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RE/MAX, LLC announces the first-ever Global RE/MAX Day, to be held on Wed., Oct. 6. This worldwide community service event will activate the RE/MAX network and its nearly 140,000 affiliates in over 110 countries and territories in a coordinated effort to give back to the communities in which they live, work and serve. To participate, RE/MAX affiliates and the approximately 700 RE/MAX Holdings staff members are encouraged to volunteer at a charity of their choice or through a community service project on Global RE/MAX Day.
“The goal of this day is to come together, harness the power of our expansive network, and help others,” said Shawna Gilbert, RE/MAX vice president of Global Development, in a statement. “We’re encouraging hyper-local participation and for members of the RE/MAX network to consider what their community needs at this time, whether it’s food bank donations, city cleanup or something completely out of the box. It’s a way to help people and businesses we’ve come to love and serve over the years.”
Since 1992, the brand has partnered with Children’s Miracle Network Hospitals to raise funds for children treated at pediatric hospitals in the U.S. and Canada. In the nearly 30-year partnership, RE/MAX affiliates have donated more than $170 million in North America to CMN Hospitals. They also support many other programs, including those dedicated to children, environmental activities, education and outreach, throughout the global network.
“Giving back is built into the RE/MAX culture,” said Mike Reagan, senior vice president of Industry Relations and Global Growth & Development, in a statement. “Being connected to the impact RE/MAX affiliates make all around the world—no matter the country, culture or language—is one of the greatest benefits of being with the global network. Community service is universal.”
For more information, please visit www.remax.com.
CENTURY 21 Cityside in Boston’s Back Bay has announced a merger with CENTURY 21 Cahill Associates, formerly of Dorchester, Massachusetts. Both family-owned franchises, with a combined 80 years of real estate experience, saw an opportunity to merge two respected offices into one Back Bay location.
David Cahill, owner of the former CENTURY 21 Cahill Associates shared “I’m excited to again be part of a family business after spending the majority of my career in one. What CENTURY 21 Cityside has done with their business is what any other brokerage should be proud to accomplish and I look forward to continue to grow my business here.”
David Cahill has 18 years of sales experience and has been the top-producing real estate agent at CENTURY 21 Cahill Associates for over a decade. He has won multiple awards, including the Quality Service Award and CENTURY 21’s Centurion Award.
Collin Bray, an owner of CENTURY 21 CItyside mentioned “David embodies what a leader is, and he is well-respected by other REALTORS®. His many years of experience with family businesses makes our new strategic partnership that much stronger.”
Jordan Bray, sales manager with CENTURY 21 Cityside added “David is a perfect fit. He works hard for his clients, puts his integrity first, and is a joy to work with!”
Jordan continued “With a powerful training system and many new tools in 2021, our value proposition has never been stronger. We provide an environment with personalized attention and the highest level of agent support available.”
For more information, please visit www.century21.com.
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On Sept. 14, RISMedia held its annual Real Estate CEO & Agent Leadership Exchange, this year co-presented by the National Association of REALTORS® (NAR). The exclusive, full-day, virtual event attracted thousands of industry professionals, featuring broker- and agent-focused sessions with real estate’s most influential and successful executives, brokers, agents, coaches and more.
During “Evaluating the Trends: Experts Discuss the Industry’s Future,” on the broker track, Inside Real Estate CEO Joe Skousen led a discussion with industry leaders spotlighting some of the biggest trends that are making waves in real estate right now, and evaluated the real impact they may have on business in the months and years ahead.
Panelists included Vanessa Bergmark, CEO of Red Oak Realty; Mike Pappas, CEO of The Keyes Company/Illustrated Properties; and Matt van Winkle, broker/owner of RE/MAX Northwest, who discussed the new business models and consumer behavior that are driving the trends that brokers need to be thinking about as they look toward the future.
While these three traditional-model brokerages don’t plan on altering their structures, they are keeping an eye on the tech models and disruptors, along with iBuyers and team models, to see what they can learn from them in solving consumer pain points.
Joe Skousen: Are you feeling any pressure from some of these new tech-enabled models? Are they impacting your model at all, and why or why not?
Vanessa Bergmark: We’re always keeping our eye on other brokerages and what’s coming in and ways that we can innovate that we maybe hadn’t thought of. I have to give kudos to the brokerages that come along and look at things differently, and maybe get the industry and homebuyers and home sellers to look at them differently. I think as far as is it making us change our entire model? I’d say, at the moment, no.
JS: Whether it’s office space or one of the other attributes of [the tech companies], have they changed how you think about the agent value model? How you offer agent value or team value?
