The Unconditional Blog

The impartial voice of the industry

 
1

The web complements, but should never replace the human component of real estate

Posted on: July 30th, 2008 | Filed in Buying / Selling a home, Real Estate Industry

The content and tone of many of my blog posts are positively in favour of using the web to seek out the answers to real estate questions – whether they be for buying or selling a property.

It was therefore somewhat of a salutary reminder of the heart of this real estate business that I read this blog post by Bradley Inman – he of Inman News. In reading it I think I was overwhelmed by a sense of empathy. Here was a person who for getting on for almost two decades has advocated the opportunities presented by the web and social media to bring transparency and empower agents, and yet when it comes to seeking a realtor to sell his parents home – the tried and trusted elements of human connection proved the most valuable.

The post is all the more heart warming as if you ever meet the guy he wears his heart on his sleeve and is passionate about his family, his company, his industry – in that order.

Have a read of “Bradley find that realtor” !

9

Futurism – what will the future hold for real estate?

Posted on: July 29th, 2008 | Filed in Technology

Crystal ball gazing is an appealing pastime for anyone, and for me the appeal lies in seeking out future trends within online and its application for real estate.

The recent Real Estate Connect Conference gave me just such an opportunity through the presentation by Michael Rogers, whose role is the “Futurist-in-residence” at The New York Times. He shared his vision for the future consumption of media.

The greater part of his perspective was focused to the Millennial generation (those born between ’77 & ’97), but the trends of media production has applicability for all generational groups. The key platforms of his views were built around the characteristics of mobile, omnivorous, opportunistic, social and visual; let me explain.

Mobile has always been seen as the future – freeing us all from the cable tethering us to the office or the home. Well now we are all but free to roam with only the availability of power limiting us. The smart phone has morphed into the “touch” mobile device with Apple leading what will be a sweeping revolution of the mobile device industry over the next year with the forthcoming Android phone powered through open source application layers, offering us so many ways to consume our time.

Early versions of touch screen devices such as PDA’s and tablet’s were always a compromise as neither provided connectivity as the new laptop replacement devices do. Web browser powered by WiFi, WiMax or 3G truly make the future mobile device the laptop replacement for browsing, searching and connecting which we have all being seeking. As ever we in NZ will be at the mercy of the telcos who in some parts of the world (most noticeably the US) seem to be getting it – by offering unlimited usage of talk and data for $99 per month.

The other component of this true mobile environment, one that has huge implications for real estate is GPS – property is all about location; as is finding retail and services all from your handheld device. The opportunity are limitless as were presented in the recent blog post “the iPhone is ready to revolutionise real estate

As to consumption of media now with this new truly mobile media; the key today is omnivorous consumption – the millennial’s consume media in almost all forms and shows no sign of relinquishing any, be it newspaper, radio, TV, magazines and online – the browsing nature allows them to demonstrate the 3rd characteristic that of being opportunistic.

This generation despite growing up with multi-channel access to news is often the last to know about stuff, their expectation is that media will come to them – they are the “RSS generation” and expect the same stuff to be available across all media platforms rather than them having to hunt it out.

Having been informed , this generation want to participate in the conversation. Naturally they are all on Facebook and MySpace and are comfortable to have their friends follow their lifestyle and activities, the next challenge is to provide them with the platform to take their friends and network with them wherever they go on the web, so their experiences are truly social.

Another far from unique skill this generation has developed is multi-tasking. They can and do consume media whilst undertaking other tasks – they have developed what has been coined as CPA – “Continuous Partial Attention”.

Finally this generation are visual – highly visual when it comes to media, borne of their need to multitask, they seek out visual content and abhor pages of text (maybe this blog post!).  They are also not surprisingly demonstrating a diminished reading ability as a consequence of this behaviour.

So what then to make of these trends for their application to real estate? – here is my take.

