Speaking of Real Estate
When we speak of international buyers, we’re usually talking about people from other countries who want to invest in U.S. property. But the lines go both ways. There are high-net-worth Americans who want to buy homes in other countries, and they can spell big business for practitioners who are willing to aid them in their global search. But where should they be looking?
Rick Davidson, president and CEO of Century 21, argued at the Asian Real Estate Association of America’s Global & Luxury Summit in Chicago on Monday that because of the dollar’s strength against many other foreign currencies, American buyers can get great deals abroad. But one country stands above the rest as the best place for Americans to invest their money abroad because of a confluence of economic benefits: Japan.
“We are deeply immersed in the Japanese market,” Davidson said, noting that Century 21 has 900 offices and 6,000 agents there. Here are the reasons Davidson gave for why Japan should be a target for wealthy U.S. home buyers wanting to purchase overseas:
- The interest rates on 10-year fixed-rate loans are 1.5 percent to 1.75 percent — far below America’s historic interest-rate lows.
- One U.S. dollar 119.54 yen, which gives U.S. buyers a 20 percent discount on purchases.
- There are virtually no restrictions for foreign investors in Japan.
- Japan is coming out of recession. Deflation is expected to stop and GDP is expected to grow in the near future, so American investors will start to see a positive ROI starting now.
- Tokyo is the cheapest of all Asian cities in terms of price per square foot. The average price per square foot of a luxury property in the U.S. is $1,180; in Japan, it’s $680.
- Tokyo land prices have been rising for five straight years, making future expectation for price growth high.
Exceptional growth has been the storyline of the luxury real estate market the past few years. No other price segment has rebounded from the housing crash with as much gusto as that of million-dollar-plus homes, which are selling at twice the historical average. According to the National Association of REALTORS®, home sales above $1 million in 2014 grew nearly 9 percent over 2013 — more than double any other price point. And the conservative expectation is that luxury sales will at least repeat that performance this year. Nearly every major city — if not all of them — shattered its record for most expensive residential sale in the last year, and each one has a listing today that, if purchased at asking price, would break it again.
There’s no doubt the industry has a lot to celebrate because of the roaring success on the top end of sales. But underneath that fanfare appears to be a little bit of nervousness that only a few will openly — or even hesitantly — admit. Is the upward trajectory of high-end sales and prices rising too fast?
At the Asian Real Estate Association of America’s Global & Luxury Summit in Chicago this week, the theme was clearly that real estate professionals should jump on the opportunities presented by the soaring luxury market. The conference was mostly tips for how to enter the high end of your local market and serve wealthy buyers’ needs, as well as the outlook for luxury sales going forward. It was on this latter point that a few glimmers of concern shown through at various sessions.
During a presentation by top luxury producers around the county, the panel was asked by an audience member where they thought the luxury market was going in the future. Craig Hogan, director of Coldwell Banker Previews International in Chicago, answered this way: “We want to see the luxury market go up, but we don’t want to see it go up so fast that then it drops. We hope it keeps doing what it’s doing without a bunch of spikes.”
On the same panel, Robert Canberg, a salesperson with Nest Seekers International in the Hamptons on Long Island, said his tony area’s average sales price last quarter was around $2 million, up more than 30 percent year-over-year. Another panelist, Ivan Sher, partner-broker with the Shapiro & Sher Group in Las Vegas, said the number of home sales above $1 million in the city was 19 in January of this year alone, up from 8 in January 2012.
These are, of course, market conditions in only two areas, but against a sea of headlines proclaiming an unprecedented heating-up of luxury sales around the country — San Francisco, Atlanta, Nashville, Boston, Miami — it’s clear that the spikes are already beginning to happen. What no one knows is if or when the drop will come. That’s incredibly difficult to predict.
However, another potentially alarming bit of information: During the opening general session at the AREAA summit, NAR Chief Economist Lawrence Yun said that the rising value of the dollar could make foreign buyers pull back on real estate purchases in the U.S. Foreign buyers have been responsible for a large percentage of high-end sales in these years of the fast-and-furious recovery of the luxury market. If they go away, are there enough buyers here who can sustain the price growth?
Even realtor.com® Chief Economist Jonathan Smoke showed a slide pinpointing the correlation between the U.S. dollar and homebuying demand from international buyers. Beginning in November of last year, the dollar took a sharp turn upward in value, and at the same time, the number of non-U.S. visitors to realtor.com® drastically declined. Pair that with Yun’s statement at the conference that “there is still some uncertainty and risk consideration about where the U.S. is currently. It’s not necessarily the best of times,” he said, noting that GDP growth in the U.S. is expected to “fizzle” this year, though he attributed that to “one-time factors” without elaborating.
That, of course, isn’t enough to say that doom and gloom is on the horizon for the luxury market or the market as a whole, but it’s something to take note of.
Economists started to say last year that the potential for another housing bubble was present, but no one would go so far as to say it was actually happening. No one can say that now, either, but it’s worth noting that eerie signs — whether it speaks to a bubble or not — are popping up. And they’re starting to be acknowledged by some in the real estate community.
As lawmakers on Capitol Hill consider patent-reform legislation, the National Association of REALTORS® has released a video highlighting the urgent need for action to protect real estate and other types of professionals from patent trolls—entities that purchase patents, then use vaguely worded claims to demand licensing fees or threaten legal action. NAR is playing a key role in the effort to reform the U.S. patent litigation system and is a member of the recently formed United for Patent Reform coalition.
Many agents focus on showing their value to clients as an expert in their community. But you can get even more granular — and more relevant to a client’s needs — by showing your expertise in each of your listings. When you know the history of the homes you’re selling, right down to the minute details, you give the client even more knowledge and value than they expect.
