Eric Block Real Estate "The Blog"

The real estate industry has been slow to evolve for years but will see rapid changes and more technology in 2019 than ever before, according to Coldwell Banker CEO and President Charlie Young.

“I feel like this is the storm of change that’s happening right now,” Young explained.

Young spoke to Inman in December, laying out his vision for what changes the real estate industry might see next year, and how his company, one of the many recognizable brokerage brands owned by holdings giant Realogy, will navigate them.

Broadly, Young said he expects to see “deeper penetration” of technologies that have been percolating for years, comparing the process to watching a hurricane form and then gradually move toward land.

“We have been watching the seeds of change coming at us for 10, 15 years now,” Young said. “But we are really in it now.”

Young pointed to Coldwell Bankers’ CBx Seller Leads technology as an example. The technology began as a presentation that agents could pull up on their iPads, but has since evolved into a system that draws on big data to streamline lead generation. Young said that such technologies are going to become more widespread in 2019, and in subsequent years.

Within five years, predictive analytics will drive this business,” he added.

Young believes there are several factors pushing the real estate industry to change more rapidly now than in years past.

For starters, consumers who are entirely comfortable with technology in other parts of their lives are “looking for those experiences in real estate.”

Agents themselves are changing as well. Increasingly, Young said, they’re seeing the benefits of technology, and they’re also younger.

“There’s been a demographic shift,” he continued. “You have more, younger, newer agents coming into the market with newer ideas.”

Economics are also driving change. Young pointed to the “sustained upswing” in the real estate market that has been happening for years, and added that the flow of cash is pushing people to innovate more quickly.

“You’ve got a lot of money flowing into this space that wasn’t flowing in five years ago,” he said.

Asked if a potential slowdown in the housing market — which many observers believe has already begun and will continue into 2019 — could impede the trend toward increased use of technology, Young speculated that in fact the opposite would be true.

In fact, agents during a slowdown may embrace technology more readily because it could make them more competitive.

However, Realtors working for large companies will have an advantage during 2019 in the event of a cooling market, Young said.

“When a market slows down, things like size and scope work to your advantage,” he continued. “I think that real estate professionals as a class are in a really good place on this spectrum of innovative change.”

Young mentioned several other projects that his company will be working on in 2019, including the NRT iBuyer program that was announced during the fall but remains in a test phase.

Other projects include real estate ads on Facebook that are tailored to users’ internet behaviors, and a voice search tool that uses Amazon’s Alexa platform. The voice search project is also still being tested.

Though Young provided few details about these projects, they offer a glimpse into fields — iBuying, social media and voice interfaces — that have become among the hottest and most competitive in the industry. Next year, then, they will continue to be battleground spaces.

And all of this will come after a year, 2018, that Young said was defined by new levels of “competitive intensity.”

“People are really fighting for their market share,” he said. “It was the year that we turned up the competitive intensity to a new level.”

Credit: Inman.com

But don’t expect homes to get cheaper anytime soon with demand remaining high

Following years of steady appreciation, home prices could begin to flatten nationally in 2019, real estate economists told Inman.

Regionally, however, it’s a different story.

“Price growth is slowing, but homes are still selling for more than they were a year ago,” Redfin Chief Economist Darryl Fairweather told Inman. “With low unemployment and an overall strong economy, we don’t expect prices to fall in 2019. There just aren’t enough new homes being built or new listings to cause prices to drop below 2018 levels.”

A recent study by the National Association of Realtors (NAR) found that existing-home sales had fallen to a nearly three-year low following six straight months of falling or flat sales. In the same report, the median home value had risen to $258,100, which was up 4.2 percent year-over-year.


Inventory is starting to slowly rise as well. According to NAR’s most recent existing home sales report, inventory was up to 4.4 months of supply in September, slightly above the 4.2 months of supply reported in September 2017.

Windermere Real Estate Chief Economist Matthew Gardner said the lack of homes for sale in many markets has pushed prices to unsustainable levels, but that’s changing as more inventory hits the market, with sellers fearing that rising rates could slow demand.

“Across many parts of the country, we’re seeing a jump in the number of new listings as sellers attempt to time the market, fearing that rising interest rates will cause home prices to adjust down,” Gardner said.

A characteristic of the current market is that more homes are seeing price reductions as they hit the market, according to Gardner. Many homesellers have come to market with unrealistic expectations, which has led to a 15 percent increase in price reductions nationally, he said.

“These price reductions are putting downward pressure on home prices at the moment but, as sellers’ expectations become more realistic, home prices should begin rising again, but at significantly slower rates as we move steadily back toward a more balanced market,” Gardner added.

Lending Tree Chief Economist Tendayi Kapfidze said he also expects a gradual deceleration in home-price gains, but the chance of national price declines is quite slim.

“The broader economic environment is still supportive for house prices with firm demand because of a strong labor market and still limited supply, although this is now improving,” Kapfidze said. “There are likely to be localized declines in home prices in areas where affordability is weakest and valuations have gotten the most stretched.”

