Trends are subject to change! Hat tip to Eddie 89 for sending this in:
When Brenda Didonna was house-hunting the last time around, she knew what she wanted: a home where the kitchen, living room, and dining room were one big, uninterrupted space.
“In our old house,” said Didonna, a financial analyst, “I’d come home and make dinner and my husband would be watching TV in the other room, and a good portion of the evening we’d be apart.”
She got her togetherness, all right, in a glorious new house in Millbury. Now when she cooks and her husband watches TV, he’s in full view. Relaxing. While she works. “Frankly it’s annoying,” she said. A real estate agent has been called.
“I miss walls,” she said.
Wait, what?!? For decades, Open Concept, and the togetherness-loving, friend-filled lifestyle it was supposed to bring, has been a home buyers’ religion, the one true way to live. Go to Houzz, the home remodeling site, type in “open concept,” and up come 221,569 photos. Over on HGTV, DeRon Jenkins, costar of the popular “Flip or Flop Nashville,” will tell you, as he recently told the Globe, that an open floor plan “allows the love to flow.”
But now, experts say, people are starting to openly yearn for walls.
“Buyers are moving away from uninterrupted views,” said Loren Larsen, a real estate agent with Compass, in Boston, who is hearing from clients who don’t want their kitchens — and the dirty dishes — on display.
“The pendulum is swinging back,” said Bob Ernst, president of FBN Construction in Hyde Park. “The reality is that life can be loud.”
There may be few real estate trends as enduring or as aspirational as open concept — the name realtors and home designers gave to vast living spaces that are all about happy-together time. The message is so powerful that to admit you don’t want to live in a house as open as a soccer field is to reveal something shameful:
That you’re not a parent who wants the kids RIGHT THERE when you’re in the kitchen, your only alone time, or what used to be your only alone time.
That you’re not a host relaxed enough to chat with guests while preparing a three-course meal.
That you’re not Marie Kondo enough to keep every inch of what used to be three rooms clutter-free at all times.
Buyer-agents are heralding this as the Big Turning Point is real estate because the lawsuit aims to ‘break up the cartel’ and unbundle real estate commissions.
There is a whole legion of agents that offer a fee-for-service menu who think they are doing the consumer a favor. But it is a great dis-service to tempt consumers to select their agent based on their fee. This is where NAR and others have failed us miserably because nobody talks about how important it is for consumers to identify the skill level of agents they are considering.
Agents offer a discounted commission/rebate/fee-for-service because they don’t have the skill level to earn a higher fee. In effect, they ‘buy the business’ with lower cost/less service, and the consumer gets what they pay for.
But if this lawsuit prevails, causing MLS companies to be run out of business and ‘broker cooperation’ to get dismantled (seller paying the buyer-agent fee), the buyer agents will be the first casualty.
On this blog we talk about street-level impact.
Here’s an example that happened to Kayla in Manhattan, where the rental market is so hot that tenants have to pay their broker directly – and the typical fee is two months of rent.
Kayla is showing rentals to her old college roommate plus one other woman. The listing agent is present, and when Kayla goes into a bedroom with one of the women, the listing broker pulls the other aside and says, ‘if you don’t want to pay Kayla’s fee, just go through me directly’.
The two women rented the apartment directly through the listing agent, and burned Kayla.
We’re sliding into single agency, where buyers/tenants will just go directly to the listing agent. They will never know if they saved any money, they won’t know if they got proper representation (unlikely), and they will just take what they get.
The reason disintermediation worked in the travel business because consumers don’t worry about a bad vacation costing them an additional five- or six-figures in resale costs (and major disruption of life) to unwind one.
Without constant reminders of how important it is to Get Good Help, buyers will be left to their own devices and just go directly to the guy who has the product – the listing agent.
Single agency is not what’s best for consumers or agents – yet the market forces are heading in that direction without recognizing the ramifications. Watch what you wish for!
Obviously, my rantings on this topic have done nothing to slow down the trend, so joining Compass was the best way to position myself for my clients.
Here’s an example of the premium paid for the upgraded one-story houses with a potential granny unit and no HOA/M-R. Two-story houses that are 25% bigger are selling for less in this neighborhood:
The real estate industry has never felt the need to create a powerful search portal in response to Zillow. There should have been an industry-wide effort to create a realtor-centric website to support our business, but NAR and others just shrugged it off.
