Mortgage, Real Estate and relevant technology predictions for 2008…
1) Property listings will be marketed via two vehicles, NAR’s Gateway portal as well as across multiple ‘social networks’ and ‘feeds’ rather than the traditional MLS systemology.
I have hope for NAR’s proposed project because it appears to be an effort to normalize MLS data, which raises the crap standard it currently trades at. Consistent data is easier to interpret, implement, and redistribute, which is still the problem when trying to cross pollinate multiple web-vertising platforms like Trulia, Zillow, and personal blogs, with a local MLS’s raw (all the info) feed. Conversating with Galen Ward of Estately, you can hear the pain in his voice when he talks of MLS data normalization. It’s a real bitch (my paraphrase), according to Mr. Ward…
It’s taken ~2years, but the DOJ’s pressure on the largest lobbying organization seems to have finally born some fruit. Past VOW and IDX strategies proposed by NAR were rather disingenuous, IMHO.
2) 2008 will be the year of the blog-site, they will ultimately replace the traditional web-site. A (properly oiled) blog-site is the disintermediating technology of real estate (and mortgage), although web decentralization seems like an appropriate adage over disintermediating. Much of the attention on these open source, easily configurable, scalable, and far cheaper to maintain than their first generation web-site cousins, has gone towards trying to figure out where ‘blogging’, or the act of entering journal like writings into a web based platform, fits into the real estate and mortgage landscape. Is it worth my while to blog, am I a good blogger, what makes a good blogger, what’s my ‘voice’??? While everyone else tries to wrap their heads around ‘just what does blogging mean to these industries’ the Trojan Horse technology has slipped through the gates of Rome, infiltrated and has begun to released what was a once costly and well protected information.
Blog-sites are a catalyst to the paradigm shift in how the web works, semantically instead of purely algorithm based, more towards a state where Social Networking Optimization rules instead of SEO. A blog-sites nature is to band to other ‘valued and trusted’ blog-sites, forming networked clusters, ‘mini-webs’ that become the well trusted highways for consumers and professionals to navigate when looking for advice on a mortgage or to buy/sell real estate. It helps that they play really nice with the Googles and Yahoo’s of the world.
As mentioned blog-sites are very scalable, affording the individual agent the ability to integrate what were once very expensive technologies.
3) Blog Networks will replace the community blog and rise to become commodities in their own right. They make sense on a business level due to potentially solid traffic metrics and the subsequent advertising dollars that typically accompany such traffic. The reciprocity…mutual SEO and SNO benefits…just can’t be ignored. In 2008, the real estate professionals who build-out the best blog-networks, win…web decentralization personified.
‘Closed ended’ Social Networks will begin to lose traction under the wave of ‘web-decentralization’, unless (of course) they open up. Properly networked blog-sites are essentially mini social networks and likely to be deemed most reliable by the people that subscribe to them.
MySpace has its place, but not in this space, the home of the $1.99/minute web-cam is holding a low pair at this table. Facebook rolled in with a Full House by opening their API for others to develop applications (only) on their platform…then Google comes in and lays out 4 Kings with Open Social, offering a framework where applications can be implemented and talk to each other, almost regardless of platform, paving the means for unprecedented communication between web-sites and their proprietors.
The scope of Open Socials influence on the web has yet to be seen, as the surface has barely been scratched as to what ‘it’ means…
It seems prudent to state that the early innovators implementing Googles open API kit and framework have a chance to clean up with Aces across…
4) The transparency standards that real estate professionals must abide by will finally permeate the mortgage industry. The gig is up…the building is surrounded; traditional mortgage practices must either give themselves up and wave the white flag or be punished by a shock and awe campaign that would make Baghdad after a ‘stealthy night’ look pretty sanguine. Mortgage pros had best ride the wave of transparency or get swallowed whole by this 100 footer.
The number one loophole I still here Bankers use when I ask (naively) ‘Since you are showing me a loan with no fees outside of appraisal and processing (and other true 3rd party line items), how do you make money? Do you receive YSP?
5) Widgets, Blidgets, Gadgets, Mini Killer Applications… relevant, easy to implement mash-ups…will replace traditional legacy type software and third party destination sites, fostering the growth of a new ‘industry’. This is another aspect of the webs splintering decentralization…
6) The Mortgage Muck (or whatever cliché you choose) will continue into 2009. The marketplace will feel the repercussions across a 3-5 year lag (since many people financed 3-5 year fixed position ARM’s). The refi-boom started ~ 2002 and lasted till, ehh, about 4th quarter of 2005. 2006 represented the beginning of the down turn, The Reaping, if you will…2007 was bad (on the TV every night, websites dedicated to following the ‘implosion’, 20/20 specials about the ‘situation’, bad)…unfortunately I don’t see 2008 being much better, save the initial deer in the headlights and/or shell shock effect that was the initial public and press reaction in early 2007. Another regrettable side-effect of the Muck will be further property depreciation due to how a certified appraiser appraises the value of property, using sales of similar property over the previous 12 months as the main cog to determine value going forward. But I’m an optimist…it’s a Bear market in real estate right now, and as a result, a great time to buy. For once I agree with NAR However, I don’t see 2008 as getting much worse either. There are some fixes slated, like rate freezing as well as an increased willingness for banks and investors to negotiate with a troubled borrower rather than foreclose.
