PROPERTY NEWS - Steve Murray, a residential property specialist with 33 years of experience in the industry and editor of Real Trends International, a trends research and publishing firm based in Colorado, shared some significant market insights exclusively with RE/MAX of Southern Africa Broker/Owners during his visit to South Africa in August.
Speaking about property in the US, Murray said that the market conditions are back to where they were during 1997 and 1998. “It’s as if the last 13 years never happened. Despite seven years of real estate downturn in the US, housing still accounts for between 12% and 15% of gross domestic income, and 65% of the US population are registered homeowners.”
Murray attributes the downfall of the US housing market largely to reckless lending, with many financial institutions providing what he calls NINJA loans - finance given to those with no income, no job and no assets. But now, like in South Africa, deposits of between 10% and 20% are required by US financial institutions on mortgages, along with similar requirements around credit records and affordability.
However, Murray says that while house prices are still declining, unit sales are up. “The recession is mostly over and we are starting to see very marginal (4%) increases in the number of sales for the first time in the last six years.”
Peter Gilmour, Chairman of RE/MAX of Southern Africa, notes that similar market conditions prevail in South Africa, with property prices remaining stable and in some areas, continuing to decline, although unit sales are slowly increasing, especially in the middle segment of the market. “RE/MAX of Southern Africa has grown market share and recorded fantastic sales results during the first six months of this year. In fact, during this period we recorded the highest sales turnover since the height of the boom in South African during 2007.”
Murray says that in the US there has been an increase in buy-to-let investment, a trend that is mirrored in South Africa. Added to this, Murray says there are currently four generations of homebuyers present in the market - Baby Boomers, Generation X, Generation Y and Millenniums - for the first time in US history.
Another interesting trend in the US market is that there has been a decrease in married couples buying homes, with more single women making up today’s property purchasers.
Murray says however, that over the next 10 years, 70% of new home sales will be made by foreigners.
Throughout boom and bust, the role of the real estate agent has remained, with 9 out of 10 American homebuyers starting their property search online, and 80% making use of the services of a real estate agent.
Murray believes that the US property market will be back in balance in 2015 in terms of the balance between the level of buyers and sellers. At the moment Murray says the market is out of sync, with a three to four month supply of housing.
The number of practicing real estate agents in the US has dropped significantly, as it has in South Africa and the world over. Murray reported that the number of agents in the US dropped by 40% to just above one million, a figure which he believes could potentially drop by another 100 000 by the end of the year.
In 2005 during the peak of the property boom in the US, real estate sales commission was sitting at around $65,5 billion, according to Murray. In 2010, he said, the commission was a mere $36 billion, almost half of the figure paid out five years before.
Talking about general trends for successful real estate businesses to watch, Murray pointed out five key areas of focus which are applicable to the US market and the world over:
1. Pressure on prices and proving value – realtors have strong competition meaning that they need to prove their value more and more
2. Innovation and change is necessary - realtors can no longer offer the same product for the same price
3. Service is essential - in the US, it’s not about price for the consumer. In fact, realtor commissions are back to what they were in the boom times
4. The Internet has changed the way we do business – online property portals have changed the way the buying population shops for homes. In the US, 90% of all buyers research property online first, although this has not caused a decline in the number of consumers who use estate agents
5. Regulatory requirements - as lessons are learnt from the recession and financing of property, housing transactions are becoming more complicated. Realtors need to be up-to-date with all regulations surrounding the buying and selling of property
In closing, Gilmour says that Steve Murray’s real estate industry and brokerage insights are invaluable business tools that RE/MAX Broker/Owners can apply to their business ventures.
ISSUED BY SQUARED COMMUNICATIONS ON BEHALF OF RE/MAX OF SOUTHERN AFRICA