August 6th, 2010

Where is the Real Estate Market Going?

By Jackie Berg, Marketing Specialist

With conflicting recovery vs. recession headlines flooding the media on the daily, it’s not surprising that even the most confident analysts butt heads on what’s coming down the pike. Onboard is often called on by spectators of real estate to speak about what’s in store for the market.

So I asked a [sort of] simple question of our staff: In 20 words or less, where is the real estate market going?

Here are a couple of answers from our office where all eyes are on this hot button – analyzing foreclosure indexes, taking the pulse of national brokerages, and also the occasional few who are just smart alecs. Leave a comment and let us know: what are your 20 words?

Tags: future of real estate, real estate market, where is the real estate market going.

March 23rd, 2010

I got my MBA on Delancey Street

By Marc Siden, CEO

I grew up, and still live in, New York City. For years now I’ve passed homeless people on the street. Some beg for money or food, but others just sit there, ranting about something. You ever see this? They are so passionate about what they say. In fact it always catches my eye, but I don’t stop. I’m a New Yorker; I’m always in a rush.

I do find myself wishing I would stop sometimes just to see what this passion is about. What are they saying? Does it matter? And if it does to whom? My conclusion: they try to communicate in a manner which few people care to participate in.

On the streets if you feel threatened, you return to home base. In business, you get back to basics. Both mean the same thing; at least they used to. School gets you book smart. The streets get you life smart and while I’m well versed in scholastics, I actually received my MBA on Delancey Street.

So I have been thinking…thinking for a long time about our industry, its transformation and about being a spectator to a lot of “movements”  that have been going on for the past couple of years. I’d like to start articulating my thoughts to my fellow CEOs and others who, I am quite sure, stay awake at night pondering some of the same things. What are the right moves? What changes should I embrace today, or are they not that important? There is a lot at stake, and man are there so many distractions out there.

I love the real estate industry

I’m a CEO of a company that I helped to form and build in one of the most interesting  and complex industries in the world: Real Estate. It’s like none other. It’s just like that end-to-end hockey game: non stop, fast and furious, then the period ends and there is a lull while skates are sharpened, cuts are stitched up and the game plan is laid out.

We all wait for the action to start again…lately however, I feel as though our industry is just like that homeless guy – so many are yelling and no one is really listening. There is passion, but no focus.

That’s the part I don’t get. And it makes me sad.

So the market crashed and there are several tangible reasons why that happened. I get that. So what are we doing about it? Are we just talking, tweeting and blogging about it, or taking control?

My issues, hardships, dilemmas and decisions are no different or harder than any of the clients whose websites we supply product to on a daily basis. I seek out solutions and rely on what I’ve learned, by stopping and listening to what others are doing around me and being inspired to follow suit.

Last week a client called me and said they were thinking of moving on. They told me that they haven’t  received enough value and will be shopping around for another solution. What did I do about it? What if I wasn’t listening to my client, but I was busy tweeting my whereabouts, or posting the latest article I read or any one of the other distractions out there?

Instead I saved the client by simply asking about what issues she was facing. It turns out, we missed some things that for years we would hit out of the park with our clients. We lost focus on what was really important.

We need to stop spending time on the future of real estate and focus on the now of real estate – the now of your clients and business.

If we aren’t focusing and effectively communicating, we are killing ourselves, folks. 2007-2009 were fabulous years. Though mired in the woes of the market downturn, real estate found solace in this thing called social media. From it came gurus… “experts.” And examples who led us down a path, where the fantasy of what social media is gave us a break from the pain and suffering of what reality really was.

But it’s 2010 now. Like you, I have a company to run. Mouths to feed. Bills to pay. And I have not seen many examples where the promises of social media delivered what we, who run companies need. 25+% increase in revenue and profit in order to stay alive, developing better products for our clients, among other things. How was your last year? Did you grow? Did you profit? Did you watch that reality show too?