VB: Not especially. I’m always looking at what I am offering my team so that they can, in turn, offer it to the consumer. So when it comes down to our marketing, our brand awareness, our ability to handle litigation or complex legal transactions, insurances, construction—there’s so much to selling a property, and it’s not getting any easier.
We’re getting way closer to the construction side of things; we’re getting way closer to massive disclosure items when we’re taking over an entire property and basically remodeling it from the ground up. So I would say it’s not changing the way I would value what we’re doing because we are making sure that we’re constantly supporting our agents, and that changes constantly, but it doesn’t necessarily change the structure of the model.
If your agents are trained, are well-educated, they’re paying attention to stats, they understand the laws, they understand contracts, they have good relationships; they’re able to negotiate; they understand the idiosyncrasies of the neighborhood, the schools, the dynamics, the crime, all of those things—when they’re really good, they’re always going to remain needed.
Mike Pappas: There’s no question a lot of dollars are coming into the marketplace trying to disrupt us. It’s exciting at the same time it’s challenging. And so I think you have to be aware. Study the competitors and know what they’re offering. One from a recruiting standpoint, and two, from what they’re offering the consumer. And then you have to know your own model. What is your core value, are you able to articulate that?
We’re a community of care. We believe in the brick and mortar; we believe in community; we believe in support. So if that’s what drives you, you need to be able to sell that and articulate that well. We take away the pain points for our associates. We automate things in the process of lead to close. So all of those things are making this one of the most challenging times in our careers because there’s so much Wall Street money coming into our business that is trying to disrupt the $85 billion dollars of commissions that we’re all used to working on and earning.
Matt van Winkle: What I’m looking at is what are the competitors doing? And it’s not necessarily that I’m going to do what they’re doing…but I’m looking at what’s the underlying pain that they’re trying to solve. One of the things that they looked at from a pain-point standpoint is availability of the agent. You’ve got a great agent, but if they’re a one-person shop, they run into the problem that they can’t be in two places at once. So we looked at that model and said we are going to create a field agent who can take off a lockbox for an agent or…show the house to grandma…so our agent doesn’t have to go change their plans if they were going to be on vacation to accommodate that.
I think five years from now it’s going to be an unrecognizable industry compared to where it is right now. I think if we’re not really shifting our models, shifting our service offerings and shifting how we work with consumers, we’re going to be on our way toward irrelevance. So we look at it like, are we going to wait for somebody else to do it and play catchup? Or are we going to be the ones to try and figure out what that next thing is and figure out how to really make this work and make sure that we’re the ones who are doing that?
JS: Talk to me about iBuyers. What impact is out there? I know we see something along the line of less than 1% of transactions in the U.S. are going to iBuyers, but some markets may feel it more than others. Is the bark worse than the bite?
MP: They’re going public…they’re not going away. I think you’re going to have to adapt to change, partner with investors. What they’re trying to do is disintermediate the broker and the agent, take that commission, “uber-ize” it so to speak, and then resell it without that agent and keeping the dollars and cents. So I think relationships matter and a certain percentage of the business will be there, but there’s still 95% – 90% of the business that still wants somebody, a trusted advisor, to walk them through that process and to maximize their dollars and cents. I’m a little surprised and it’s interesting to me— the one “ah-ha” moment is people will sell less for convenience which I hadn’t understood before because being in the business, we’ve always had sellers that want to maximize their price, not sell for less.
JS: So you feel like there are some tools and strategies that you can use as a business to really combat the iBuyer effect and have it working for you rather than just against you.
MP: What we found is you need to know what’s out there in order to overcome the objection and to be able to answer the questions, have the knowledge of what there is, but in our mind, maximizing the price in that short period of time for the consumer is really what the consumer wants today. But they are gaining ground. They’re not going away and they’re a competitor that we have to compete with.
JS: What do you think about the importance of the consumer experience to the brokerage and what changes does that drive as we look toward the future?
MVW: The consumer doesn’t like the process of buying or selling a house, and that’s where all this disruption money comes in. And the question is, can the brokerage model—those of us who are used to working with the consumer, the agents who are guiding consumers through this process—can we adapt fast enough to provide that better experience? Or is somebody else going to come in who doesn’t understand the brokerage process? Who doesn’t understand the agent experience and how to guide somebody through…? Can they grab enough market share promising a better experience faster than we can basically deliver a better experience with the knowledge that we have?
Most consumers…still want the agent. So how do we look at the adaptation of the model? How are we streamlining it, how are we leveraging technology? How are we helping agents leverage themselves so that they’re delivering their highest value?