Real estate agents were early adopters of the mobile phone – they have been and always will be a mobile workforce, especially as we are likely to see less high street presence for the industry. I therefore firmly believe this industry will be big adopters of mobile touch devices. This will have a big consequential beneficial effect for online marketing. Over the past 5 years as the web has replaced newsprint as the primary source of real estate listings, the expectations of the consumer to contact and engage with agents through email with fast response has failed. Agents don’t like being tethered to their desk. Now providing them with a universal communications device that is so much simpler than a Blackberry for the mass of agents, adding to it a web browser and a GPS device and you have the components to empower agents to show the future generations the service professionalism and support that the consumers want.

5

Is buying a house really twice as expensive as renting? – observe the wisdom of the crowd

Posted on: July 23rd, 2008 | Filed in Buying / Selling a home, Property Investing, Renting

To buy or to rent – a perplexing question at the best of times, and as with most western societies we are conditioned largely to see home ownership as a logical path to passive investment. Whilst there is much to debate on the subject and mixed opinions, I was taken by the demonstration of balanced feedback presented on the NZ Herald website today in response to the article “Buying house – more than twice as dear as renting“.

The article quoted Property Investors Federation vice-president Andrew King with figures saying to buy the median house in NZ cost $745 per week as compared to the median rental price of $305 per week – on the face of it a bit of a no-brainer! However firstly isn’t this a clear case as “he would say that- wouldn’t he” as representing Property Investors.

However for me the most powerful element of this story is the clear demonstration of the collective The Wisdom of Crowds which is shown in the feedback comments on the Herald’s your “view section” – to provide a smattering of these comments:

Nigel Pinkerton from Lower Hutt:

With respect, F symonds is also not comparing apples with apples.
Say I took out a $400,000 mortgage and payed an average of 7.5% for the rest of my life, not reducing the loan’s value. Bear in mind that mortgage rates are currently at the top of their cycle.
I would be paying about $575 a week for the rest of my life, and by the time I retire $400,000 would not be a lot of money to pay off (prices and incomes keep increasing).
If I am renting, even at say $400 a week. This rent will keep increasing with the cost of everything else and in ten or twenty years time I may be paying $800-$1000 a week or more with nothing to show for it.
Generally, if you are covering more than 75% of your landlord’s interest payments, you are making them richer on paper (which they can cash in by selling up in the future). This applies even if you are not contributing to paying off the principle (book value) of the loan.

Shaun from Karori:

The quoted figures are misleading in the following ways.

1. Most home owners will be on fixed rates. In the worst case where a mortggage has recently been refixed, these rates will still be over 1% lower than the quoted floating interest rate of 10.4%. Many home owners will still be on fixed rates which are even lower.

2. The quoted mortgage repayments figures include repayment of capital – which means that over the term of the 25 years the 90% mortgage ($310,500) is completely repaid. This savings part of the mortgage needs to be taken out in order to compare like with like.

Taking these two factors into account and using an a current bank 3yr fixed term rate of 8.8%, gives an actual annual interest cost of $27324. This is around $7500 less per year ($150/week) than the quoted figures.

Still cheaper to rent, but lets be accurate in the figures so as to make the comparison valid.

ILNZ of Howick:

There is one major point missing here: rent increase every year, 7-12%? so it will possibly takes only 5- 6 years for your current rent to match your mortgage payment, and the rent still goes up in the years to come, but not your mortgage payment

If you do not own a house when you can afford it, then you will forever miss out.

And when you are old, say after 25 years, paying off your mortgage, you have a house that worth a fortune by then, but not those renters.

KatieR of Point England:

Got reminded this week of the benefits of ownership. Renting in the current climate is great financially but terribly disruptive to your life. Theoretically you pay your rent and don’t have to pay another bill other than power and phone. In real life, I am hassled to pay water bills without notice and worry about lawns. I rent so I don’t have to worry about this crap.

