High end real estate and hot markets

High end real estate is hot and is pushing home price limits to new levels. And although many luxury home buyers are seeking homes that are in vogue, other high net worth home buyers are looking for other things in their homes.

Many high end home buyers want their homes to be a piece of art; and it seems as if there is a market for pairing art and real estate. What seems to pair luxury real estate and art is Art Basel (the annual premier art show) in Miami, where luxury real estate agents are flocking to make sales.

According to The Miami Herald, South Florida developers have paired “exceptional art” with high end real estate to create something special. And there is a market for it.

However, while many luxury home buyers are looking for exquisite art, other buyers of high end real estate are looking for “safe havens.” These home buyers are looking for established markets that are performing well and have a history of stability.

Not sure where the hot high end real estate markets are located? According to Zillow some of the top luxury real estate markets are New York, Los Angeles, San Francisco Bay Area, Miami, and Washington DC. The metro DC area includes Maryland and Virginia, and is not only the seat of power – but is also culturally significant offering a wide variety of art and music. The superlative selection of high end homes in the DC metro area offer a multitude of home styles and locations for most any life style; many high end home inquiries in the Maryland area include Bethesda, Potomac and Chevy Chase.

by Dan Krell © 2013

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November 26, 2013November 23, 2021

Increasing anger about real estate issues

What’s behind the increasing anger about real estate issues?

Did you know there is an anger epidemic in the U.S.? Dan Bowens of Fox 5 (New York) cited a USA Today study indicating that 60% of American adults polled reported they had angry or irritable feelings – which is a 50% increase from a 2011 poll. And if you are in a service industry, such as a real estate, you not only encounter the occasional obstinate client; but you can also find yourself engaged with bullies.

by Dan Krell © 2013

According to the American Psychological Association (apa.org), “Anger is an emotion characterized by antagonism toward someone or something you feel has deliberately done you wrong.” Anger can be used constructively to solve problems, but it can also cause problems that can interfere with thinking and “…harm your physical and mental health…”

Anger was common when the market declined: Many home owners were irate about deflated home values; many other home owners were outraged about their underwater mortgages, while others were furious about lenders foreclosing on homes. In fact, it was common to see foreclosures that were trashed by the owners as a way to express their anger.

Anger was also common as the market strengthened: Home sellers were irritated by buyer push back on price. Many home buyers were frustrated about multiple offer situations on some homes; while a few buyers were aggravated by the notion that they were no longer able to purchase foreclosures at steep discounts.

Regardless of the reasons for America’s reported increase in anger, the issue really isn’t the anger per se; anger is a useful emotion that can be productive. But rather, anger seems to be increasingly manifesting in irrational and aggressive means – even in the real estate industry.

A recent edition of Realtor® Magazine (Daily Real Estate News; October 20, 2013) reported that there are increasing incidents of physical assaults of real estate agents; attacks have been reported in model homes, open houses, as well as in their offices. Although these acts of physical aggression are increasing; the article did not report or discuss the more common verbal aggression, which includes threats and intimidation.

Anyone can get caught up in their anger and cross a line; agents, clients, neighbors, and even those who are engaged in a seemingly noble neighborhood cause are not immune. Fortunately, anger can be short lived and resolved; however, if the anger becomes all consuming – it may be time for mental health intervention.

The anger statistics didn’t surprise me. It seems as if we can find something to be angry about if we want to. However, it may be worthwhile, especially those who have been chronically angry and have lashed out at those who do not acquiesce or comply, to let go and be thankful for the good in our lives.

Goal Auzeen Saedi, Ph.D. sums it well (Why Are We Americans So Angry? Psychology Today; Millennial Media; April 30, 2013): “But what do we do with all of this anger? We let go. We forgive. We meditate and pray. We surround ourselves with loved ones…There are parts of all of us that could be made softer and kinder. We can learn to see the good in each of us that exists and teach our children to do so. Or we can continue to get angry, bully each other, make threats and demands. It is our choice.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 25, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

November 20, 2013November 23, 2021

Realtor production or customer satisfaction – importance and meaning of rankings

What’s more important? The number of homes your real estate agent sells; or the customer service they provide?

