Reviewing My 2011 Predictions

Self-Graded Exams Are Easy!

In 2009, I batted .600 in predictions for 2010.  And I thought that was fun. It’s one thing to make predictions; it’s another to look back and see how those predictions fared.

How did I do last year in predicting events of 2011? I was hoping to be maybe 1 out of 7, since most of my predictions last year were of the doom-n-gloom variety. Sadly, I think I’m 4.5 out of 7 for a .642 batting average. Hall of Fame (Infamy?), here I come.

We’ll review my take on the predictions for 2011 after the jump.

1. The Beginning of the End of the Homeownership Society – NO

The trend towards government policy pullback from homeownership remains, but thankfully, we did not see the kind of pullback I was predicting. In fact, Congress acted to keep up support for housing by raising the FHA loan limits in November.

A lot of the news-making that happened in 2011 — the proposal by Treasury and HUD to eliminate Fannie/Freddie, the QRM regulations, the threatened end of the mortgage interest deduction — simply fizzled out in the latter half of the year. That isn’t to say those proposals are dead. But the dysfunction in Washington DC in the grips of an election season meant that nobody was willing to take bold steps backwards or forwards. So status quo it is, at least for another year.

2. Mass Confusion in Real Estate Finance – NO

Once again, thankfully, I was wrong on this prediction. The seeds of confusion and discontent have been sown, and there are lawsuits in various courts making their way through the system, but at least in 2011, we didn’t see an implosion in housing finance of the sort I was worried about. The infamous company MERS at the heart of the crisis withdrew from the foreclosure business in 2011. The institutional lawsuits I was worried about have not blown up; instead, it looks as if the big banks and investors are settling things amongst themselves. We’re not out of the woods (and likely won’t be without a Supreme Court decision), but at least 2011 wasn’t the year.

3. Double Dip in Housing – YES

Unfortunately, I have to say I was right on this one. CNN Money reported on a “double dip in housing” in the summer of 2011. Then we had the most recent report about housing prices sliding in November:

However, worse than expected sales of existing homes also pointed to sluggish housing market recovery. Existing-home sales for November rose 4% to a seasonally adjusted annual rate of 4.42 million units from 4.25 million in October, according to the National Association of Realtors. The reported figure for November was a disappointment given that October sales were downwardly revised from 4.97 million to 4.25 million units.

The average house price in the United States at the end of 2011 is the lowest it has been since 2003. I don’t know what else to call these numbers but a double dip in housing.

4. The Age of Less Will Arrive – SORTA

I think I’m giving myself half a point here. The fullblown Age of Less did not arrive in 2011 — once again, thanks be to God/Zeus/Gaea/deity of your choice here — in large part because predictions #1 and #2 did not come true. We did not see the sort of mass exodus from the real estate industry of brokers and agents.

On the other hand, the industry is continuing to shrink. NAR’s Monthly Membership Report shows that in November of 2010, there were 1.08 million members of NAR; in November of 2011, that number is 1.02 million. It’s another 5.4% drop year over year, as some 50,000 REALTORS either (a) left the Association or (b) left the industry altogether.

Anecdotal reports from various vendors who sell to the real estate industry is that it is getting harder and harder to get realtors to spend money. Many simply can’t afford it; others are taking a wait-and-see approach. Conference attendance numbers are down as well. It isn’t hard evidence, but there you have it.

Either way, based on a 5% drop, I’m giving myself half a point here.

5. The Real Estate Industry Will Fail To React – YES

Here’s what I wrote back in 2010:

Unfortunately, on the whole, I think the real estate industry will fail to react to the Age of Less. There will be exceptions, of course. But I fear that the vast majority of companies, brokers, agents, Associations, MLS, tech vendors, and others will spend an inordinate amount of time and energy rearranging deck chairs on the Titanic. There will be much effort spent focusing on ancillary issues like agent ratings, franchise IDX, the DotMLS domain, QR Codes and so on while the entire infrastructure of contemporary real estate crumbles around them.

You tell me how I got this one wrong.

6. Return of the Broker – YES

A heartening sign is that this prediction appears to have come true in 2011. Brokers large and small are starting to react to changed business realities by reasserting themselves. Two most obvious examples are the Franchise IDX issue and the recent efforts by brokers to regain control over their listing data. Edina Realty’s decision to pull listings off syndication made waves, but that’s just the tip of the iceberg. MRIS, the nation’s second largest MLS, recently put up a guest blogpost from Jon Coile, the President & CEO of Champion Realty. The money grafs:

As their business models matured and our “partners” experienced pressure to create new revenue streams, many of these same companies started quietly selling the right to be positioned on a property results page as “the agent,” as in, “contact the agent for more information on this listing.” The only problem is, “the agent” that these aggregators put forward as an expert doesn’t necessarily know anything about the property, the neighborhood or the community. They are merely agents who have bought the rights to receive a percentage of all listing inquiries for a particular zip code.

That erosion of data oversight and accuracy  – plus the variety of methods of inserting other agents on our listings as “the agent” – is why you are now hearing about agents and brokers making the move to remove their listing inventory from the national aggregators. [Emphasis mine]

Actually, it goes beyond that simply because of that “…and brokers”. Why brokers? Under the old model of brokerage — that of warehousing as many agents as possible — why would a broker care all that much? He didn’t for ten years. Why now? Plus, we should have heard a far louder outcry from the actual listing agents themselves; we have not. If anything, the wide disparity of opinion on the wisdom of syndication amongst the agent population suggests that there is nothing like consensus there. So what’s this all about?

To me, the answer is that the broker is reasserting himself. We’ll see how this plays out in 2012, but it happened in 2011.

7. No Groundbreaking New Technology – YES

Yeah…

Nuff said? Feel free to name a single groundbreaking technology from 2011. Coz I can’t.

Forward, Into 2012

I’m working on my predictions for 2012, along with music videos, of course. Feel free to send suggestions my way (rhahn@7dsassociates.com works) or post them in the comments. As always, your thoughts and comments are welcome.

Thanks!

-rsh

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