2021 Predictions for Realtors & Investors

    Listen to ""2021 Predictions for Realtors & Investors | David Bartels | Lee Honish | Everhome.io" on Spreaker.

    12/16/20 Script (Projected record Time 48 min)
    Intro Music Jingle
    This is Lee Honish DIGITAL MARKETING AND CONTENT SPECIALIST, and you are listening to the “EVERY HOMES REAL ESTATE TREND BROADCAST”
    (Transition banter to lead into Lee’s Intro Monologue)
    Intro Monologue:
    Welcome to the EVERY HOME REAL ESTATE TRENDS BROADCAST. I am again Lee Honish and as always, I am with BROKER/OWNER David Bartels, you can always follow him on @DAVIDBARTELS and we have 2021 is the discussion this week and we will talk about cold weather, yes, even for me in San Diego. (Talk a little bit about what is going to be on the show today) but first…
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    (Transition banter to bring David into the conversation and lead into topic 1)

    (7 min) News #1 “Looking Beyond IBuying To Auction Theory: The Future Of Residential Real Estate”
    Forbes Real Estate Council Maximillian Diez
    In September of this year, surprising many in the real estate industry, Opendoor announced that it was merging with Social Capital Hedosophia II, a special purpose acquisition company (SPAC) founded by tech billionaire Chamath Palihapitiya. The choice to go public by merging with a tech SPAC came as something of a shocker to many in the real estate industry, Silicon Valley and Wall Street. Opendoor is an instant buyer or iBuyer — a company that buys homes as-is, fixes them up and resells them. It has acquired several businesses under its brand umbrella and is regarded as the leader in this space.
    Suffice it to say that this merger is intriguing, and I believe it's the harbinger of the future of real estate.
    Around the same time as the merger, the Royal Swedish Academy of Sciences was preparing to announce the 2020 Nobel prize winners in economic sciences. The Nobel Prize has been awarded to pioneers, innovators and experts in their respective fields since 1901. This year, the Nobel in this category went to Drs. Paul Milgrom and Robert Wilson, two Stanford professors who, for the last 30 years, have been the leading experts in auction theory. You may be wondering how auction theory relates to Opendoor's choice to go public.
    Whether they realize it or not, iBuyer businesses have the opportunity to change the real estate process in an unexpected way. Not only has consumer behavior changed, but the types of homes that iBuyers choose to purchase instantly, fix up and resell are, in essence, "commodity" homes.
    According to Investopedia, a commodity is "a basic good used in commerce that is interchangeable with other goods of the same type." When they are traded on an exchange, commodities must also meet specified minimum standards. What iBuyers do is commoditize homes by refurbishing or remodeling them and providing a warranty to the buyer. This gives buyers peace of mind and more money to sellers.
    Auction Theory
    Many of us are familiar with auctions that happen on court steps or those marked by the telltale cadence of the professional auctioneer and their gavel. The types of auctions I'm referring to are different. I'm thinking of high-stakes auctions, like the ones theorized by Milgrom and Wilson. These auctions are based on algorithms, well-planned and developed and conducted in an open environment.
    The Nobel laureates have developed the theory for auctions of objects with common values and private values. A common value is one that is unknown beforehand but, in the end, is the same for everyone. Dr. Wilson has shown that rational bidders often bid below what they estimate the value of the object is because they fear the "winner's curse" — paying more than one needed to win an auction.
    Dr. Milgrom theorized that private values also affected the final price in an auction. By analyzing bidding strategies across myriad auction formats, he demonstrated that when bidders know more about other bidders' estimated values for an object, the final sale price was higher than expected.
    Companies like Opendoor, Knock, Redfin, Reali and Zillow can begin to operate as iBuyers, acquiring houses outright, remodeling them, providing home warranties and eliminating uncertainty in residential real estate transactions. This makes it considerably easier for consumers to sell homes, which in turn eases the process to purchase homes. I believe that employing auction theory in the iBuying process will create a more efficient real estate market and could eliminate or almost eliminate the need for real estate agents.
    A good place to test auction theory is on apartments and condominiums. For the most part, these types of properties in the same building or campus do not vary much. Although seeing an apartment or condo in person before purchase will be a challenge for the auction model, 3D tours could address that. The question then becomes: Can cookie-cutter units, aka commodity housing, be the next big thing in consumer taste? If you think about it, rising home prices are in part a byproduct of customization. How much customization do buyers really want in a condo or an apartment, though? Are they concerned with aesthetics? Or is the confidence that they're buying a safe, clean, quality unit more important?

    I don't think we are close to that type of world just yet. However, utilizing auction theory in the world of residential real estate could prove to be the new way of transacting. By removing the drawbacks associated with homebuying — risk, uncertainty and fear — consumers can view homes as commodities, bidding on them, trading them in and upgrading.
    By leveraging auction theory, iBuyer companies would be poised to usher in a new way to buy and sell real estate. Agents and their commissions wouldn't be necessary for the average real estate transaction. Consumers would appreciate the savings, and appreciate not having that "high-touch" agent experience. More importantly, they'd feel safer making the largest purchase of their lives, given the transparency of the auction process, the reputation of the iBuyer they're buying from, and the warranty that company provides on their new home.
    (7 min) News #2 “Housing Market Forecast and Predictions for 2021”
    DS NEWS Daily Dose
    Shelter-at-home orders and other measures were put in place just before springtime this year, which is usually the best time of year for listing and selling homes. However, 2021 poses to be a much more stable year for real estate, according to Realtor.com.
    Low inventory, a higher number of buyers than sellers, and historically low mortgage rates sent housing prices upwards quickly. It also made fall the hot time of year for sellers instead of the warmer months.
    But 2021 should send things back to where they once were and continue pushing new trends that were emerging even before the pandemic.
    Since mortgage rates of around 3% have become the norm, they don’t feel as exceptional and won’t entice buyers as they have in the recent past.
    Realtor.com predicts home sales to come in at 7.0% above 2020, building momentum through the spring and continuing through the end of the year. Economic growth from coronavirus vaccines and more normal consumer spending will fuel this trend.
    As for home prices, they’re still going up, but they’re slowing down. 2020 is looking to end 7.6% over 2019. But 2021 should only increase by around 5.7%. This will be aided by many millennials trading up and adding inventory to the market.
    Speaking of inventory, 2020 saw half a million fewer homes on the market than the previous year. However, “newly listed homes” should be more numerous by the end of 2021. And we may even see an increase in inventory—a first since 2019.
    The big trends to watch out for, however, are an increase in first-time buyers, people wanting at-home offices, and suburban migration.
    Millennials make up the largest generation, and on their heels are the Gen-Zers who are entering their home-buying years. The older Millennials, those approaching 40, will be looking to trade up and purchase bigger homes to accommodate growing families. These two generations have been able to save money due to shelter-in-place orders and less going out in general, meaning they’ll have more money for down payments.

    Remote work was already a growing trend before the pandemic forced more white-collar workers to stay in their homes. And it looks like many will continue to primarily work away from the office, adding to the appeal of the suburbs. Look for an increase in listings mentioning home office space or even close-to-home remote-working options, like coffee shops.
    Since commutes have changed, so has the need to be downtown. More people are comfortable with the idea of commuting further if they have to than before, according to a summer survey.
    Sellers will continue to have the upper hand throughout the entire year due to an accelerated buying process—thank you, lower inventory. But all in all, 2021 should feel more normal and predictable than 2020.
    COMMERCIAL READ
    LIST YOUR HOME online, for one low set fee!
    Experience The Everhome Way and discover the benefits, risk free.
    Explore Everhome’s easy to use listing service risk free and begin your journey to sell your home like a REALTOR. Get the benefits of massive exposure, full service representation for critical elements of negotiations, legal forms, escrow and title for a low set fee, that saves you thousands.
    Visit everhome.io that WWW dot E V E R H O M E dot I O
    That’s everhome for every home

    Recurring Segments

    (7 Min) What’s Happening with NAR Segment: “Realtors Apologize for Role in Housing Racial Discriminati
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