Part of the issue here is the agent who is negotiating the contract, that is, who’s helping prep the house, is often the same person making flyers or running errands or doing all the other things. Most agents are still running solo. Teams are starting to grow but it’s not the dominant amount of business in most markets.
So how do we, as broker/owners and managers, really help our agents still be the center of the transaction, but really streamline that experience. I think that’s the challenge that everyone’s trying to solve right now. And doing that at the same time as other people are coming in and saying, “Well the agent isn’t really that important part of the process. We can diminish the value of the agent. We still have an agent as part of this transaction.” But they’re not really at the same level as an independent agent and I think that’s really where the challenge lies for the industry and for broker/owners.
JS: As you empower your brokerage more with technology, does that also help with other issues that you face in the business: retention, recruiting the right agents, driving more referrals?
VB: Without a doubt. We already have these relationships. We also have our own data. The key element is I think there’s some things we see in the iBuyer relationship or technology that’s been a savior. And I think that regardless of what model you’re using, there’s always friction in the transferring of ownership of a property that people have lived in to another person. And that can be in title, construction, in liens against the property…so even if you made that quick and painless and you reduce the cost of it, those problems still exist. Somebody’s dealing with them somewhere.
So the question is how do you get better at seeing those and dealing with them, coming up with creative solutions for them and then knowing your overall market. That’s what we’re focusing on. We work with a very defined market, we’re not everywhere, we’re very deep, we’ve been there for 40 years but we keep evolving on how to take care of this particular market. When you pay attention to that, when you provide those resources, they’re taking some of these great ideas of other models and infusing them so that they can support their agents and in turn support their consumers, and we’re doing pretty much the same thing. Once you do that, once you come up with these creative problem-solving solutions, then retention becomes an easier factor to compete against. People will stay where they are if they are getting what they need.
JS: What about teams? Are teams important today, are they important in the future, does that change at all as we go?
MP: I think there’s no question there’s been a momentum and a direction for teams. Associates want construct, they want support. They’re willing to work for less within a team. I almost call teams the old broker of yesterday—smaller offices, selling managers, engaging their clients. So there’s no question that teams will continue.
VB: We’re a very low inventory market, so we have an extremely high price point and a lot of demand for support. The more people you have working for that client or working on that product, I find the better. I look forward to the evolution of that part of an agent’s life because they’ve had to sacrifice everything to be a real estate agent. We all know there’s no boundaries, the hours are long, so teams have created a little bit of balance and structure into an industry that was really lacking in giving people some boundaries and work-life balance. I’m all for teams or partnerships or doing what I can to support anyone who is looking for growth and sanity opportunities while also providing a really great consumer experience. So I think they are going to rise, and I think it’s our role to support them.
MVW: The team is the solution to the second problem in the industry which is the agent experience. It’s a tough business: it’s 24-7, you’re always on call, always on demand. So the team gives a little breathing room around that experience and yet the client can still be taken care of. And I think that that’s one of the areas we’re looking at from the brokerage standpoint. If you have somebody that doesn’t want to fully support building their own team, but they don’t want to go on their own, what’s that middle ground and how do we help that middle agent?
I think a lot of teams are struggling too, trying to find that balance between profitability and scale and how they’re able to provide the service they want. But we’re embracing them. We’ve got successful teams and I know that we’ll certainly have more in the future.
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Beth McGuire is RISMedia’s VP of online editorial. Email her your real estate news ideas to firstname.lastname@example.org.
The post Evaluating Real Estate Trends: Experts Discuss the Industry’s Future appeared first on RISMedia.
Pending home sales rebounded from their summertime slump in August, according to the latest report from the National Association of REALTORS® (NAR).
NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, increased by 8.1% last month, climbing to 119.5.
While each region experienced a monthly increase in contract signings, year-over-year activity dropped 8.3%, with the northeast seeing the most substantial decline.
Despite recovering from two consecutive months of contract signing declines, experts at NAR say affordability issues continue to weigh on buyers.
According to the report, home price gains are triple the wage growth, which experts suggest is an unsustainable imbalance in the market.
+4.6% MoM — Now 96.2 PHSI
+10.4% MoM — 115.4 PHSI
+8.6% MoM — 141.8 PHSI
+7.2% MoM — 107.0 PHSI
What the Industry Is Saying:
“Rising inventory and moderating price conditions are bringing buyers back to the market. Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising. This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.” — Lawrence Yun, NAR Chief Economist
“As pandemic concerns lingered and companies delayed office re-openings, many Americans were eager to lock in affordable mortgage rates, even as prices continued rising at double-digit rates.”