In addition, I now only deal with property agents and will not rent from owners- and recently learned that this needs to be written in the tenancy agreement as some owners know this and have it managed by agents for the first two months then start doing it themselves. Agents are contactable 24 hours and get things done quickly. Owners expect me to put up with things not working for their convenience. I don’t pay rent to put up with a broken toilet and pay rent for my convenience.

I am thinking about buying next year as I am sick of the crap- six week evictions because their son is getting back from overseas, landlords visiting at all other than a six month property inspection (I am paying for privacy) and the terrible state of most rental properties – plumbing, electrics alarm and paint matter to tenants.

The key point here is that with the feedback mechanisms of blogs and the all pervading power of Google – so called experts need to be aware that people will seldom take their version of the truth at face value – people are encouraged and rewarded to dig a little deeper and hear the “wisdom of the crowd” before making up their mind.

0

Real Estate Connect SF 2008

Posted on: July 22nd, 2008 | Filed in Website news

I’ve come up here to San Francisco to attend the Real Estate Connect conference over the next few days. This will be the 3rd Connect I have attended and I can safety say that the experience at each of the past 2 has been “life-changing” – that is in the context of my “life” at realestate.co.nz.

Connect is organised by Inman News and follows a format of maximum content and interaction with minimum “fluff” – there are no sponsored dinners or enormous exhibition areas. If you want to eat or have a coffee, you have about 3 minutes between the hour long sessions scattered among the 3 days of the event (which by the way start at 8 and finish at 5). Like a smörgåsbord of interesting topics, you choose the ones that interest you and then try and sequence the day to maximise content and networking.

As the week progresses I intend to share the insight and future development from the conference to try and cast a visionary eye over what I may borrow / steal / acquire to bring back to NZ and seek to deliver with the intent of adding value to both the realestate.co.nz website and the market of online real estate in NZ.

The conference here in SF last year was the pivotal event for showcasing the power of social networking within the real estate community and lead to the implementation of this blog as well as the Voices blogging platform for agents. Attendees at the conference come from all over the US and the world and represent the leading operators of online services for the industry as well as forward looking agents who actively embrace the technological transformation of the industry.

Watch this space for insight and opinion!

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Trends for real estate in NZ – the top 5 for 2008

Posted on: July 17th, 2008 | Filed in Real Estate Industry

With the benefit of a half a day in the country and extensive research prior to his visit Stefan has put together his perspective of the top 5 trends for the real estate industry in NZ for the next year. He is presenting these in more detail at his 2 speaking engagements whilst he enjoys his brief time in NZ.

The tug of war has started… again!

The evolving and changing real estate business model

With an industry amounting to a transaction value of north of $35 billion, it is always going to see innovation and challenge.

The changing business model trend is particularly topical in NZ. The past year has played witness to a number of challenging developments, the majority of which have been focussed on the costs of service. We watched the very public rise and fall of The Joneses but away from the headlines business models charging 1% commission instead of the standard 3-4% have established a foothold in some areas. Other models will continue to appear and evolve.

Thought Reform

The DNA of a new breed of Real Estate Agents

This trend is so timely. Within the last year the market has changed so dramatically and sales are much harder to make so success will rely heavily on an agent’s skill set.

“Agents are no longer order takers and are looking to acquire skills to build their business” – Bill Shue, President, RealtyU a large US based agency.

What degree of additional education will be needed to better understand the needs of the consumers of the future? The new recommendations contained within the new tabled Real Estate Agents Bill includes a requirement for continued professional development so education providers and the Real Estate Institute (REINZ) will be already developing strategies for agents to regularly upskill.

Clash of the Titans

Power brokers flex their muscles

As to whether we will see more polarisation of the market to the major groups and franchises is not an easy question to answer.

Almost two-thirds of all NZ real estate offices are part of franchise or marketing groups compared to Australia where less than half of all offices are.

The flexing of muscle in the USA has shown that the big doesn’t always win. Power struggles have been won by smaller players showing innovation, internet strategies, growth, good profile and consumer awareness. As is often stated, real estate is a local business and innovative local firms can become the power brokers for areas or sectors of the market.