HR 3915, despite all the hub bub, is little more than a reiteration of what was intended to be for the past 30 years, save the national licensing requirements and new foreclosure defense remedies. Its also an ‘example maker’, as in there will be some sacrificial lambs that 3915 slaughters for all the public to see and revel in.
The term ‘credit crunch’ is sooo relative. Don’t expect 100% financing with a middle credit score below 640, you must prove your income at this credit level as well. Prepare to have at least 2-4 months of the potential mortgage payment (+ escrowed taxes and insurance) in a liquid account, showing this average balance over a minimum 60 day period. Low documentation loan financing still exists, credit scores above 680 are mandatory and creeping up toward the 700 FICO club. So, a ‘credit crunch’ will remain in effect compared to recent history, but that’s a good thing.
In the end, the mortgage market should slowly iterate to a place where ‘new lending standards’ are implemented more efficiently, effectively, and clearly (with the consumer in mind), leading to a less likelihood that the tragic events the mortgage refi boom (2002-2005) caused does not happen again.
If I were Zillow:
I would focus on refining the property valuation methodologies, period…and be very careful with their mortgage offering, it takes one ill-conceived app to spoil the bunch. Offering cursory level home values is one thing, getting mixed up in the potential misrepresentation of mortgage information will get you a lawsuit that sticks, including the big black eye that comes along with it.
If I were Trulia:
I would stop adding noise to the site and offer more of their indigenous applications (most specifically: intuitive data UI navigation) to real estate agents for use on their own site (that whole open API thingy). Every time I go to Trulia my eyes hurt.
If I were Redfin:
I’d continue to focus on the consumer experience and damn the haters.
These weren’t really predictions, unless they come true
8) NAR begins to implode and/or overhauls their infrastructure. It won’t completely happen in 2008, alas their current house is still infested and needs an overhaul. (Going out on a limb here) NAR drops the political spinners who’ve failed to convince their million member tribe that everything is peachy, and caused the organization to be reduced to the butt of some pretty funny jokes while their forecasting is worse than a Kansas weatherman during the summer.
NAR postures change yet won’t let go of antiquated business practices that threaten this industrial age organizations existence. Same cat, new skin (see Move.com).
In the alternative, NAR adopts new policies of openness, cooperation, and a willingness to become a slightly more consumer centric organization. It’s OK to support your membership, but if the ‘Union’ is choking out the capacity to do good business going forward, then…
My late father ran an international business for 15 years and had to deal with a Union so high on their own ether, it ultimately cost them their jobs. The Union steward was demanding general laborers be paid $22/hour (this was back in the early 90’s). My dad opened the books to ‘the man’ and showed him unequivocally that the company could not run in the black paying that wage and further showed that the most he could pay them to run a profitable company was $20.80/hr. $1.20/hr difference. He also told them that if they did not accept his offer, he would be forced to move the company’s manufacturing operations to the Texas, Mexico border where he would only have to pay $4.50/hr for comparable labor. The Union stood their ground (called his bluff, I guess), demanding the $22/hr wage, not a penny less…my dad moved the Company 3 months later. He was then pummeled in the press by all sorts for being a greedy, uncaring, Ivory Tower money monger.
Moral of the story: If the economics aren’t practical, you are replaceable.
It’s of little wonder why Realtors are judged by the status-quo to be below an attorney on the credibility/likeability, overpaid necessary evil list. I’m not saying that Realtors have little credibility and are overpaid necessary evils so please save my Inbox the storage space…I think (good) real estate professionals are actually underpaid, alas all the consumer nation sees 6% being bilked from their properties equity and could care less who ends up with ‘half of half, minus minus minus’ of the commission, this lip service falls on deaf ears. Ask someone who isn’t a Realtor to ask someone else who isn’t a Realtor what their opinion of Realtors are. 90% of the time you will get a furrowed brow accompanied by a less than desirable diatribe.
NAR’s loyal ranks are beginning to dissent in masses as the days of big Broker house centric realty crumbles. Today a licensed real estate professional can get along just fine sans affiliating with a big name brokerage or submitting to pay the all mighty NAR its myriad of fraternal dues.
Where there are problems, there are also opportunity’s, and they are proportionate.
9) You tell me…Give me a worthy prediction for 2008.