“Real estate markets are moving toward a new equilibrium, as the pandemic frenzy to find a more spacious home in greener suburbs and lock in historically-low rates has given way to a more tempered search for affordability. Record-high prices are motivating buyers to be more selective, and with monetary tightening expected to push rates higher, buyers are likely to become even more cost-conscious.”
“The days of liberal price-escalation clauses, home inspection waivers and dozens of multiple bids are likely behind us, as the share of homes for sale with price reductions is growing. For millennials and other first-time buyers, today’s markets are signaling a return toward seasonal trends, as improvements in the number of available homes for sale are tamping down the unsustainable price trajectory of the last 12 months. A more measured pace of price appreciation is good news for millions of first-time buyers who felt locked out of the housing market earlier this year.” — George Ratiu, Manager of Economic Research at realtor.com®
For more information, please visit www.nar.realtor.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to email@example.com.
The stories are everywhere. Homes that, within days or even hours of going on the market, receive dozens of hyper-competitive offers. Buyers who are not able to waive contingencies, offer well above asking price, or pay in cash are consistently being left behind as either investors or buyers with more courage (or recklessness) are snatching up homes.
Though these things are certainly happening, a new report this week from Zillow indicates that the frequency or severity of this crisis might be exaggerated, as buyers are only submitting two offers on average before purchasing a home and most still go through the traditional process of viewing and inspecting properties.
“Our 2021 survey of buyers found buying a home got more challenging in the past year, but many buyers were ultimately successful in landing a home without taking unnecessary risks,” said Manny Garcia, a Zillow population scientist, in a statement. “Most buyers continue to get inspections, and sellers appear to prioritize higher offers over waived inspections.”
Only about 10% of buyers took the risky step of waiving inspections, according to the report. Only 5% skipped an in-person, individual home tour before making an offer—though attitudes around that process are certainly changing, as close to 60% said they would at least consider buying a house after only a virtual tour.
At the same time, though, other data supports the suggestion of many people’s feelings and anecdotes—that buying a home is significantly more difficult and competitive now than in year’s past. Only 36% of people got a home on their first offer, down from just over 50% in 2018. Cash purchases were up slightly as well—a 4% increase over 2020— though the number of buyers who reported spending more than their budget only ticked up slightly from 2019 numbers.
First-time homebuyers also struggled, with their share of the market dropping 6% overall in 2021, from 43% of all buyers in 2020 to 37%. They were significantly more likely to have to submit multiple offers before buying a home, according to the report, and also more likely to feel rushed in the process. They also had a higher rate of initial mortgage denial before eventually being approved.
But overall, the new data from Zillow fails to support the dramatic tales that have passed by word-of-mouth and through the media.
“So many buyers are hearing horror stories from friends and family about the housing market, so it’s important to educate buyers about the local market so they can make the best decision for their family,” said Tom Toole, team lead at Tom Toole Sales Group
As in the broader real estate market, competition and difficulty buying a home has not affected all consumers equally. Closing on a home is significantly more difficult for Black, Latino and LGBTQ+ individuals , who were all more likely to be denied a mortgage than white buyers. While 31% of white buyers had to push through at least one mortgage denial before being approved, a staggering 54% of Black and LGBTQ+ consumers received a denial, as did 56% of Latino buyers.
People of color also made up only 26% of all homebuyers as a lack of intergenerational wealth, along with other persistent inequalities and ongoing discrimination have prevented a broad swath of Americans from fully participating in the housing market. A 2019 Zillow survey found that Asian, Latino and Black buyers were much more likely to report being treated differently because of their race compared to white consumers.
The report also pushed back—at least a little—on the narrative that buyer preferences have been dramatically upended during the pandemic. Among the home characteristics that have greatly increased in desirability, smart home capabilities (13% more people valuing that since 2019), energy efficiency (11% increase from 2019) and having a hot tub (10% over 2019) topped the list. Most other things—overall square footage, commute convenience, outdoor space and preferred bathrooms and bedrooms all stayed roughly the same or followed trends that preceded the pandemic.
Geographically the story was similar, with movement roughly similar to previous years. In 2021, 39% of buyers were moving to a different home in the same city, which matches up with the 40% who said the same in 2019. And defying another narrative, more people in 2021 were actually staying in the same state compared to homebuyers in 2019—50% compared to 41%.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to firstname.lastname@example.org.
The post Extreme Buyer Competition Might Not Be That Common appeared first on RISMedia.
Mortgage applications decreased 1.1% WoW for the week ending Sept. 24.
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, the Market Composite Index, a measure of mortgage loan application volume, decreased 1.1% on a seasonally adjusted basis from the previous week.