The new digital currency

Information

Information is key and online is the arena in which real estate now operates.

The past couple of years have seen enormous changes in the online real estate marketing – to quote the report “web traffic has replaced walk in traffic”.

Buyers are thirsty for information on all properties and are finding it all on specialist real estate websites with comprehensive portfolios of photographs, video and mapping.

The growth of the web has put the ‘print media spend’ by real estate companies under review and now the state of the market is forcing cost cutting so the newspaper marketing budget is likely to be the biggest victim.

The real estate industry and newspapers were in a co-dependent relationship for so many years that separation will be hard.

Sami Inkinen, the founder of USA online search engine www.trulia.com has described the reluctance of real estate to divorce newspaper in a much less favourable way.

“I can’t find a single large real estate brokerage firm in 2007 that says print advertising really works but I can easily name dozens who still spend the majority of their ad budgets on newspapers. It’s like a chain smoker battling lung cancer, while still smoking two packs a day.”

Two worlds; one industry

The evolution of online communities & networks

The web has started to transform the real estate industry but the most significant part of its evolution is yet to come.

The web was first used by buyers and sellers for browsing, then for searching.

The most important trend for New Zealand real estate over the next 12 months will be buyers, sellers and agents using the web for sharing.

Real estate is a universal topic of conversation at any time with anyone which makes it a perfect platform for online social interaction.

For the real estate industry the trend is towards agent blogs – they provide an open forum for agents to discuss the market, their community, raise topical issues for debate, demonstrate their expertise and create meaningful dialogue with potential clients.

Most importantly blogs and social networking sites such as Facebook and LinkedIn provide the professional capabilities and services of an agent to be represented in an open and honest manner.

This will become a credible and comprehensive way for buyers and sellers to get a sense of the agent’s ability, integrity and honesty – a better way to choose an agent than by throwing a dart at the newspaper!

The challenge within this trend is the fact that the majority of real estate agents are from the baby-boomer generation not the internet generation.

Technology is set to be a disruptive influence on this industry:

– will we see changes happen this year? – unlikely;

– will these changes be far reaching? – absolutely;

– will the changes benefit those that embrace this new open networking environment on the web? – absolutely;

– will the consumer be the beneficiary through greater service and value ? – without any doubt.

11

NZ visit this week by leading real estate visionary

Posted on: July 14th, 2008 | Filed in Website news

This week at the invitation of realestate.co.nz Stefan Swanepoel will visit NZ.

Stafan SwanepoelStefan is widely regarded as a leading visionary within the global real estate market with many books and hundreds of speaking engagements to his name. His most acclaimed role is as the author of the annual “Real Estate Trends” report. This comprehensive and throught provoking book is published at the start of each year defining the 10 major emerging trends for real estate professionals for the forthcoming 12 months.

This year’s reports singles out what Stefan calls “Two worlds; one industry” – The evolution of online communities and networks, as the # 1 trend for 2008.

This trend defines the way the web in our daily lives and in real estate has begun to transform business and industries, what is key is understanding the evolution of the web from browsing to searching to sharing. The concept of web 2.0 is something that has been much discussed and debated with the implementation of social media, in many ways social media is fundamental to the future of real estate marketing.

The trend is towards blogs as the platform for real estate agents to profile themselves – to demonstrate their “subject matter expertise” as well as creating meaningful dialogues with past, present and future clients. On realestate.co.nz we have provided the Voices blog platform to enable any agent to create a blog – to enable them to embrace this trend and demonstrate to a global audience as well as to their clients down the road their skills, knowledge, expertise and passion for their chosen career.

Real estate Trends - Consumer reportIn addition to the comprehensive full report, Stefan provides a free summary document which is targeted to home buyer and sellers – the 10 page summary report is available from Stefan’s website, seek out the link at the foot of the page (registration is required – simple email and name).