Ruben Gonzalez, the chief economist at Keller Williams, believes prices will increase again next year, but at a slower rate — around 4 percent.

“I don’t think we’re gonna see declines in the near future,” Gonzalez said. “Typically, when we’ve seen price declines, in the last three decades or so, usually we see inventory levels well above six months, usually in the eight- to nine-month range. We’ve got quite a ways to go in terms of inventory shifting before we start to see declines in home prices.”

The year-over-year increase in the median price of existing homes continues to rise, but as the year progresses, the total percentage increase is slowing. The median existing home price was up 4.2 percent year-over-year in September, the third time in three months the year-over-year increase was under 5 percent. Earlier in the year and late last year, the year-over-year increase was routinely more than 5 percent, even nearing 6 percent.

The most recent data from the Federal Housing Authority found that home prices in August rose more than 6 percent, year-over-year, but only jumped 0.4 percent month-to-month and actually decreased by 0.7 percent in the Mid-Atlantic, month-over-month.

Danielle Hale, the chief economist at realtor.com, thinks the market still has awhile to go before an unhealthy level of affordability pushes prices down.

“There is still some room for both home prices and mortgage rates to increase before we get to a level of unaffordability that has historically been cause for concern,” Hale said. “Aging millennials forming households will provide a strong boost to housing demand that should keep prices from slipping in the near future.”

“One potential caveat to this analysis is that higher levels of debt could prevent this millennial generation from buying homes at levels of affordability that were comfortable for previous generations,” Hale added. “If higher debt loads are an obstacle, the market may see demand (and housing prices) drop off before home prices rise another 10 percent and mortgage rates rise to 5.5 percent.”

Chavi Hohm, the team leader of Team Diva at Coldwell Banker Bain, said prices have actually already started to drop in Seattle, and next spring, the market will be flooded with new inventory in the condo and luxury market. Hohm offered some advice for agents on the changing market.

“Many of the buyer’s agents are new to real estate and lack the follow-up skill set to encourage buyers back into the market to scoop up the deals,” Hohm said. “Those with good follow skills will win in this market.”

James Clifford, a managing broker with Washington Realty Group in Sumner, Washington, said pricing will really vary depending on the regional market.

“Our area continues to have employment growth and population growth,” Clifford said. “As long as we have both of those prices will not go down. Locations with diminishing population and stagnate job numbers will most likely be price sensitive.”

Last month, a Redfin agent in Portland said she believed the market had hit its peak, in a news release about price appreciation slowing around the country.

“I don’t have a crystal ball, but I wouldn’t count on your home appreciating and being worth more in the spring than it is now,” Rebecca Walter, a Redfin agent said. “The [Federal Reserve] has indicated they will make one more rate hike in December, which would impact buyers’ purchasing power. We have this window before the market slows for the holidays, so the sooner the better if you’re planning to sell.”

Credit: Inman.com

It won’t be a buyer’s market until 2020, but home price growth has slowed in more than half of the nation’s largest metros, according to the study

The industry may not see a buyer’s market until at least 2020, according to a majority of real estate economists surveyed by Zillow and Pulsenomics LLC.

In the real estate technology company’s latest “2018 Q3 Zillow Home Price Expectations Survey,” more than 75 percent of approximately 100 economists surveyed predicted the market won’t favor buyers until 2020 at the earliest.

“For the past several years, home sellers held all the cards at the negotiating table, fielding multiple offers while buyers faced stiff competition and a fast-moving market,” said Aaron Terrazas, Zillow’s senior economist. “Conditions are starting to show signs of easing up, but the effects of years of limited construction still linger.”

“Inventory is still falling on an annual basis, and home values are growing well above their historic pace,” Terrazas added. “Although these trends are starting to lose their edge, it is far too soon to call it a buyer’s market.”

Home value appreciation has been faster in 2018 than in 2017, according to Zillow’s data. Inventory has also dropped on a year-over-year basis for 42 consecutive months – signs that the market is firmly in favor of sellers.

Home growth is slowing in more than half of the nation’s 35 largest metros, with price cuts becoming more common. Even in markets where appreciation has slowed, prices remain high and sellers continue to have the upper hand, according to Zillow. Home values are also expected to rise an additional 5.9 percent in 2018, according to the data.

While more than 75 percent of respondents believe a buyer’s market won’t emerge until 2020 at the earliest, 43 percent of respondents believe the market will shift towards buyers in 2020. Regionally, economists believe the Midwest will start to favor buyers before other regions.

“While ongoing supply constraints are reinforcing the floor on home prices right now, the experts’ forecasts still imply the joists will start to crack sometime next year, and result in sub-three percent annual home-value appreciation in 2020 and beyond,” said Terry Loebs, the founder of Pulsenomics LLC, the research and economists firm that conducted the Zillow sponsored the survey.

“For the first time, a majority of the experts said that there is downside risk to their long-term outlook for home values nationally – and they outnumber experts who assigned upside risk to their forecasts by more than a three-to-one ratio,” Loebs added.