“Increased optimism about the strength of the economy pushed Treasury yields higher following last week’s FOMC meeting. Mortgage rates in response rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “The increase in rates—mostly later in the week—led to a decrease in both purchase and refinance applications, with a prominent decline in government loan applications. Conventional loan applications increased, driven by a rise in conventional refinances. This was perhaps a sign that some borrowers reacted to higher rates and decided to refinance.”
Added Kan, “With home-price appreciation continuing to run hot, increasing more than 19% annually in July, applications for larger loan amounts continue to outpace lower-balance loans. The average loan size for a purchase application reached $410,000, its highest level since May 2021.”
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L.E.A.D. Vision Course, Now Available at Annual!
REALTORS® tap into the experience of National Association of REALTORS® leaders by attending the REALTOR® L.E.A.D. Vision Course on Nov. 10, during the REALTORS® Conference & Expo. This course will feature one-on-one mentoring from dynamic, influential association leaders, the opportunity to identify your personal leadership style and create your unique vision for leadership. Enroll today!
Recent RPR Study Reveals Significant Jump in Listing Visibility
Recent RPR (Realtors Property Resource®) study reveals significant jump in the number of associations/MLSs that display on-market listings with REALTORS® on a national scale.
REALTORS® encounter job-related risks every day. Even seasoned REALTORS® can miss warning signs or become complacent in their practices. Honor REALTOR® Safety Month by being prepared with protocols in place to protect your agents and office. Learn more at REALTOR® Safety Program website!
For Ron Snow, broker/owner of RE/MAX Associates of Utah, building a future-proof business model is the only way to compete with the Goliaths of the world.
A pioneer in real estate automation and technology, Snow launched his career in the grocery industry, spending 11 years in the technology management department at Kroger. While he ultimately got into real estate as an investor, Snow has made it his mission to resolve the dysfunction associated with the buying and selling process for homeowners and investors alike.
“A lot of what I’m doing comes from the way in which we worked things in the grocery industry,” says Snow. In fact, it’s this under-one-roof mentality that drives every decision Snow makes as he works toward creating a tech-enabled, integrated brokerage.
“I’ve spent a lot of time building out a system to walk the consumer through the entire real estate journey while positioning the agent as the consumer’s point of entry,” says Snow.
As revenue streams grow thinner, brokers and agents need to engage clients across the full lifecycle in order to create broad, sustainable revenue streams. But a soundproof business model can only take you so far. And, according to Snow, it only works with the right technology. “I found out very quickly that it was better for us to partner with the right technology company than try to be a technology company ourselves,” notes Snow, who explains that getting more heavily involved with Inside Real Estate over the last 18 months was the logical next step.
“We’d been working with Inside Real Estate for eight or nine years,” says Snow, who points to a shared vision as one of the main reasons behind the partnership.
Partnering with Inside Real Estate was a no-brainer. A leader in innovation, Inside Real Estate offers a tech platform, kvCORE, that’s designed for growth.
“There are no limitations, and the platform was built to grow and evolve alongside my business,” explains Snow, who has leveraged kvCORE to not only help his top agents and teams expand their business, but to build upon the tech foundation with ancillary services for additional revenue streams.
According to Snow, since partnering with Inside Real Estate, he and his team have been able to exponentially grow their repeat and referral business. As impressive is the growth they have seen in highly profitable affiliated services revenue. Between these and other improvements, Snow’s business has seen a massive 400% increase in profitability. And, more importantly, this growth is not slowing down.
“We’re able to generate leads at a fraction of the cost using Inside Real Estate’s system and technology,” says Snow. “While we can throttle it up or down as much as we like, the biggest problem we’re running into is that we’re generating 10 times more leads than we saw previously—so much demand, in fact, that we’re reinventing our follow-up strategy.”
So what’s next?
As the future continues to unfold, there’s a lot on the horizon for RE/MAX Associates and Inside Real Estate as they get ready to launch the first-ever end-to-end experience this fall on Inside Real Estate’s new Homeownership Platform, CORE Home.
“Today’s consumer demands an experience with a single focal point, and that’s exactly what we’ve built,” says Snow. Tightly integrated with kvCORE, the Homeownership Platform enables agents to deliver the seamless experience consumers demand, and keeps agents at the center of this process long term.
Providing a superior, portal-grade consumer experience that spans the entire homeownership lifecycle, from buying and selling to moving to owning and then buying again, the Homeownership Platform allows consumers to track the entire lifecycle process in one place, keeping them informed and connected to everyone and everything they need during each phase of the process.
While there are others out there in a race vying for the homeownership consumer, Inside Real Estate has put the brokerage first, ensuring that this technology empowers the brokerage and agent brands vs. a third-party brand. “This is what sets them apart, and why it will undoubtedly be successful, and why they have always been our long-term tech partner,” says Snow.