Personally, I’ve turned off most of the RSS feeds that float in with the real estate tide and unfollowed the vast majority of Twits who spend their days telling each other where they are, what they eat, and who they just waved hi to. I get the fact that being social is fun. I am all about fun.

But fun doesn’t cut it when you oversee the livelihood of dozens of employees. Strategies, planning, vision, cost cutting, innovation, and technology does.

Back to basics means focus.  It means solid fundamentals. It means listening to your clients, employees and peers. It means giving your opinion and participating in innovation and improving our industry.

If I could have last year back, I would not have passed the homeless guy, who was actually sitting on the corner of my home base which I passed as well. In the street they say a beating makes you tougher for the next battle. No regrets as I have grown from these challenges and have a solid vision for 2010-2011.

Now, back to focusing on today’s challenges. Check back to OnBlog as the year goes on. I will be following up periodically to continue the conversation and show you how Onboard is going back to basics, and what we learn along the way.

Tags: back to basics, focus, real estate market, real estate social media, real estate trends, social media.

October 28th, 2009

Listingbook Hits 100,000 Agent Milestone

By Jackie Berg, Marketing Specialist

Listingbook aims to make the home sales process enjoyable.

It’s not often you hear a success story about a company’s dramatic growth during the downturn – and it’s unheard of to witness a company’s expansion by almost 200% in a year.

Our client Listingbook has done just that.

Since last year, the online client-servicing tool provider has grown to over 100,000 registered agents, up 187% from last year. Listingbook’s splash in the real estate industry is accompanied by 241% more consumers logging in from last year to use the customer portal in the process of buying a home.

More than just a property search site, Listingbook empowers agents in today’s “need to know, want-it-now environment” says Michael Ondrejko, Listingbook SVP of Operations.

According to Ondrejko, Listingbook’s rapid growth can be attributed to the company’s ability to supply its users with Onboard Informatics‘ local neighborhood information. Paired with this comprehensive local information, Listingbook’s superior productivity and marketing tools have powered their outstanding market share in the agent community.

Listingbook offers brokers, agents, and consumers local market knowledge through Onboard’s community, school, and amenities data sets. The demographic and neighborhood content accompanies each listing to agents who have upgraded Listingbook accounts and their clients, giving them a full understanding of the communities they are considering.

“Consumers want to make an informed decision about where they will live. It is the agent’s job to give that to them,” Ondrejko said.

In its eight years, Ondrejko says Listingbook has evolved and channeled its many lessons learned into a quickly-growing force in the real estate industry that keeps the agent in the center of the real estate transaction process. With continual advancements in user interface design, relevancy, and scalability, Listingbook is not complacent even with 100,000 agents on its roster – and expects even more future growth.

Tags: Clients, company growth, data services, Listingbook, real estate market.

January 14th, 2009

Can a real estate market have no bottom?

By Peter Goldey, CKO & CIO

Freshly returned from Inman Connect Panel duty, it seems that my topic had serious wings and has taken flight.

Our Friday AM topic:  “Crunching the Numbers To Find the Turnaround” (a synopsis by Scott Sambucci can be found on SeekingAlpha).

While I’m not quite ready to play Obama’s chief economic advisor, I do have lots of numbers at my finger tips.  Our prediction is that – almost without exception – 2009 will see an overall price decline in virtually every market.  Volumes will start to recover, but fueled by distressed properties in many markets.

That’s probably not new news.  But evidently a hot topic for Yahoo! which picked up Forbes’ article on finding the bottom in the America’s worst markets today.  “America’s Weakest Housing Markets” doesn’t hold a lot of surprises for us at Onboard.  While not “in the business” of making predictions, we do forecast prices and activity out at least four quarters and we’re seeing prices hold or rise in fewer than 5 percent of markets for 2009.

Note: As usual, it is hard to do apples to apples comparisons.  Forbes’ indicated that the most current sales data available is from Q2 2008, and their predictions represent the inclusive change from then forward.  (Onboard has sales through December 2008 in many markets, as well as complete distressed property information, tax basis info, CPI, employment trend and a proven valuation program by comparison).