The visit this week is only the second time Stefan has been to NZ – he will be speaking at 2 events to an invited audience of real estate and business leaders in Auckland on Thursday and Friday.

I will take the opportunity to post a summary blog post at the end of the week providing Stefan’s views and opinions on the NZ real estate market. If there is any question you would like me to put to Stefan please post it as a comment below.

5

100th post for Unconditional

Posted on: July 13th, 2008 | Filed in Website news

It’s almost 8 months to the day that the first post on Unconditional was penned. Looking back it was a step into the unknown in someways. This is post #100 and it is worth reflecting on these past 8 months.

Prompted by the experiences witnessed at the Real Estate Connect conference held in San Francisco in July last year which showed the emergence and power of blogging within the real estate industry in the US, I returned from the conference confident that we could lead the NZ industry in the adoption of blogging and through this medium establish a broader channel of communication and thereby hopefully contribute to an enhanced profile for real estate in NZ.

The principle of blogging is founded around transparency, honesty and openness – qualities which seldom spontaneously spring to mind in the context of real estate and that is why blogging can and is now beginning to give a genuine voice to the career-minded real estate professionals, and start to right some of these long held attitudes.

In 8 months the Unconditional blog has garnered a broad audience which now comprises around 400 unique daily visitors, in June the total number of visitors exceeded 7,000; a number which has grown steadily from small beginnings at the start of the year. Participation in the conversations prompted by this blog is the key to the value of the blog and I am pleased and appreciative of the contribution from all of those that have posted – a total of 1,600 comments have been made to the 100 posts. As an indication of the topics that have captured the interest of the audience this is the top 10 posts based on the number of comments made:

  1. NZ’s Property slump – compelling facts cannot be ignored – posted in March with 40 comments
  2. Media seriously impacts the psyche of NZ’ers when it comes to property – posted in May with 39 comments
  3. Is NZ facing an impending property crash? – posted in February with 35 comments
  4. NZ Property slump is mirrored around the world – posted in May with 29 comments
  5. Will 2008 see house prices rise or fall? – posted in February with 22 comments
  6. NZ property market may well see a brighter outlook sooner – posted April with 20 comments
  7. Will we see property prices rise before 2018? – posted in March with 20 comments
  8. Newspapers and real estate – a match made in heaven; now beginning to show signs of disaffection – posted in July with 19 comments
  9. Auckland property market potentially showing signs of stability – posted in July with 16 comments
  10. Barfoot & Thompson sales figures for April reinforce the trend – posted in May with 15 comments

It is pretty clear that discussions around the future state of property sales and prices have naturally
captured the discussions. All discussions I am pleased to say have been professional, respectful of others and valuable. My role I feel is to prompt the discussion around topics and issues that are valuable to highlight and in doing so allow others to contribute.

I have enjoyed enormously writing every one of these 100 and I look forward to writing the next one just as a much as the last. There are times when the brain dries up, but with real estate that momentary lapse of creative inspiration is soon swamped with new ideas and topics – that is the nature of real estate, it affects so many of our lives and is such a great conversation piece.

Thanks to all of those who have followed this blog from the start and to those who may be finding this for the first time – please stay with us and join the conversation.

Alistair Helm

CEO Realestate.co.nz and passionate blogger of Unconditional!

101

According to the Dutch – The best thing about NZ is that our housing prices are low!!

Posted on: July 10th, 2008 | Filed in The lighter side

Now that is certainly the kind of headline to capture interest!

and the fact is, that is what has been reported on a very active Dutch blogsite. The website Greenstijl which (with the valuable assistance of Google’s translation service) describes itself as “scandalous revelations and journalism research interspersed with airy and pleasant topics disturbed nonsense” posted an article last Saturday titled Departure to New Zealand!