Highlighting the small historical details that make up a home is the theme of a recent social media campaign by Century 21. This Facebook campaign featured three historic properties and highlighted each of the homes’ unique historical journeys.
Besides highlighting individual homes, this campaign also seeks to position Century 21 agents as local experts who care about the little details that encompass the lifespan of a home.
“We wanted a social campaign where we could make our agents and their properties stand out, and this idea of looking at the small details of a home was proposed,” says Matt Gentile, Century 21’s director of social media. “We looked at some markets and ended up in Boston — and what better place with the historical homes in that market — and we found some homes that had standout features.”
This campaign is a good reminder to agents that in your online marketing efforts, focusing on learning the history of your listings and your community will truly show your value to clients. This value proposition was something that Century 21 wanted to emphasize. “If you’re the type of agent who is going to know your listing so well that you know the small details, you’re probably the type of person that I want to work with,” says Gentile.
While Century 21 doesn’t have plans to make this campaign a part of its larger social strategy, they do use Facebook as a “learning lab” for online marketing efforts. “Our agents have a stake in the creative direction, and the instant feedback that social allows, Gentile says. “We’ve been getting a lot of feedback globally on this campaign, so you get to know what works and what doesn’t.”
The improving U.S. economy and strengthening dollar provided a welcoming backdrop for the National Association of REALTORS®’ first foray to the major global real estate exposition known as MIPIM held this week in Cannes, Frances. More than 21,000 attendees from 93 countries have gathered to explore global investment opportunities at the trade show.
The eye-catching 1,200 square-foot NAR-U.S. Pavilion highlighted the association’s commitment to global commercial interests while raising awareness about top markets for foreign investment in the United States. The pavilion showcased three robust U.S. markets that are internationally-recognized for their success in attracting foreign investment: Miami, Chicago, and Birmingham, Ala. “There are quite a lot of connections to be made here at MIPIM,” said NAR Treasurer Mike McGrew, who is part of NAR’s delegation at the show.
Attendee Cynthia Shelton, a commercial practitioner with Colliers International from Orlando, Fla. and current Committee Liaison to the NAR Leadership Team was energized about the NAR’s presence at the show. “This is going to make the U.S.A. the place to be, to invest in even more than it is now,” she said, in an interview from a MIPIM broadcast on YouTube. “REALTORS® represent the boots on the ground. We’re hoping to bring more investors to the U.S. to invest in things like office buildings, residential developments, and retail. When investments happen, cities give credits, get more taxes, and allow us to develop better projects which helps our schools and employers.”
The wide range of countries at the show— from Belgium to Brazil— is generating considerable buzz. “Governments have invested large sums to attract attention from buyers, developers, and interested parties,” said Christopher Zoller, CRS, and 2015 residential president of the Miami Association of REALTORS®. “We are getting lots of inquiries here from people looking for investors or investments, developers or developments, small personal purchases or large scale opportunities. It is exciting to see the global scale of real estate excitement.”
The CCIM Institute has partnered with NAR at the event to showcase their education platform and the value of their prestigious professional designation. After being away for several years, participating in the MIPIM event “has given us the ability to seek out significant business relationships for our members,” said 2015 CCIM President Mark Macek. “As an organization with members in over 30 countries we look forward to using this opportunity to move CCIM forward.”
NAR’s presence at the show has broadened awareness of the role of REALTORS® in commercial and global real estate. Approximately 70,000 NAR members offer commercial brokerage and related services. An additional 283,000 members are involved in a combination of residential and commercial work.
Real estate professionals always talk about giving the homes they sell more personality. Of course, that usually comes in the form of inspired staging, bold paint jobs, and creative landscaping. Rarely do they mean it so literally as to give the house its own Twitter account and let it tweet to buyers.
But truth is stranger than fiction.
Bob the House — a three-bedroom, one-and-a-half-bath ranch in the Chicago suburb of Mount Prospect — has been tweeting about his journey on the market since October. You’ll find Bob to be a rather inspirational house, tweeting messages of positivity and hope on a regular basis, along with fanfare for the Chicago Cubs and humorous updates about his search for the right family. (“Six showings today! You like me, you really like me!”)
Here’s the open secret: It’s not really Bob who’s doing the tweeting. It’s his “handler,” Rich Burghgraef, an account executive with sales consulting firm Randolph Sterling, Inc. Burghgraef writes in a blog post that he created Bob, whose name comes from the street the house lives on, Robert Drive, as a way to get away from typical advertising tactics. It seems Bob was a hit, with showings of the home going from one or two a weekend to six and eight after the Twitter account debuted. It may have even been responsible (or at least contributory) to the ultimate happy ending, as Bob tweeted on March 1: “My new family moved in on Friday. Thank you all for taking an interest.”
“I learned long ago [that] people will buy from people they know, like, and trust,” Burghgraef writes in his blog post. “However, when you are talking about selling a house, nobody cares about the person selling the house. What buyers care about is whether the house can be their next home.”
Burghgraef says that he used Bob to make a personal connection with buyers, not just to throw marketing messages of “buy me!” at them. Bob would tweet about the school that taught him to tweet (so there’s a good school in the neighborhood!); his friend, the stop sign (safety first!); and his stepson, the swing set (don’t you see your family here?). The home’s Twitter account gave buyers a new way to “fall in love with him even before stepping in for a showing,” Burghgraef says.
“I work with a lot of newer salespeople, and one of the common frustrations they come to me with is how they lose confidence in the product or service they sell because the competition came in at a lower price,” he writes. “If you truly understand and are passionate about the fact that you have the best solution for your client, the only true competition is apathy.”
Who was Bob’s competition? It could have been the comp down the street selling for $5,000 less, Burghgraef says. But that was still no match for Bob.
“He just needed to find a different way to make you fall in love with him,” Burghgraef says.