Traditional realtors should be demonstrating why our experience, our advice, and our gravitas is a better solution for consumers.
It starts with realtors having the best real estate search portal – and Compass has committed to producing it! Our website will make it clear who the actual listing agent is on each listing, regardless of company.
There is another benefit – we put our Coming Soon listings in the front of the search, which will hopefully cause consumers to keep coming back, and help build the traffic faster.
From our CEO:
The future of the real estate industry will be defined by the company that creates the best experience for buying and selling a home. I believe Compass is going to be that company. To achieve our mission of helping everyone find their place in the world, we must make it as simple and straightforward as possible for people to navigate the process of buying and selling a home. We must also put the person who knows how to create a world-class customer experience front and center: the agent.
Many technology companies are doing the exact opposite. They’re confusing consumers and taking advantage of agents in order to maximize their own profits. They most commonly do this by hiding the true listing agent and monetizing the client lead in a variety of ways.
At Compass, we are not just looking to elevate ourselves, we are looking to elevate the industry. Being the first company to show the true listing agent on every listing will not only help bring clarity to the home-buying process, but it is the right thing to do.
It is part of a 3-step strategy to win the consumer:
Make the Compass website and mobile app just as good as the best aggregators by end of summer 2019
Invest millions of dollars advertising our Coming Soon inventory to consumers around the country
Put the listing agent on every listing, making Compass.com the only site in the country where consumers can always find the listing agent
It means we are gently nudging consumers towards connecting with the listing agents directly, making that trend more obvious to all. If the business is going that way anyway, we might as well be out in front of it. JtR
We saw yesterday that fewer NSDCC homes have been coming to market this year, in spite of record pricing. Boomers are reluctant to move for several reasons; aging-in-place, higher mortgage rates, and kids aren’t moving out because of affordability:
First, the number of movers has generally been on the downtrend since during 1985-1986. During 1985-1986, there were 46.470 million people who moved, or 20.2 percent of the population, and by 2017-2018, there were only 32.352 million movers, or 10.1 percent of the population. Comparing 2017-2018 with 2016-2017 data, there were 2.55 million fewer movers during 2017-2018 (32.352 million) than during 2016-2017(34.902 million), with the fraction of movers declining from 11 percent in 2016-2017 to 10 percent in 2016-2017.
The decline in mobility rates is also reflected in the lower turnover rate, or the ratio of existing homes sold to owner occupied housing stock. In 2005, there were nearly 10 houses sold for every 100 owner occupied homes. The turnover rate dipped to 4.8 in 2010 Q3 and was on the rise as the housing market recovered, peaking to 7.3 in 2017 Q1 and Q2. It has since fallen to 6.8 homes in 2018 Q3, as interest rates have increased.
In the 1980s we had roughly twice as many people moving, but rates were dropping precipitously from 18% to 10%, and boomers were much younger. We don’t have either of those going for us now, and boomers are still in control of our destiny – could sales keep dropping?
Even if a few more are added in the coming days, Bb is our winner – congratulations! (Bb, contact me for tickets)
Today’s count:
NSDCC New Listings Jan 1 to Feb 28 (as of March 11th):
2018: 783
2019: 767
There was enough concern about how the market wrapped up in the second half of 2018 that I thought we could see more sellers getting an early start in 2019. But there’s no panic – we didn’t even list as many homes as we did in the first two months of 2018, let alone more.
The surge noted last week continued its hot streak, which should be expected as the selling season really gets rolling. The total number of pendings increased 6%, and those over $2,000,000 increased 24%!
Glad to see the $2,000,000+ market having some life, with 462 active listings – or 54% of the total inventory of houses for sale between La Jolla and Carlsbad.
Even though it might feel warmer, we are still lagging behind last year:
Weekly Total Pendings
Week
2018
2019
% diff
Jan
244
217
-11%
Feb
262
233
-11%
Feb
280
255
-9%
Feb
295
263
-11%
Feb
318
261
-18%
Mar
328
267
-19%
Mar
339
284
-16%
What might contribute to buyers wanting to wait-and-see a bit longer is the lack of bidding wars. Instead of having to deal with the messy multiple-offer situations, agents who get a hot listing just sell it off-market now.
Without bidding wars, we don’t have those disappointed losers who get more determined to grab the next one, and move quickly to pay whatever it takes.
Unfortunately, there was a collision at the gliderport yesterday where two people died. Here’s what it’s like flying one, with a view of La Jolla Farms:
