The new year is not to far off, and I thought it would be good to look at what it might hold. This is the time of year when many professionals, particularly in real estate, are networking, since it is a slower time for business in our industry, so many are making their plans for the coming year, based upon what they are hearing in these meetings. With the subprime mess looming large over our ventures, you may think that the real estate industry does not have much to look forward to, but you would be wrong.
All businesses go through cycles, and difficult times do not kill the industry. You will find real estate professionals leaving the field, but those of us remaining are just better at our craft. This fact bodes well for the consumer, but the industry will not fare well with few practitioners. The real estate professionals left standing are the individuals who are knowledgeable and resourceful, which are good qualities for our customers. The loss of workers in this field could mean greater unemployment, which is not good for the economy, since many people are already worried about expenditures. Consumer spending on holiday gifts has not been bad though. Spending on large financial purchases like homes or cars is being put off till a better understanding of the financial sector is obtained by the general consumer. New investors appear to be entering the real estate market, and many real estate professionals have seen them as their main business. Early 2008 will find this group as the prominent consumer for many in the real estate industry. Banks are focusing on their retail side, so loans at good rates are out there.
Realtor associations are arranging their marketing campaigns, with a message about real estate being local. The message is that your local area may not be suffering from the set backs that some markets have seen. The problem is that national news still effects local markets, so it will take a lot to change this perception. Realtors are focusing in on appropriately pricing homes. There is an education effort under way to make the seller realize that some sale prices just do not fit market conditions. Although buyers have not completely left the market place, you will not see a good return to home buying until late spring of 2008. By this time, people will realize that their bank is offering them a good deal on a loan, and sellers who have had their homes on the market for a while will price their homes reasonably. The National Association of Realtors has forecasted that 2008 will be a great year for home sales, continuing the upward trend that the real estate market has seen in recent years. The buzz word in the industry seems to be “Latino”. There is more focus on this group to become homeowners, and it is felt that marketing campaigns directed towards Hispanics will bring them into the market. Currently, most Hispanics in Houston are renters, but with growing families, a home makes sense.
The three major trends involved with new homes will be telecommunications, energy efficiency, and the environment. Broadband is sweeping the nation, as sites like YouTube become more popular. Affordable homes are already being pre-wired with cabling for broadband technologies, and we will see telecommunications companies move more into marketing this technology for the homes of middle class America. Energy efficiency and the environment are tied together in the housing market. As the energy costs increase, the consumer will be hit with more marketing for goods and services that produce better, energy efficient homes. In my specific industry, there is a push towards inspecting homes for their efficiency, and many are taking the time to be certified for energy code inspections. It will take a while for this to catch on with the general public, but you will see this service advertised more next year. Manufacturers are jumping onto the bandwagon of the environmental movement by making products which they claim has some right to be called eco-friendly. Many of these claims are questionable. With housing sales down, manufacturers have to find a way to have existing homeowners to become excited enough to buy their product, and being concerned about the environment is the way that they hope to go after your dollars.
By the end of 2008, we should have seen a return to normalcy in consumer spending and the housing market, if many economists are to be believed. Housing prices will come down in some markets, but most markets will probably see modest gains. Houston’s median home price is around $155,000 for a roughly 2000 square foot home, which is lower price than in many areas, so a steady increase is likely.