What are some of the factors in predicting the bottom?

Markets are complex, living things.  To look at distressed property inventories without looking at employment rates or income to price ratios is like deciding which concerts to attend based on venue without considering whether you like the artist.

The bottom line:  prices are out of whack.  Period.

Until either they correct OR other expenses catch up (inflation), prices will continue to fall (or if sellers won’t lower prices, volumes will continue to plummet).  We’re seeing huge volumes out in California today as prices for distressed properties have fallen to a sweet spot that is making sense to investors and home buyers.  But look at the non-distressed segment and volumes are still low.

Meanwhile, in NYC, volumes are low overall and prices are just starting to come down.  The timing on the downturn is 18 months or more behind the west coast and with different market factors (such as international demand) most don’t predict as long or deep a slide.

And then you have Detroit.

What to look for?

If it isn’t clear already, real estate is local.

You have to think locally as you approach the market and predict its future.  Yes, interest rates, crazy cram down measures, and better lending practices at a national level can have impact.  But they are NOT the drivers behind a turn around.  The market will turn around when enough buyers believe that property is priced correctly again.

Think about how each of the following impact your local market.

• Employment – are you ahead or behind the national rate?  Are people optimistic?  Are wages falling or holding steady?  Factory closings and layoffs can have dramatic impact on a localized market.  Onboard incorporates employment trends in our valuation processes.
• Income to Price ratios / Inflation - can first time buyers afford starter homes?  If not, then there won’t be many new buyers in most marketplaces as families will choose to rent instead.   As prices come back in line with wages and the cost of goods, volumes rise.  Most economists predict a rise in inflation – which for the housing market, right now, would speed this process up.
• Distressed property volumes - and not just the total counts, but also:  Are the number of new foreclosures each month escalating?  Holding steady?  Declining?  Are REO’s coming off the market faster than they are coming on?  Are volumes on 30, 60 and 90 day notices escalating or falling? Onboard tracks REO’s, defaults, and other distressed property signals and matches every incoming sale we collect to determine if it was distressed and to what extent.
• Absorbtion rates / Days on market / Price reductions - the longer the average time on market, the more downward pricing pressure.  Don’t be fooled by quick turnaround on REO”s either.  Better than not, but there’s a big difference between that and turnaround on full priced sales.  And here’s where good data matters.  Onboard knows when homes are de-listed and re-listed to try and beat the days on market and reduction watchers out there.  Do you?
• Currency $$ – if the dollar remains weak, are there international buyers clouding the local picture?
• Consumer confidence – if buyers believe that prices are going to continue to fall, they will delay purchases.  This is just as true for houses as it is for TVs.  And if they are fearful about their job stability…well would you buy a house?
• Years in residence – I haven’t heard others talk about this much, but the longer someone has been in their home, the more downward pricing they can withstand and still make a profit on their sales.   Yes, years in residence typically translates to more equity.  But that’s not my point here.  If you bought low, you can sell less low…if you can find a buyer of course.  Onboard tracks this at the neighborhood level by comparing sales volumes against total housing stock levels.
  
• Participation in the upswing - the bigger the boom, the larger the price inflation, and the bigger the downturn (for the most part).
• Understanding “the curve” – typically volumes fall before prices.  Often well before.  And typically volumes will pick up will before prices rise again.  In California, volumes crashed in 2007.   Now we are seeing strong growth in volume even though prices are down 35% – 45% in many areas.
• Inventory - take a look at some of the hardest hit markets in Florida, Nevada and California and you’ll find dramatic levels of overbuilding.  So long as huge volumes of homes are sitting vacant, prices will remain suppressed.  Combine that with high unemployment and a rental market that is better priced and less risky and you see the problem.  Unless you have a very distinctive property, you can’t compete against vacant.

How to stay on top?

To make good decisions you need good information.  If you want to be in position to predict your local market (rather than react to post sale data), you need to follow the statistics and find the relevant trends.

