth, it’s ranked as low in equalities for its residents. Only 40% of the 58 million inhabitants live in formal housing. The rest are housed in tribal settings and township shacks. Pre-COVID-19 unemployment stood at 30%. Notwithstanding the inequality existing in the country, South Africa has a vibrant real estate market comprising over 6.5 million homes valued at over $3 trillion, with more than 250,000 residential home sales in 2019. The real estate market, like that in New Zealand, has many similarities to how real estate is conducted in the United States.

    The March arrival of the COVID-19 virus in the country has turned real estate on its head as the government has imposed one of the more draconian lockdowns and stay-at-home policies in the world. Since March, people may only leave their homes for essential foods and medical supplies. Only essential service workers carrying permits may travel any distance before being confronted with an army-manned roadblock. There are no train or bus services, all international and domestic air travel is canceled, and a national evening curfew exists. As of June 1, this has seemingly worked as the country has only 14,000 active cases and 650 deaths, but the cost to individuals through job losses and the country’s economy has yet to be counted.

    NO REAL ESTATE CLOSINGS

    Real estate may only be carried out virtually via Zoom, virtual tours, virtual listings, social media, and other related technology. This has not been easy due to the poor quality of internet services in many parts of the country. Fortunately, many foreign-based real estate groups are represented, like Keller Williams, RE/MAX, Century 21, ERA, Harcourts, and Engle & Volkers. They are introducing some of the tech products available in their countries of origin to the local market.

    Since March, there have been no real estate closings in residential, commercial, industrial or agriculture sectors as the Deeds Registry Office has been closed. This has been severe for the over 50,000 commission-based agents and brokers who have had no income. The government announced a risk-based opening of the economy with five levels of risk for various industries. On May 1, the country moved from the maximum risk Level 5 to Level 4. Sadly, real estate was earmarked to open at Level 2 which meant a long wait for the industry to open real estate offices and meet clients one-on-one. As of June 1; however, the country moved to Level 3. Real estate and the Deeds Registry office may open with strict protocols.

    UNIFIED ORGANIZATION

    One of the positives to emerge has been the unification of organizations representing residential, commercial, industrial real estate, as well as business brokers and auctioneers into one national body. The National Property Professionals Council will represent the industry in all matters pertaining to the sector. The industry has come together, which bodes well for the future as the industry recovers from the enforced standstill.

    Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Fourth Circuit Rejects RESPA Lawsuit—no Concrete Harm

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    REGULATORY

    WHY IS THIS CASE SO SIGNIFICANT?

    A three-judge panel of the Fourth Circuit Court of Appeals recently held that plaintiffs claimed their real estate company’s marketing agreement violated RESPA because they lacked standing to sue under Article III of the U.S. Constitution could not show a concrete injury-in-fact.

    This decision in Baehr v. The Creig Northrop Team will make it more difficult for class action representatives to sue in federal court based on a procedural violation of RESPA. Here’s why the case is significant.

    THE SUPREME COURT’S NON-DECISION IN FIRST AMERICAN AND DECISION IN SPOKEO

    In 2012, the real estate industry eagerly awaited the U.S. Supreme Court to rule in the case of First American Financial Corp. v. Edwards, which would have resolved a longstanding dispute among federal courts over whether a plaintiff in a RESPA lawsuit lacks standing to sue in a federal court under Article III if they have not been negatively affected by the price or quality of the settlement service purchased. The Supreme Court ultimately ducked the issue and decided not to issue a decision.

    In 2016, the Supreme Court in Spokeo, Inc. v. Robins laid out the framework for determining whether a plaintiff who alleges a statutory violation of the Fair Credit Reporting Act (FCRA) without tangible harm has an injury-in-fact required to obtain Article III standing to sue.

    The Court in Spokeo acknowledged that the injury need not be tangible but said that Article III standing requires a concrete injury-in-fact. In determining whether an intangible harm constitutes a concrete injury, it said that both history and the Congress’s judgment when it enacted the statute is instructive and important. When enacting the FCRA, Congress sought to curb the dissemination of false information. Still, a violation of one of the FCRA’s procedural requirements (such as disseminating an incorrect zip code) without more may not result in any actual harm. Therefore, the Court held that a plaintiff could not achieve standing under Article III by alleging a mere statutory violation of the FCRA in the absence of concrete harm.