“#1 Real Estate Agent.” “#1 in Sales.” “Top 1% Nationwide Producer.” If you’ve spent some time with real estate agents, you may notice how many tout themselves as being #1. And although some of these rankings are legitimately given by a recognized organization; many agents may be creating their own production ranking designation to use for marketing purposes.

by Dan Krell © 2013

Ranking designations are used in various industries to demonstrate a superlative product, or excellent service. One of the most recognized organizations that bestow ranking designations is J.D. Power & Associates. J.D. Power & Associates is most notable for ranking customer satisfaction in the auto industry, but they also rank satisfaction and other industries including real estate. In fact, you may see the J.D. Power & Associates ranking on a home builder or national/regional broker.

Production ranking is more prevalent in the real estate industry, however, and there are a number of organizations that rank the production of agents, teams and brokers. With the growth of the internet, unofficial production rankings can be found on many home search and real estate data websites. REAL Trends (realtrends.com) is a company that is dedicated to providing analysis of the residential real estate industry, and offers real estate data online; the site provides agent, team and broker production rankings in the U.S. and Canada

The National Association of Realtors® has been toying with the idea of adding a ranking system on the consumer home search site Realtor.com (operated by Move.com). The pilot program, called “AgentMatch,” has not been received well by many agents. There are concerns about the perceptions created by the displayed production statistics; some critics cite issues about statistics that may not be representative of production, which also may not tell the entire story behind of many transactions.

Another NAR initiative in agent ranking is a pilot program called the “Realtor Excellence Program.” Currently the program is being tested in several U.S. markets; and as a recent Chicago Tribune article (Realtor group testing agent ratings program, March 15, 2013; by Mary Ellen Podmolik) reported, it is being received well. What’s different about the “Realtor Excellence Program” from other agent ranking programs is that this program provides agent ranking through customer satisfaction. A quote from Laurie Janik, general counsel of the Mainstreet Organization of Realtors® says it all, “I’m looking at reducing liability. I want happy sellers and happy buyers…Right now we measure agent performance based on how many deals they did…But was (the transaction) a train wreck?”

This distinction between agent production and customer satisfaction is an important one. Although you might think that high volume production and customer satisfaction are not mutually exclusive, the relationship usually has some negative correlation; customer satisfaction typically takes a back seat when production goals increase. If a high volume real estate agent or team is invested in maintaining or growing their production, you need to ask about their commitment to customer satisfaction.

Many agents use national averages to determine that they are in the top percentile in production. Using these averages and stats, I also find myself in the “top tier” of various categories. Be that as it may, many consumers deem self promotion about production in a service industry as gauche and trivial. Many consumers are less interested in hiring agents whose focus is about being #1; rather, consumers want to be treated as #1.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 18, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

November 15, 2013July 4, 2019

Is there a best way to predict the housing market

Various studies demonstrate that you can assess and somewhat predict activity in a housing market; which, albeit in hindsight, can assist home sellers and buyers in determining whether it is a good time to sell or buy a home. For example, I recently wrote about gauging real estate through divorce and premarital agreements; which discussed the implications of these life events to the housing market. The increase in prenups could indicate an increased perception in the value of home ownership and possibly the overall housing market.

Another recent study indicated that it may be possible to determine home pricing through internet search data. Beracha and Wintoki (Forecasting Residential Real Estate Price Changes from Online Search Activity; The Journal of Real Estate Research 35.3 (2013): 283-312.) set out to find out if keyword search engine data from Google could determine price shifts in various cities. They concluded that this may be the first study that directly links “aggregated” search engine data to “abnormal crosssectional home price changes.”

Essentially, the research established that you can figure out metro housing market activity through Google Trends and Google Insights, which provide keyword volume measurement in internet searches. The study examined the keywords “real estate [city]” from 2004 through 2011, and concluded that “…cities associated with abnormally high real estate search intensity consistently outperform cities with abnormally low real estate search volume by as much as 8.5% over a two-year period.”

