The document provides an overview of the state of the housing market and real estate brokerage industry from January 2010. It discusses economic trends including unemployment rates, interest rates, and household formations. It notes that unemployment will remain high through 2010, interest rates will begin to rise in early 2010, and household formations are below projections. The document also summarizes housing market observations like continued foreclosures and soft pricing. It outlines issues facing real estate brokerages like lower home sales, commissions, and agent numbers compared to past years. Finally, it discusses expectations for a slow, steady recovery in home sales and prices in 2010 and consolidation in the brokerage industry.
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Steve Murray - Keynote - Preparing for the Future
1. State of the Union Discussion about housing market issues and trends January 2010
2. A Brief Message I regret that I have so little voice That is scratchy and hard to hear I had Thyroid Surgery two weeks ago this morning
3. A Brief Message The docs say it is regular that one loses ones voice when having this surgery And it could be 1 month or six months before I have my voice back
4. A Brief Message (Friends say the longer the better) That’s OK – can take the ribbing Its when my wife T says the same thing it gets to me
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6. A Brief Message So what would you do if I sang out of key Would you stand up and walk out on me??? Lend me your EYES and I will try not to disappoint thee
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9. State of the Union Overall economic observations Housing market observations Brokerage market place issues The path to prosperity
12. Employment Unemployment varies from state to state Ranging from 5% to 14% Not expected to see dramatic change to the better until late 2010 or early 2011
16. Interest rates As a result of these actions and other influences mortgage interest rates will begin to increase in the early part of 2010
17. Household formation The Joint Center for Housing Studies at Harvard and the U.S. Commerce Department project new household formations will average between 1.25 and1.45 million each year for the next 10 years
18. Household formations For 2008 and 2009 the actual numbers of new household formations are 950,000 and 890,000 respectively; Neither organization is projecting a return to projected levels until unemployment returns to more normal levels (<6%)
19. Household formations Household formations and total number of households are critical because they create new demand for all things related to housing; Long term trends indicate that 5% of all households will purchase a home each year
20. Housing market observations Foreclosures will continue to have a significant affect on the housing market Softness in pricing particularly in the upper and middle price brackets
22. Brokerage market issues For all of 2009 there will be approximately 5.0 million existing home sales and approximately 400,000 new home sales The total is 5.4 million home sales The number for 2005 was 8.3 million
23. Brokerage market issues The total gross commissions generated from housing sales peaked at $65.7 billion in 2005; For 2009 the corresponding number will be approximately $38.4 billion
24. Brokerage market issues The number of Realtors® is estimated to be 1.1 million today; That is down approximately 15% from the peak;
25. Brokerage market issues Gross commission are down <45% while membership is down <15%; Competition among sales professionals will continue to affect commission charges to consumers and commission splits among the best producing sales professionals
26. Brokerage market issues For those brokerage firms offering Core services the environment for doing so is seeing increased regulatory action; FHA capital requirements GFE and other RESPA reforms are increasing costs
27. The Path to Prosperity The housing market will likely show flat to slightly increased housing sales in 2010; Existing home sales could grow by 3-4% in 2010 and new home sales by 10-12% in the same time frame
28. The Path to Prosperity Prices will remain soft particularly in the mid to upper price ranges; Expectations are that nationally the median price of homes sold may be flat to a slight increase in 2010
29. The Path to Prosperity Average Commission rates have risen four years in a row rising from a twenty year low of 5.02% in 2005 to 5.29% in 2009 (est.); Brokerage costs per unit of productivity and per sales professional have returned to the level of 1999 – 2000;
30. The Path to Prosperity Consolidation among brokerage firms will be a continuing trend as the 4th quarter of 2009 and the first two quarters of 2010 challenge many firms from a cash flow and balance sheet perspective
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33. With a little help from my friends Thank you for your attention Now let me turn this over to Gino Blefari and Ed Krafchow two of the finest leaders in residential brokerage today