    THE BAEHR CASE

    The Baehrs engaged a real estate agent of The Creig Northrop Team to handle the 2008 purchase of their home. In 2013, they filed a lawsuit against The Northrup Team and Lakeview Title Company, which had a marketing agreement with the Northrup Team and provided the settlement services needed to complete the transaction. The Baehrs claimed that the monthly payments made by Lakeview to The Northrup Team were illegal kickbacks under Section 8 of RESPA. They did not claim that they were overcharged or that the settlement services were inadequate, but alleged that they “were deprived of an impartial and fair competition between settlement service providers in violation of RESPA.”

    In 2018, the district court awarded summary judgment to the defendants because the Baehrs lacked Article III standing because they were not overcharged for settlement services and had not otherwise suffered a concrete injury.

    The Baehrs appealed, once again claiming that the deprivation of impartial and fair competition between settlement services providers is a concrete injury under RESPA, even in the absence of an overcharge. They also advanced three new allegations of concrete injury: (1) that the Northrop Team had a fiduciary duty to disclose and remit any fees paid by Lakeview; (2) that it was unjustly enriched by their engagement of Lakeview; and (3) that they paid for settlement services provided in contravention of RESPA.

    THE BAEHR DECISION

    The Fourth Circuit panel applied the principles used in Spokeo to reject the Baehrs’ claim that the deprivation of impartial and fair competition among settlement service providers by itself is concrete harm under RESPA that justifies standing. An allegation of a statutory violation cannot satisfy the injury-in-fact requirement of Article III without showing that the harm stemming from the statutory violation is the type of harm Congress sought to prevent when it enacted the statute. When enacting RESPA, Congress intended to protect consumers from “certain abusive practices that had resulted in “unnecessarily high settlement charges.”

    “The upshot is that the deprivation of impartial and fair competition between settlement services providers—untethered from any evidence that the deprivation thereof increased settlement costs—is not a concrete injury under RESPA,” the panel concluded.

    The panel also rejected the plaintiffs’ three new arguments to show concrete injury, saying that (1) they had not established that the Northrop Team owed them a fiduciary duty; (2) any unjust enrichment by the defendants did not harm them; and (3) payment for a service in an allegedly unlawful transaction was still just a mere statutory violation insufficient to provide standing. Accordingly, it directed the district court to dismiss the plaintiffs’ complaint.

    WHY BAEHR IS IMPORTANT

    Federal statutes like RESPA, which authorize statutory damages in addition to or instead of actual damages, long have been attractive targets for class action attorneys. Individual plaintiffs like the Baehrs base their standing to sue on the mere fact that the statute was violated, and request class certification. Under RESPA’s treble damages provision, the class often asks for millions of dollars in damages without alleging or proving any concrete injury.

    The Baehr decision is only applicable to federal courts in the Fourth Circuit (Maryland, the Eastern District of North Carolina, and the Middle District of North Carolina). The Baehrs can still ask for a review of the panel’s decision by the full Fourth Circuit. Nevertheless, this ruling establishes a strong precedent in federal courts that alleged violations of RESPA must comply with Spokeo—which means that the court will look beyond allegations of bare statutory violations to whether there is any concrete injury.

    Sue Johnson is the former executive director of RESPRO, the Real Estate Services Providers Council Inc. She retired in 2015 and is now a strategic alliance consultant.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Unprecedented Turnaround In Home Showing Activity Seen In April And May

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    Showing Traffic Matches Prior-Year Levels in Many Markets According to Latest ShowingTime Data; Tech-Facilitated Showings, Loosening of Stay-at-Home Restrictions Account for Improvements

    KEY POINTS:
    • Year-over-year gains in showing activity seen in states immediately after restrictions are loosened for in-person showings, signaling how other states might fare following similar legislative decisions
    • Tens of thousands of virtual showings have been conducted to date through ShowingTime
    • ShowingTime’s COVID-19 tracker, which charts daily homebuyer demand across the U.S. and parts of Canada, reveals steady improvements in almost every state and province showingtime.com/impact-of-coronavirus

    Showing activity continued an impressive turnaround after an historic spring collapse, led in part by loosening restrictions and increased adoption of virtual showing technology, according to data from ShowingTime.

    In early April, 42 states had issued stay-at-home orders, though by mid-May, the number of states where only essential businesses were permitted to remain open had dropped to 21. The Department of Homeland Security lists real estate as an essential service, though local guidelines take precedence.

    “The beginning of April marked the absolute bottom of per capita real estate activity since the Great Depression as three-quarters of buyer traffic evaporated, yet that was immediately followed by an unprecedented turnaround,” said ShowingTime Chief Analytics Officer Daniil Cherkasskiy. “We’ve seen a significant rebound in May as rapidly returning buyer traffic concentrates on the subdued levels of inventory.”

    The data also show that listings that have gone under contract since the onset of the COVID-19 pandemic have required 40 percent fewer showings. “The probability of going under contract for listings coming on the market has been remarkably stable after the first week of April,” Cherkasskiy said. “This suggests that buyers who were still trying to see homes in April were, on average, more determined to complete the transaction.”

    The upswing in showing activity correlates with an increasing rate of adoption of technology, with more and more agents conducting showings virtually. Since introducing a “virtual showing” option within its showing management products in early April, ShowingTime has seen tens of thousands of showings conducted exclusively online.

    ShowingTime also introduced Showing-Time LIVE, an all-in-one showing and video platform that enables agents and their buyers to use ShowingTime’s mobile app for live, one-on-one interactive video showings. ShowingTime LIVE is currently available in select markets, and will be available throughout the U.S. and Canada in June.

    “We’re continuing to see great resilience in the industry, which can be attributed to agents’ willingness to expand their view of how showings can be conducted,” said ShowingTime President Michael Lane. “The data we’re seeing indicate an impressive rate of adoption of virtual showings. With the introduction of ShowingTime LIVE, we’re able to help agents get buyers into properties in a safe manner.”

    In Michigan, state officials updated their guidance on May 7 and declared real estate an essential business. As a result, the state’s showing activity jumped dramatically, recovering to a normal Springtime run-rate in just eight days. It could signal how other states will fare following similar actions and loosening of restrictions.

    As anticipated, Showing Index® data in April revealed flagging activity on a year-over-year basis. Nationally, showing activity dropped 42.1 percent year over year in April, with the Northeast Region’s 51.2 percent fall the most significant of all four regions. The Midwest’s 41.4 percent year-over-year dip came next, followed by a 36.7 percent decline in activity in the West. The South’s 33.6 percent fall in activity rounded out the year-over-year decreases in buyer traffic.

    April 2020 - ShowingTime Showing Index graph

    The ShowingTime Showing Index, the first of its kind in the residential real estate industry, is compiled using data from property showings scheduled across the country on listings using ShowingTime products and services, providing a benchmark to track buyer demand. ShowingTime facilitates more than five million showings each month. Released monthly, the Showing Index tracks the average number of appointments received on active listings during the month. Local MLS indices are also available for select markets and are distributed to MLS and association leadership.

    About ShowingTime

    ShowingTime is the residential real estate industry’s leading showing management and market stats technology provider, with more than 1.2 million active listings subscribed to its services. Its showing products and services simplify the appointment scheduling process for real estate professionals, buyers and sellers, resulting in more showings, more feedback and more efficient sales. Its MarketStats division provides interactive tools and easy-to-read market reports for MLSs, associations, brokers, agents and other real estate companies, as well as a recruiting tool for brokers. ShowingTime products are used in 370 MLSs representing one million real estate professionals across the U.S. and Canada. For more information, contact us at research@showingtime.com.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • REALTORS® Report

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    77% OF POTENTIAL HOME SELLERS ARE PREPARING TO SELL FOLLOWING END OF STAY-AT-HOME ORDERS

    More than 3 in 4 potential sellers–77%–are preparing to sell their homes following the end of stay-at-home orders, with half completing do-it-yourself home improvement projects, according to a new survey from the National Association of Realtors®.

    “After a pause, home sellers are gearing up to list their properties with the reopening of the economy,” said NAR Chief Economist Lawrence Yun. “Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”

    NAR’s latest Economic Pulse Flash Survey, conducted May 3-4, asked members how the coronavirus outbreak has impacted the residential and commercial real estate markets. Several highlights include:

    • Five percent of Realtors® said their clients are shifting neighborhood preferences from urban areas to suburban areas due to COVID-19.
    • About 1 in 8 Realtors®–13%–reported buyers have changed at least one home feature that’s important to them due to COVID-19. For these buyers, the most common home features they identified as important are home offices, yard space for exercising or growing food, and space to accommodate a family.
    • Nearly 3 in 4 Realtors® currently working with sellers this week–73%–reported their clients hadn’t reduced listing prices to attract buyers.