And although the study’s authors discussed prior research linking internet keyword searches and consumer behavior, they caution that there are a number of keywords related to real estate that may be more relevant than the keywords used in their study. Regardless, the authors assume that their results may be useful in home sales and purchases. More importantly, it may seem as if their results may strengthen the link between specific search engine keywords (e.g, “real estate Rockville” or “real estate Bethesda”) and the ability to predict a housing bubble, or possibly home price peaks.

Generalized, “global” data, such as those described in Beracha and Wintoki’s study, and their meaning may be interesting; however, limiting yourself to such indiscriminate analysis for your home sale or purchase could be disadvantageous. Global data does not distinguish the many factors that impact regional markets; nor can it sort out differences within a local market (neighborhood data within a region can vary significantly).

Using “global” tools may be useful; however, if you are planning a home sale or purchase – seek out the assistance of a local Realtor®. Your real estate agent has access to local specific data that is reported through the MLS. Using MLS data, your agent can prepare a market analysis that compares your home to recent neighborhood sales; the breakdown can put your home in perspective and can give you a price range to assist you in listing or purchasing the home. Additionally, your agent can provide a hyper-local trend analysis so as to help you understand what to expect from the local housing market.

by Dan Krell © 2013

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

October 23, 2013July 11, 2019

Gauging real estate market through divorce and premarital agreements

Can we gauge the real estate market through divorce and premarital agreements?

A recent news item (prnewswire.com) from the American Academy of Matrimonial Lawyer (AAML.org) appears to be good news for real estate. The October 16^th press release proclaimed that a majority of AAML members surveyed indicated that there was an increase in prenuptial agreements over the last three years. Among the top reasons cited for a premarital agreement included “the protection of separate assets” and “the division of assets.”

According to the AAML, the increase in premarital agreements correlates to an improving housing market and overall economy. Alton Abramowitz, president of the AAML was quoted to say, “As the financial and real estate markets continue to improve, there is a greater awareness of risk to possibly sharing these gains in a divorce…” Mr. Ambramowitz further stated, “…The trend of divorcing spouses fighting over which one has to take possession of a devalued home and other depreciated assets appears to be coming to an end.”

Although this was an anecdotal survey that does not provide empirical evidence linking the increase of prenuptial agreements to an increasingly healthy housing market and strengthening economy; Mr. Abramowitz’s logic makes sense, and you might think his reasoning as intuitive.

However, the increase in premarital agreements is not necessarily an indication of a growing economy and housing market – but rather, there may be other anecdotal evidence explaining the prenuptial increase may be due to the increasing number of couples delaying marriage to a time when some wealth has been amassed. The results of a 2010 AAML survey indicated a rise in premarital agreements was also attributed to couples marrying later in life.

Additionally, the link between the concept of delayed family formation and an enduring sluggish housing market was cited by Ben Bernanke, in a February 2012 speech given to the National Association of Homebuilders. The speech identified economic concerns and a decline in family formation as reasons for the decreased commitment to home ownership.

Furthermore, counter-intuitive results from a recent study found that divorce rates drop during housing slumps and recession; but the notion that divorce rates are higher during prosperous times may support the most recent AAML survey that premarital agreements could be an indication of a healthy housing market. Abdur Chowdhury’s 2013 study (’Til recession do us part: booms, busts and divorce in the United States, Applied Economics Letters, 2013, vol. 20, issue 3, pages 255-261) analyzed data from 45 states between 1978 and 2009 to find that “divorce is pro-cyclical.” During a recession, Chowdhury believes that there is a “new appreciation for the economic and social support that marriage can provide during tough times.”

Supporting Chowdhury’s results, Melanie Lawder (Divorce Rates Lower During Recession, The Marquette Tribune, 2012) reported that divorce rates dropped to 16.9 per 1,000 married women (from 17.5 per 1,000 married women in 2007) during the Great Recession. Lawder also quoted a study by the National Marriage Project at the University of Virginia indicating “29 percent of Americans aged 18 to 45 believe the recession has deepened their commitment to marriage.”

Although there may be numerous reasons for divorce rates to drop during difficult economic times, the recent increase in prenuptial agreements can certainly be viewed as a positive sign for housing; it may be that there is an increasing perception of the value of real estate, which people seek to protect.

by Dan Krell
© 2013