The good news is that local information is available.  Don’t settle for market level statistics.  Look for neighborhood data and local services.  In many areas, even zip codes are too heterogenous to power a decision process or spot a clear trend.  And property classes (sizes, types, styles) can behave very differently.  Ask your data vendors how they can provide information specific to properties and streets rather than counties and metro regions.  Try to split condos from SFR and segregate by bedrooms or square footage.  Look for multiple data points around listing activity, sales, economic conditions, and distressed property status.  And ask to have the content integrated so that you aren’t left trying to match a foreclosure report against sold home data or listing activity by hand.

The better news is that you are probably a local expert yourself.   And if you could just get the data the way you want it, you’re going to know a lot more about how to find the local turnaround than I will.

Tags: absortion rates, Americas Weakest Housing Markets, consumer confidence, employment, Forbes, Inflation, Inman Connect, Lifestyle Listings Engine, local, real estate market.

October 16th, 2008

As the World Turns…Why the Global Economy is More Like a Soap Opera Every Day

By John Paul Murphy, Content Services Manager

Over the course of the next few months, we will be fortunate enough to have Tara Powers blog for us while living in Spain. We are hoping that she can give us a different perspective on not only what is happening here in the United States, but impart some knowledge on what is happening globally…

- John Paul Murphy

If watching the 11:00 news wasn’t always an uplifting pastime in the U.S., doubtless it’s even more enjoyable now that we get to hear about how our country’s economy is crashing and burning every night as well. Maybe you’d think that being across the pond, nightly news would be a bit lighter — scenes from Oktoberfest, or at the very least the latest update on David Beckham.

Except, guess what? The proverbial housing bubble burst is here as well, has led to a strikingly similar, just less publicized, crisis of financial affairs.

So, what happened? At least in Spain — the country that I’m calling home — the sequence of events was entwined with those in the States. Going back to the introduction of the Euro in 2000, historically low interest rates gave rise to a booming real estate market. This boom was characterized by an explosion of construction and an unusually high demand for this excess of homes, many of which were financed with low-interest mortgages that allowed as much as 40 years for repayment. Spanish banks turned to international markets to finance their increasing demand, so much so that 25 percent of the Spanish real estate market was being financed by money coming from outside the country.

When the subprime mortgage crisis hit North America in August of 2007, confidence in the European real estate market plummeted as well. The Spanish markets had to rely on Central Bank of Europe to keep their finances from collapsing as debts grew. Banks stopped lending for mortgages and construction, paralyzing real estate growth, sales, and demand.

As of October 6, 2008 15 percent of the 25 million homes in Spain are vacant. The construction sector has lost over 22,000 workers since the start of 2008, and agriculture nearly 10,000. Small business owners are giving up their businesses at a staggering rate — almost 300 each day since May 2008, according to the National Federation of Autonomous Workers.

Germany, Sweden, Austria, Denmark, and Ireland made moves in recent weeks to cover 100 percent of their investors, although the rest of Europe is seeking a more coordinated plan. A major summit of 20 countries was held on October 11 to formulate such a plan, and the following days saw countries pledge a combined 2.2 trillion Euros in their own forms of the U.S. bail-out plan. Britain alone pledged 37 billion pounds in new capital to its three largest banks, as well as 400 billion pounds in bail-out funding.

The 27 countries of the EU are currently involved in a European Council in Brussels to create a more detailed common plan. In addition to these efforts, the president of the EU plans to call another summit next month in order to reform the world financial order put in place at the Bretton Woods conference in 1944, possibly including a revision of the way markets, banks, mortgage firms, hedge funds and private equity are supervised as well as higher guarantees for bank deposits.

So the moral of the story is, things are about as precarious over here as they are in the good ol’ U.S. of A. While the U.S/Euro exchange rate may still make buying any souvenirs for myself a bit of a pain, the economy here is just as tenuous. And just like in the States, it seems that only time will tell what’s in store for the global state of affairs.

Until next time…adios!

Tags: global market, Onboard Informatics, real estate industry, real estate market.