    View NAR’s Economic Pulse Flash Survey report:
    www.nar.realtor/research-and-statistics/research-reports/nar-flash-survey-economic-pulse

    View NAR’s Weekly Housing Market Monitor:
    www.nar.realtor/research-and-statistics/weekly-housing-market-monitor

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • U.S. Home Sales And Listing Activity Since The Start Of The Pandemic

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    MARKET WATCH / HOUSECANARY MARKET PULSE

    Tight supply has contributed to price stability in many markets.

    Nationwide new listing volume was down 25.8% nationwide com-pared to the week ending March 13, when most COVID-19 measures were implemented. Although, the weekly new listing volume is up 17.4% from its lowest level, which occurred during the week ending April 17. Nationwide weekly new listing volume has been increasing each week since that time.

    For the week ending May 8, the weekly volume of listings going into contract for single-family detached homes was down 5.2% nationwide compared to the week ending March 13, when most COVID-19 measures were implemented. Weekly volume of listings going into a contract is up 46.2% from its lowest level, which occurred during the week ending April 10. Of note, nationwide weekly contract volume has been increasing each week since April 10, indicating buyers are finding ways to complete transactions while practicing social distancing.

    During the week ending March 13, there was an early spike in properties being removed from the market. That trend reversed for the subsequent three weeks. Since the week of April 5, removals have settled back down to pre COVID-19 levels.

    The total nationwide available inventory of single-family detached homes was down by 4.7% compared to the week ending March 13, when most COVID-19 measures were implemented, and has remained relatively constant over the past six weeks. Tight supply has helped stabilize prices in many markets through the weeks following March 6. For example, since the week ending March 6 through current, there are 86,234 fewer properties in total supply than before the beginning of COVID-19 stay-at-home measures. Thirty-six of forty-six states have shown an increasing demand for properties under contract that exceeds the net supply. If this trend continues, it will put increasing pressure on real estate values.

    Before the COVID-19 pandemic, housing prices continued to rise in most markets. Using a three-week moving average of the median price of new listings, two-thirds of the states reviewed saw a rise in median housing prices for newly listed properties as the historically strong spring buying season continues.

    An Uptick in Median List Price

    Over the week ending May 8, 32 of the 46 states have seen an uptick in the median list price of new listings, while 14 states have shown price declines. Hawaii, New York, Florida, Connecticut, and California have shown the strongest price gains. West Virginia, New Jersey, D.C., North Dakota, and Idaho have all shown the most significant declines in new listing prices.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Strengthening Your Team

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    LEADERSHIP

    When the pandemic became widespread, I released a statement about the importance of industry leadership and in it wrote this:

    A business is only as resilient as the leader who guides it; lead with conviction and confidence, focusing on solutions rather than what you can’t control.

    That idea is still applicable today as we continue navigating every challenge presented by the COVID-19 crisis. Strength in this new world is a dichotomous concept; we must be strong as leaders, but we also must instill strength in all those we lead. You become a more influential leader when you give power away.

    If you’re wondering how to build your team’s internal strength, here are a few ideas:

    Provide opportunities for self-direction and decision-making. The more you empower your team members with the ability to make decisions, the more they’ll gain confidence and competence in the choices they make. When team members can take ownership of their initiatives and implement their ideas, you create a climate where everyone is fully engaged. Your team knows that what they say and do matters critically to the success of the overall organization.

    Understand that being in control is a basic human instinct. Power is not about greed or financial gain; it’s about the ability to direct and decide and inspire and influence. People want responsibility and control. They want to know that their work and the decisions they make will positively impact future outcomes.

    Choice feeds power. A study by researchers at the Delgado Lab for Social and Affective Neuroscience at Rutgers University revealed that choice activates the reward-centric circuits of the brain, making people feel more confident and willing to explore options outside of their comfort zones.