To provide those non-dutch speakers amongst the readers of this blog and again with the benefits of the service of Google translator – here is a translation of the article:

Geen sentence in Canada? New Zealand were looking for immigrants. Pastoral farmers, It’ers, hbo’ers, engineers, you name it. Anyone with a little training is welcome in that great country! People who want to work in tourism. People who build boats, conveyor belt can work, understand petrochemical industry, forestry, rightly want in the film and television industry (and which is best large), like in the financial sector or so … Even officials want to be. The list is endless. Like what you’ve seen? This is a good start. Check also the vacancies, and apply! New Zealand has one of the most beautiful and diverse landscapes in the world. Nowhere else can you find fjords, gletchers, mountains, grasslands, surf beaches, dive, hobbitstedes and everything nice and cool to the earth, and hip clubs in one place. You earn tons of money there. The best housing prices are low. Yes, absolutely, make Netherlands viable, what we are concerned rot you tomorrow. That we mean very nice.

The pictures are all from Flickr, so they are real.

With appropriate apologies for the roughness of computer translation, you get a view of how the dutch see NZ – makes for an appealing perspective!

This blog site is one of the most popular in Holland and attracts an audience which makes it the 36th top site in the country (according to Alexa) with a reach on a weekly basis around a third of that of Trade Me!

With this level of visitors (some of the posts regularly get 500 to 700 comments!) – it is not surprising that the referal link to this website in the original post certainly impacted our traffic over the weekend. Normally Holland represents around 0.25% of all our traffic – an average day being around 50 visitors searching our properties, but as can be seen from the graph below over the past 5 days Holland has shot up from #14 top country to #2 – with on Sunday alone 8,400 visitors!

The best bit of it was the fact that they did more than just hit the home page, they actually went looking to see if our prices really are low! – with 767 replies posted on the blog post – some may express agreement – that is for you to translate!

2

The definitive set of real estate facts and information

Posted on: July 10th, 2008 | Filed in Money Matters, Real Estate Industry

If ever you need to access to the definitive set of graphs on real estate and property statistics for NZ – then this is the place for you (and for me!). The team at interest.co.nz maintain this set of 21 graphs which pictorally provide a great snapshot of the drivers of property sales in NZ.

Real estate statistics graphs - interest.co.nz

Not only just real estate statistics are provided on the website – here are the other categories comprehensively covered:

Confidence

Credit

Economy

Exchange rates

Government

Industry

Interest rates

Labour

Overseas trade

Population

Prices

Social indicators

10

Home owners opt to rent out properties that are struggling to find buyers

Posted on: July 8th, 2008 | Filed in Renting

With the level of property sales already down 44% at just 25,500 properties in the first 5 months of the year – and stock of property on the market at record levels, it comes as no surprise that the level of rental properties on the market is also growing.

In fact over the past 3 months as the levels of new properties coming onto the market has begun to decline and the overall stock of properties has also begun to decline, so the level of stock of rental properties has risen. The graph below shows the statistics of properties listings on realestate.co.nz through the first half of 2008.

Rental listings vs property for sale on realestate.co.nz Jul 08

The blue shaded area represents the stock of rental properties – growing sharply from a steady 4,000 in the first 3 months to then spike up to the current level of over 6,000 this month. At the same time the red columns representing properties for sale as measured on the left hand axis shows the decline from April, down from 61,700 to just under 60,000 this month – not a massive decline, but a decline all the same.

As a note it is important to note that rental properties on this website tend to reflect a high turnover as the timeline of renting is on average so much shorter than selling properties, however looking back over the past 24 months – no other period has seen such a fluctation in stock.

Additionally it is clear that it is difficult to directly correlate the circumstance of properties once marketed for sale being alternatively offered for rental, however the feedback from within the industry and other articles definitely point in this direction.

Ammended content 9th July

At the request of Lance – below is the same data presented for an 18 month period – clearly the stock of rental listings are growing at a rate far ahead of any seasonal influence.

Property for sale and for rent - realestate.co.nz 2007 /2008

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