There is no shortfall for prognosticators when it comes to real estate predictions in 2014. Not everyone can be prophetic, but the following list is an amalgamation of thought leaders in the real estate, mortgage and finance industries. My job, is to simply be an order taker and amass -- in what I believe to be -- a small representative sample of those predictions, in a cohesive and free flowing dictate that lets the reader decide for him or herself whether or not the predictions are at all reasonably foreseeable. Albeit some may seem farfetched, there is a rhythm and reason to the madness.
Banks Will Lend Less
The Achilles heel of the mortgage lending industry, is its inability to make up its mind on what it wants to be. (It's a chameleon with an identity crisis). For better or worse, the residential lending industry has been fairly stingy the past five years, which may remain the same for the projected future.
According to Lawrence Yun, chief economist of NAR (National Association of Realtors), that trend will likely continue.
Mortgage accessibility remains the wild card. There is market incentive for banks to increase their lending, as they are flush with cash and recent years' well-underwritten mortgages have performed outstandingly well. But new mortgage regulations in 2014 and the threat of lawsuits against lenders might cause them to stay conservative and continue to restrict lending.
As one real estate professional predicted recently for 2014, a drone accident masterminded by a maverick real estate broker will make national news!
As national media have reported, this next trend in real estate photography is being developed, deployed --- and deplored in some cases, in increasing numbers. The purpose: to capture new and improved photographic/video angles on high-end luxury homes for sale.
For the record, paying someone to fly a drone is illegal right now, at least according to FAA rules on commercial drone use. In spite of this, that does not seem to be stopping people from becoming an aerial photographer. Case and point: Scott Gerami, managing broker for RE/MAX in Naperville, IL has been tinkering with a camera-equipped drone aircraft to complement his existing real estate photography. In his words, "Why not highlight close schools or a pool or a nearby park? Showing where everything is in proximity to each other could be the key to a buyer's decision."
Some realtors would even like to see drone notaries. The concept being that a notary won't have to show up in person when a notary with a live video feed (controlled by an escrow officer with a pilot's license), can remote the drone and witness the actual live signature of the buyer and seller to a real estate transaction.
MLS Arms Race
The life blood of the real estate brokerage industry is information, and that information is distilled from the MLS (Multiple Listing Service). Whereas cash is king, a close second to that proverb, is information.
Just ask Chris Smith, co-founder of Curaytor, a real estate software consultancy.
Big data, and who should have access to the data, will continue to dominate discussions. The "arms race" between Zillow, Trulia and Realtor.com will heat up, and I would expect to see franchises start to compete as well. Watch for a couple of the larger brokerages to acquire a tech startup or two and to also deepen their partnerships with the vendors who "get it."
What Mr. Smith is saying, is that software efficiency, information transformation and mobile technology will continue to be the three-headed bull in the china shop. Without that trifecta, you might as well be a "door-to-door" cold knocker broker from the Stone Age.
As a former commercial broker in the nineties in Los Angeles, those tech tools weren't available to us. We actually had to take a picture of the storefronts and get the film developed into actual paper photographs at your corner store Walgreens or Thrifty's drugstore. Now all you do is Google the property address you plan to prospect and do a cut-and-paste to your digital database. Viola!
Online Ratings for Brokers
Online reputation management ratings are starting to prop up on the Internet. In fact last week, I came across a site that gave a "listing close" ratio on residential real estate agents. As whereas before this information was sacrosanct between an agent and his sales manager, now the whole world can view your work performance! Nice.
Fortunately, most working professionals don't have to subject their work performance evaluations to the public at large. In real estate, coffee is for closers. But at the very least, this emasculating technology data will put a fire underneath the backside of slacker brokers.
Henceforth, all those $30 thousand millionaires who drove around in their leased Mercedes won't be able to be "Mr. BS" any longer in their 3-for-1 custom suits who enjoy buying cute umbrella drinks for the little ladies during happy hour.
In fact, this type of work performance technology may become the equivalent of the new app called Lulu, which is only available to female users --from teenhood to post-cougar females -- who can now vent online and give the dish on their ex-boyfriends. Performance technology might give pause to a broker handing out his business card at a bar, when a female might get the 411 on his closing ratio during her next washroom break.
A Return to Subprime Loans?
According to Pete Flint, co-founder and CEO of Trulia, this is where mortgage lending might go.
With slightly increasing mortgage rates thwarting demand for refinancing, banks will be incented to start making mortgage credit more widely available. Overall, I think this means the steady, slightly uneven recovery of the market will continue, which is good for all of us.
Without question, Mr. Flint's perspective is contrarian -- but a welcomed insight and one I am hopeful will come to fruition.
As an active real estate professional who has a soft spot for hard money, lenders ought to men up and do the patriotic thing -- and that is to lend with a little more gusto, and make loans with "leashes" attached to them. Meaning, require a higher credit score in return for a lower down payment.
As I predicted earlier in 2012-2013, lenders have began to do just that, in that conventional loans from major banks are requiring only 5 percent down for a primary home loan, wherein the past five years that norm had been 10 percent to 15 percent, with the exception of FHA loans, which required a 3.5 percent down payment.