“In the end, it all boils down to what the consumer really wants, not what the system can be designed to do,” says Snow, who can’t say enough about the success he’s seen since working with Inside Real Estate. “And the best part is that it’s letting agents deliver what the consumer really wants, not a large portal.
“If you’re not running this type of system with the technology and support to back it up, you’re not going to be around to see what the future holds,” concludes Snow.
Realogy Holdings Corp., and The Platinum 401k, Inc., a retirement plan outsourcing resource, recently announced the establishment of the SPARK Members Pooled 401(k) Retirement Plan. Available exclusively to all real estate agents in the U.S. affiliated with Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran®, ERA® and Sotheby’s International Realty® who are Premium Level members in the SPARK Association of Real Estate Professionals personal and business benefits program, the new retirement plan offers real estate agents an easy and cost-effective way to save for their future as independent contractors.
The new SPARK Members Pooled 401(k) Retirement Plan provides Realogy-affiliated real estate agents the opportunity to easily set up their own 401(k) and take advantage of features such as a higher-than-average contribution limit of up to $64,500 per year and the ability to borrow tax-free for home purchases or other needs. The plan also offers members a significant offload of fiduciary liability, more investment options and low administrative costs.
“As independent contractors, we know that convenience, savings and versatility is essential for Realogy’s affiliated real estate agents, and that retirement planning can sometimes seem confusing and stressful. That’s why we established this unique 401(k) retirement plan for our SPARK members to make the process as seamless and beneficial as possible,” said Realogy Executive Vice President of Product and Innovation Simon Chen in a statement. “With SPARK, Realogy-affiliated real estate agents can now confidently plan for their futures while they work hard to achieve their professional goals.”
“We understand that many independent real estate professionals find it difficult to save for retirement since their income can vary from month to month, or because they are self-employed, they do not have access to an employer-sponsored 401(k),” said Scott Reid, SPARK membership director, in a statement. “Through SPARK in partnership with Realogy, we are pleased to offer our members a way to start saving for their future and do so easily with multiple ways to make contributions from their earnings and without many of the barriers that individuals who establish their own retirement plan can face such as set up costs, ongoing audits and fiduciary exposure.”
SPARK is a membership association that was created by real estate professionals designed to offer real estate agents a selection of personal and business benefits, including access to individual healthcare, disability insurance, dental, vision and life insurance, as well as auto and home insurance, identity theft protection, cyber and data breach insurance, human resources solutions, workers’ compensation insurance and commercial property or building insurance, and a pooled 401(k) retirement plan. Additionally, SPARK offers members a slate of discounts and services, including complimentary access to FOREWARN, an instant risk management, due diligence and agent safety app.
For more information or how to enroll in SPARK, visit www.SPARK-Benefits.org.
Luxury Portfolio International® (LPI), the luxury marketing division of Leading Real Estate Companies of the World®, has unveiled its latest issue of Luxury Portfolio magazine.
The 200-page edition’s linen paper cover and expanded coverage of not only real estate but design, travel and lifestyle represents a shift for LPI as an expert source for all aspects of the affluent lifestyle, according to the company.
In the newly released magazine (Volume 11: No. 2), the focus is on optimism and the home.
“This issue of Luxury Portfolio magazine is a celebration of life at its most refined and cultured, with a touch of exuberance,” said Mickey Alam Khan, president of LPI and the magazine’s publisher and editor-in-chief, in a statement. “It is a call to optimism, with the home at the center of it all.”
The cover story explores designers’ bonds with their dogs in a Q&A with design author and YouTuber Susanna Salk and photographer Stacey Bewkes.
A stylish photo shoot in collaboration with Neiman Marcus, a profile on noted royal biographer Andrew Morton and a roundtable discussion on the future of home with esteemed architects are just a few of the many articles exploring the luxury lifestyle within the magazine’s pages.
“The new-look magazine with its enhanced content and creative design should inspire real estate professionals as well as homeowners, sellers and buyers,” Khan said. “We hope readers return to this magazine repeatedly, pass it along to friends and family or request more copies, and keep it on their coffee table and desks as a key source of inspiration.”
View the magazine’s digital edition.
For more information, please visit www.luxuryportfolio.com.
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For emerging brokerages carving out their niche in the market, recruitment and retention of top talent have become essential to their trajectory. From better pay to an array of tech resources, newer companies are doing anything they can to appeal to agents. For Real Brokerage Inc. (Real), that has meant offering “low splits, revenue sharing, equity and more.”
