RISMEDIA, December 19, 2006-Change, as they say, is the only constant. And it's certainly no different in the real estate industry. Since his concise analysis of the real estate industry in his 1997 book, Real Estate Confronts Reality, Stefan Swanepoel has risen over the years to visionary status, according to many in the industry. His 13th book, The Swanepoel Trends Report, published earlier this year, offers important and insightful forecasting of the issues that stand to most impact the real estate industry. Here, Swanepoel prognosticates on the year ahead.
Maria Patterson: How would you categorize the year 2006?
Stefan Swanepoel: A new beginning for the Internet. Once hailed as the silver bullet," thereafter ridiculed as overrated," the Internet has returned in a stronger and more sincere showing than in its decade-long real estate history.
The online buyer is here, the means to provide more extensive and better services via the Internet is here. I even think that a few of the future long-term winners are also here today and that over the course of the next few years they will solidify their position as dominant players.
No matter which model you look at, almost all of them are changing the traditional rules of finding, connecting, serving and staying in contact with the home buyers and sellers of tomorrow. The foundation for change has been poured and the time has come to build a new industry.
MP: The number of licensed agents rose dramatically the last few years from 1.5 million to 2.6 million licenses. What are your thoughts on this?
SS: It's awful. One out of every 115 people, and if you deduct kids, one out of every 85 adults in the U.S. is now licensed to sell real estate. We have way too many licensed agents and the industry is going to pay the piper for allowing so many to flood the industry. Generally speaking, real estate schools have had their hands full helping new entrants prepare to pass the licensing exam, Realtor Associations have been enrolling new members and brokers have been taking care of a strong real estate market. Overall, this has resulted in less training being provided to rookies and less career development for existing agents. The bottom line is the basic skill and productivity knowledge of the average agent is lower today than it was a decade ago. In some regards, we have gone backward as an industry. It is a sad state of affairs.
MP: Now that the market is slowing down across the country, do you expect business change to happen faster or slower?
SS: Faster. A slowing real estate market will cause those who wish to remain in the business and be successful to look for new ways to gain more market share in a declining market.
Mergers and acquisitions will increase and recruiting will once again return to a higher level of importance. Smart companies will maximize their technology while simultaneously improving their agent training programs with a strong emphasis on practical skills and specialization.
There will also be those companies that will explore new business models in order to grab someone else's market share. The victims will be those unsuspecting brokers that believe that change can't impact their business that quickly. What they don't realize is that the industry is rapidly approaching the point where critical mass allows change to take place at an increasing rate, as large segments of the market begin to embrace certain concepts, techniques or business practices.
MP: What would you say are the most important companies or concepts that dominated the last 12 months?
SS: It was most certainly a dynamic and eventful year. In no particular order I would consider the following as strong reminders of the year that was:
New brand and company of the year award goes to Zillow. Their Zestimates were feared by some, zapped by some, but discussed by all. At convention after convention, it became apparent that the pre-launch marketing they enjoyed had instilled a level of Expedia" concern and they were labeled the bad outsider" here to steal" our business.
Top story of the year probably goes to the bubble." This was a constant high-profile topic for both the inside and outside media. The debate was divided between the soft-landing" and the crash" parties, each providing endless charts and stats to prove their point.
Negative publicity was kicked up a notch this year by all the constant stories about mortgage, housing and valuation fraud. Real estate agents, already low on the consumer totem pole of most respected professions, got tainted with the same brush as mortgage brokers, but were more often not guilty.
Perhaps the most important shift was the dynamic affirmation of the importance of social network and streaming video. Gens X and Y proved their power and future role in society when we witnessed the billion-dollar deals created by upstarts MySpace and YouTube. The rules have changed-completely. It's safe to say, real estate watch out, change has arrived."
MP: So what would you say is the most exciting company you will be watching in 2007?
SS: It's always hard to single out only one company, but if I had to I would say Trulia. Although they had a very quiet launch early this year, their strong consumer-driven focus, yet broker-friendly MLS model has slowly been gaining traction.
Real estate vertical searching is a very interesting concept and definitely worth keeping a close eye on its evolution.
MP: Give us another interesting industry player to watch in next year.
SS: I find RealEstate.com fascinating. They are no longer just a Web site or even a single paradigm company but have diversified into a well thought-out, multi-level, multi-tiered real estate company with four very different strategies.
They are definitely a strong contender to change many existing industry rules" and that's interesting.
MP: What about your top non-real estate player to watch?
SS: That's easy. Google is cool and grabs the top spot for many reasons. Even though Google added Google Earth, Google Base and Google AdSense last year, most of us really only got to experience it this year and the industry will only feel its potential impact next year.
MP: If you had to pick one specific technology concept that is changing the real estate industry, what would that be?
SS: There were many new technologies announced but, if adopted nationally, I would probably have to say blogging is definitely changing the industry.
Blogging was a nonexistent concept in our industry two years ago, and now there are thousands upon thousands of real estate agents that use blogging to improve their rankings on Google, Yahoo! and MSN and to better communicate and interface with their customers.
Blogging is emblematic" of the emerging changes in our industry. In every corporate boardroom across the country the subject of collaboration" and Web 2.0 is being discussed. Blogs allow millions of people to easily publish their ideas, and millions more to comment on them. I even find myself drawn to blogging and have together with 40 other industry leaders, authors, speakers and brokers banded together to create RealBlogging.com. Readers will frequently be able to read about the latest trends there.
MP: Speaking of trends, when is the 2007/8 Swanepoel Trends Report being released and how will this report different from this year's edition?
SS: We have spent more than five months collecting, researching, reading, validating and checking literally thousands of reports, articles, charts, surveys, companies and people in order to put together the most comprehensive report available on real estate trends.
The 2007/8 Swanepoel Trends Report, ready for shipment January 15th, will be about 40% more extensive than the current edition. Numerous new trends have been added to the watch list, while some longstanding trends have been completely rewritten due to the vast changes over the last 12 months. The report will also include a special section entitled Innovative Concepts" that will provide brokers, managers and agents detailed information on five innovative solutions that could change their business model. RE
Copies of the 2007/8 Swanepoel Trends Report can be pre-ordered at www.RealEstateTrendsReport.com.
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