    Goals and commitments can create power. By allowing your team members to set their own goals and obligations without influence from a manager or leader, you’re empowering them to decide the trajectory of their success. You’re allowing them to take the initiative and self-direct themselves toward excellence in execution.

    Don’t worry about slackers. It could be argued that by giving your team autonomy, you’re also opening people up for laziness or an inability to execute because there’s no pressure influencing performance. However, slackers will self-select out of a working system with strong leadership and an empowered team. After a while, team members will get tired of doing the slacker’s work, and the slacking member of the team will be forced to step it up or step out.

    Invest in strengthening the knowledge and capacity of your team. I’ve long been an advocate for coaching and training, and that has never been truer than it is today when so many excellent mentors and coaches are providing incredible online resources for learning.

    Think of yourself as a coach. Some of the best leadership examples come from the world of sports—Bill Walsh, Phil Jackson, Bill Belichick, Vince Lombardi, and Don Shula. All of these great coaches were actively engaged in building the physical and mental strength of their teams. Beyond building strength, another aspect of being a coach is the assessment of robustness.

    A forward-thinking leader is constantly evaluating team members and asking how best to guide them toward greater competency and fortitude. As Frances Hesselbein, former CEO of the Girl Scouts of the U.S.A., once said: “Ask, don’t tell.”

    So, what’s the message? Leadership is a mindset and a movement toward greater strength within an entire organization, creating empowered team members who feel motivated to perform at their very best. While we’re all at home figuring out how to keep business thriving, let’s remember to focus on helping our team members thrive.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • How To Bring Stability And Hope To Your Business

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    BUSINESS LEADERS

    Many business leaders face extreme challenges during their careers, but the coronavirus pandemic is uncharted waters for all.

    Most offices and stores are slowly reopening across the U.S. Companies still operating are mostly working remotely, and many are doing business differently to adjust to the new normal. As uncertainty continues to reign, how should leaders respond to new fiscal challenges, and what guidelines should they follow?

    Companies around the world are reevaluating how they do business to overcome the challenge that we all face at this moment. Times of crisis are when the best leaders step up, calm their workforce, believe in their capabilities, and go beyond the norm to influence changes that make a company more robust for the long haul.

    While the health and well-being of team members have to be leadership’s primary concern, it’s never been more critical to find new and creative ways to meet revenue goals. Challenging times is when innovation is often born, and that starts with leaders who won’t be paralyzed by problems, but rather see them as opportunities to grow.

    Here are five tips to help business leaders navigate this unprecedented time:

    1. Turn to your core values. A company’s core values act as a compass in stormy seas, Newman says, bringing some stability and helping maintain direction even while waves of uncertainty approach. Your unchanging core values provide clarity amid the turbulence. They serve as a framework to inform your decision-making process, especially during periods of uncertainty.
    2. Be strong and honest. Leaders who are best prepared to get through a crisis have an excellent level of resiliency. They have mental discipline, accept life’s insecurities, and don’t panic when the storm hits. The next step is committing to transparency with employees. Share your thoughts, concerns, and encouragement, and reinforce the company values.
    3. Learn, invite new ideas, and adjust. A crisis causes leaders to reevaluate processes and consider improvements tailored to a changing business climate. It’s imperative to learn from the current crisis, and, from your data, determine what your company can do differently to adjust. Embrace it as an exciting opportunity to innovate and be better. Solicit ideas from your most trusted people. Look at new services and products you could create. Everything from what you sell to how you deliver it might be on the table for a change.
    4. Be extra resourceful. One thing we learned during the last recession is how to be resourceful. Now is the time to reorganize and refocus to achieve lean and efficient business operations. Develop a plan to reduce costs without interrupting critical business functions. Reach out to your network and external partners to leverage any resources you may have outside of the company. Empower all team members and leaders at your company to exercise a new level of responsibility.
    5. Increase and improve communication. Communication with team members, clients, and external partners is paramount. There’s no reason you can’t enhance communication despite the current circumstances. Increase the use of technology to stay in front of clients, including video conferencing, emails, and even text messages when appropriate. Work with your business leadership to develop the proper communication plan for your business.

    How a company overcomes significant challenges determines what type of company they are. As leaders step up and guide a company through, they develop deeper leadership capabilities that will last long beyond the current crisis. Likewise, their company will be stronger for it.

    Jadon Newman is the founder and CEO of Noble Capital (www.noblecapital.com). With a 20-year career in real estate and finance, he specializes in private lending, private equity, investment real estate, and strategic venture capital.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Sea Change Coming For Brokerages

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    ADAPT AND THRIVE

    Business owners likely to change the way brokerage offices do business and how space is configured.

    The ongoing global health crisis has forced business owners to alter the way they do business. As we’re all learning, if you don’t adapt and embrace new and different ways of doing business, you’ll get left behind. In the real estate industry, broker-owners and their sales professionals have had to become particularly nimble in the way they do business.

    Due to the strong interpersonal nature of this industry, it’s become incredibly challenging to do business the way we’ve done it in the past, which sadly was only a few months ago. It seems like ages since we’ve gathered around the water cooler with peers, attended in-person team meetings, and packed ourselves into tight rooms for training sessions. We took for granted the ability to meet with clients face-to-face at a Starbucks or in their homes. Open houses and showings were just a part of the daily hustle.

    We’re resilient people, and we’re figuring things out. It is incredible how quickly we’ve all embraced our new virtual world. While video conferencing has been around for a while, it hasn’t necessarily been a preferred or widespread way of doing business. It’s now become our new best friend!

    Whether Zoom, Google Hangouts, or Microsoft Teams, we’ve all had to learn how to use virtual communication platforms to keep in touch with our co-workers, partners, and clients. Inter-personal restrictions have also prompted us to rely more on virtual home staging, virtual tours, and even virtual closings.

    We’ll get back to rubbing elbows once we get past this health crisis, but the wide-spread acceptance of virtual business born from this crisis will no doubt fashion permanent habits for all of us. From an employer’s perspective, we’ll be more accepting of working from home as well as virtual meetings and training. From a sales professional’s perspective, we’ll find virtual meetings more acceptable to our clients. This will ultimately lead to less of a need for abundant office space or a way to distance people within the office.

    In the real estate industry, we’ve seen a long-term trend that has us slowly moving away from brick and mortar in our new virtual world. This crisis will force our hand to accelerate this trend drastically.

    Many of our brokerage clients at REAL Trends are putting into motion plans to reduce their occupancy expenses. Also, we got a big tell from a recent survey we sent to leading firms around the country. A whopping 62% of those polled will consider reducing their footprint when office leases come up for renewal, with nearly half seriously considering office consolidations based on the success of working from home and virtual meetings.

    The bottom line is that the COVID-19 health crisis has fostered a universal acceptance of virtual business. This will undoubtedly prompt a sea change in the way brokerages view, design, develop, and ultimately spend money on office space.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Consumer COVID-19 Harris Poll

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    IT’S TIME FOR A PROACTIVE APPROACH FROM BROKERS

    With COVID-19 probably here in some form for the long term, this study shows how vital it is for brokers to go above and beyond with precautions.

    The Harris Poll, one of the country’s most respected polling and research organizations, released the findings of a study done in early May. In it the poll found:

    • 80% of Americans are still concerned with the risk of being exposed when leaving home for errands and worry they will accidentally expose others.
    • Nearly 75% of Americans worry about future public activities, such as public transit, socializing or going to bars, restaurants, hairdressers, etc.
    • 66% of parents are concerned their kids will be exposed if sent back to school, causing many districts to cancel in-person classes for the rest of the school year.
    • Taking a flight is also a concern for 66% of Americans.

    Given this, real estate professionals and brokerage firms will need to go beyond passive acceptance of government directives as to what needs to be done to show homes.

    It appears the Coronavirus is here to stay, much like influenza. Given the high levels of current fear about the virus, it seems apparent that agents and brokerage firms should take a proactive approach to assure buyers and sellers that they’ve done all they can to ensure their safety. This should be a priority.

    No agents can promise that each home is 100% safe for sellers and buyers, but they can take every step possible to let both parties know the steps they’re taking to be as safe as possible. It should not be done with an attitude of “this is what they tell us we have to do,” but rather, “our agents and we pledge to take all the steps we can to assure a safe environment.”




    Harris Poll No. 2: Are Americans Reconsidering Where They Live?

    Study shows that Americans are rethinking high-density city and urban homes and moving to less-crowded places.

    According to the results of a separate April 2020 Harris Poll, nearly 39% of urban dwellers said that COVID-19 had prompted them to consider moving to a less crowded place.

    • It seems that 18 to 24-year-olds who were surveyed were more likely than other age groups to say they’re considering a move.
    • Urban dwellers (43%) were more likely than suburban (26%) and rural (21%) residents to report having browsed real estate websites for homes or apartments to rent or buy.

    WHAT DOES THIS MEAN?

    According to Harris and other sources, after a surge of people moving to urban cities—more than 1 million population during the early 2010s—major metro areas have seen growth slow-downs and even losses over the past four years according to an analysis of Census Bureau data by the Brookings Institution.

    Remote work is being normalized and is likely to become a more permanent reality, allowing staff more flexibility to live further away from the company’s headquarters.

    One other note was that people tend to stay put during the threat of a recession, so the current downturn could discourage people from picking up and moving.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Surveys Reveal Broker And Consumer Views On The Future Of The Market

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    We analyzed several recent surveys to give you a pulse on the market.

    BROKER SURVEY

    HOW DO BROKERS VIEW THE FUTURE?

    REAL Trends and Colmar Associates recently surveyed brokers to see how they see the future of real estate.

    In April, REAL Trends and Colmar Associates surveyed 150 brokers (125 responded) to determine their future view, given the current state of the market. Here’s what they had to say:

    • 66% said they were going to use more of a combination of virtual meetings and company gatherings
    • 24.8% said that their experience with virtual meetings was excellent, and 51.2% said it was very good
    • 52.8% of the brokers surveyed said the decline in agent counts would be between 5% to 15% because of the economy’s change
    • 40.8% of brokers said they felt the recovery in housing sales would take hold between one to three months; 36.8% said it would be between three to six months, and 15.2% said it would take longer than six months
    • 61.6% said they would consolidate their office space
    • 20.0% said they felt business would be off 5% to 10% in 2020; 43.2% said they believed that business would be off 11% to 20% in 2020, and 16% said they would be off 21% to 30%;
    • 92% said that their business would survive this downturn, showing the determination of the brokerage firms.
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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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  • The Housing Market Is Coming Back

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    FIRST PERSON / COVID-19 RECOVERY

    All the signs are showing that the housing market is making a comeback.

    As of May, we already see signs that housing will be one of the economy’s sectors that lead the way back. Looking at the earliest indicator—showing homes for sale—leads us to conclude that families’ desire to adapt housing to their particular needs remains unwavering.

    Thanks to ShowingTime, we can see the downward and upward progression of showings in the past several months. We looked at the results for Connecticut, Florida, Texas, Illinois, Colorado, and California. In each case, showings bottomed out in late March to early April and moved up sharply through the rest of the month. Some are only slightly below or even from where they were a year ago.

    This won’t help closings in May, which will likely be the trough for housing sales, or June, which may be relatively anemic. But, the significant increase in showings bodes well for July and beyond. This still doesn’t address the low inventory issue that we’ve been dealing with for the past four to five years in most markets. Many brokerage firms, MLSs, and state and local associations of Realtors® report a rise in the number of sellers taking their homes off the market due to fears about people being in their homes or a sense that this may not be the best time to sell a home. Both of these issues will likely fade somewhat by summer.

    Let’s remember some basics. Virtually every study about consumer attitudes about homeownership remains positive whether the source of the study is an industry group or some outside survey or research firm. Generation Z, Millennials, Gen-Xers, and Boomers still desire to own a home. Secondly, based on the 2018 Harris Insights/REAL Trends/California Realtors® study, consumers think using a Realtor is smart. Some 90% reported they used a Realtor to purchase or sell a home in 2018 (up from 85% from the same research in 2014), and 92% of Millennials and Gen-X said they used a Realtor.

    These fundamentals seem to remain intact. Even amid the challenges of Covid-19 and the shutdown of the economy, families were lining up to look at homes for sale. While nearly 20% of American workers are out of work as of this writing, it also means that 80% of Americans are still at work. As the economy recovers from what will be the worst quarter in U.S. economic history, more consumers will be ready to buy housing that fits their needs as the year goes on.

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    This article originally appeared in the June 2020 issue of the REAL Trends Newsletter. It is reprinted with permission of REAL Trends, Inc. Copyright © 2020. To read the rest of this issue & more, please visit our Real Trends page online.

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