Real services 32 states and Canada and is among the pool of emerging brokerage models that went public in the past year and a half. The company’s chief executive maintains that Real’s focus is on the people at the closing table.
“We wanted to create a brokerage that understands what agents go through every day and develop a tech platform to set them up for success in a better way,” says Tamir Poleg, founder and CEO of Real. “Agents do a vast majority of the work, and they should be entitled to more money in their pockets.”
More Money in Agent’s Pockets
While Real’s branding leans more on its tech-powered features, the brokerage’s value proposition is its agent financial structure. Emerging brokerage models have traditionally pushed commission splits that favor the agent, and Real is no exception.
The New York-based company offers an 85/15 commission split for agents with an annual cap of $12,000. According to Real’s website, agents who hit the benchmark can earn 100% of their commission for the rest of the year.
Real provide a similar deal for teams that sign with them as well.
Joining the company’s financial perks is a revenue share program that essentially lets agents earn additional cash for recruiting new agents. Through the program, agents can earn a 5% revenue share per capping agent they bring in. The earnings come from Real’s portion of the commission split with the particular agent, according to the company.
Real also offers an equity program where agents obtain company shares in place of their commissions—5% of net commissions—or by hitting annual caps or directly recruiting new agents.
Tech and Support
As far as tech-stacks go, Real relies heavily on its mobile technology platform, allowing the company to offer agents 24/7 support and resources in a paperless brokerage model.
Real provides agents with personalized web pages and Real mobile apps to agents to manage their businesses. The company’s mobile platform leverages SkySlope as an all-in-one transaction management resource along with CloudCMA for real-time market data.
Real also provides Chime CRM at a discounted rate along with other training and agent development programs offered digitally.
The Fine Print
Aside from perks and tools that Real props up, a few aspects of the company differentiate it from traditional brokerage models—for better or worse. Although it has a growing footprint across the nation, Real doesn’t offer office space for its agents.
Instead, the tech-focused company encourages agents looking for office space to use flexible workspaces.
A sizable commission split and other financial perks are appealing points of Real’s agent plans, but it comes with some conditions, including a $149 start-up fee.
The brokerage touts zero monthly fees, but the agents still pay a $500 annual fee which gets deducted from their first two transactions each year. They also charge $225 per transaction fee for sales after an agent hits their yearly cap.
Agents are also responsible for joining and paying for their membership to a local board of REALTORS® and MLS.
Thus far, the focus on improving the agent experience has helped Real increase its footprint. Coming months and years may see a growing emphasis on the client-side experience, according to Poleg.
While he didn’t disclose what those plans entail, Poleg hinted that a potential consumer-side improvement could be on the horizon by the end of the year.
“I think the future is more exciting because we’ll be building a journey where consumers, whether you’re trying to sell or buy a home, will probably enjoy a different level of service and experience when you deal with our agents and the software layer that we will put on the process,” Poleg says.
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news to email@example.com.
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The commercial real estate sector is on the path of robust recovery, according to new data from the National Association of REALTORS® (NAR) that analyzed 390 commercial markets, finding positive net absorption and strengthening rents across the multifamily, industrial and retail property markets as economic production rebounds to pre-pandemic levels.
While the apartment and industrial sectors are experiencing historically low vacancy rates, retail reports a more gradual recovery as consumers make their way back to in-person shopping.
One area suffers, however. Office absorption rates and rents have declined and many occupied spaces are largely empty due to a lack of workers. Small- and medium-sized metropolitan areas, however, are experiencing increases in office occupancy rates, outperforming the national average and most large cities.
“Even as the economy makes a steady recovery, the one sector still lagging behind has been the office market,” said NAR Chief Economist Lawrence Yun in a statement. “Work-from-home flexibility looks to be the defining shift of the new post-pandemic economy.
“Despite the overall challenges, however, some local markets are bucking the trend with more office occupancy and rising rents,” added Yun. “A combination of strong in-migration and relatively lower cost of doing business is driving these growth markets.”
As part of NAR’s C5 Summit, held in New York City, the association unveiled the top office markets:
“C5 is the nation’s top gathering of commercial real estate and economic development professionals,” said NAR President Charlie Oppler in a statement. “Commercial real estate plays a vital role in stimulating the economy and revitalizing communities. Whether it’s sales, property management, financing or development, C5 will help facilitate important investment and partnership opportunities.”
The increase in single-family home price tags showed no signs of slowing in July as the most recent S&P CoreLogic/Case-Shiller Indices showed another record surge.
For the fourth consecutive month, home prices surged with a 19.7% climb in July—up from 18.7% in June. Experts note that July’s numbers marked another three-decade record in price growth for that month.
All 20 cities saw monthly price increases as the 10-City Composite increased 19.1%, while the 20-City Composite by almost 20%, with 19 of the markets reaching all-time high price gains—Chicago was the only outlier.
While all 20 cities showed price growth, experts note that 17 markets gained more in the 12 months ending in July than they had in the 12 months that ended in June.
Maintaining their top spots on the price gain list, Phoenix, San Diego and Seattle recorded 32.4%, 27.8% and 25.5% gains, respectively.
The complete data for the 20 markets measured by S&P:
Las Vegas, Nev.
Los Angeles, Calif.
New York, N.Y.
San Diego, Calif.
San Francisco, Calif.
What the Industry Is Saying:
“July 2021 is the fourth consecutive month in which the growth rate of housing prices set a record…This month, New York joined Boston, Charlotte, Cleveland, Dallas, Denver, and Seattle in recording their all-time highest 12-month gains. Price gains in all 20 cities were in the top quintile of historical performance; in 15 cities, price gains were in the top 5% of historical performance.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. July’s data are consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.” — Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices
“Today’s S&P Case-Shiller Index reflects the competitive nature of the 2021 summer housing market, with interested buyers, including everyone from families looking for homes in anticipation of an in-person, back-to-school season to buyers seeking larger homes in desirable suburban markets.
“However, July also saw a rising wave of homes coming to market as many homeowners decided to press forward with pandemic-delayed plans, which spurred sales activity. The flow of fresh inventory on realtor.com®, which continued into August, offered buyers more options and helped take some of the sting out of skyrocketing prices and the frenzied pace from earlier in 2021.
“While prices continue to rise, the rate of growth has been moderating. This is expected to temper as we move further through the fall season and white-hot market competition mellows into more typical seasonal patterns. For many buyers, autumn is already providing better buying opportunities, with fewer competing bids, the return of contingencies and more listings with price reductions.” — George Ratiu, Senior Economist, realtor.com®
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news to firstname.lastname@example.org.
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The Federal Housing Administration (FHA) announced new and extended COVID-19 relief options for borrowers recently or newly struggling to make their mortgage payments because of the pandemic and for senior homeowners with Home Equity Conversion Mortgages (HECMs) who need assistance to remain in their homes. These measures respond to the continued impacts of the pandemic and are part of FHA’s continuing evolution of its COVID-19 policies so that the right tools are in place to help borrowers.
Specifically, FHA made the following changes:
“Our top priority is to help as many individuals and families as possible to recover from the COVID-19 pandemic and keep their homes,” said Principal Deputy Assistant Secretary for Housing Lopa Kolluri in a statement. “For FHA, this means that we will continue to work through all of our channels—mortgage servicers, housing counselors, and our other federal partners—to ensure we get the positive outcomes struggling homeowners need.”
Across the U.S., home prices increased in July by 1.4% compared to June. The latest Federal Housing Finance Agency Housing Price Index (FHFA HPI®) also reports that house prices have risen 19.2% YoY.
Census divisions breakdown:
West North Central: +0.8%
South Atlantic: +1.9%
West North Central: +15.6%
“Record appreciation rates for the U.S. continued in July,” said Dr. Lynn Fisher, FHFA’s deputy director of the Division of Research and Statistics in a statement. “Although the monthly pace of increase slowed in most Census Divisions in July, four areas experienced year over year growth rates in excess of 20 percent and all saw annual gains in excess of 15%.”
Over the last few months, the luxury real estate market has experienced the return of a more normal pace of doing business for those looking to buy and sell their homes. Initial trends also indicate a moderation in the levels of sales and price increases, according to the latest report from The Institute for Luxury Home Marketing.
However, while the frenzy may have settled, it’s important to note that prices are still trending upwards. This is because an inventory shortage remains the dominating factor affecting current market dynamics.
During the previous 18 months, an extraordinary demand from buyers prioritizing single-family homes with large square footage, extra rooms, outdoor space and privacy above all else, was the dominant trend.
In the last six months, demand for attached properties—especially condos which stalled in 2020—started to see an uptick, as buyers realized that greater inventory levels and more reasonable pricing had opened the door of opportunity.
As we move into the Fall season, we review both new opportunities and trends that homeowners and investors should consider during their property search.
A Return to Urban Living
An increasing number of buyers are starting to return to larger metropolitan cities for multiple reasons, whether it’s simply missing the lifestyle they had before circumstances changed, to looking for a potential investment opportunity.
These buyers are recognizing that while city prices did not drop significantly, they did soften due to high inventory levels. Similarly, many residents are seeing the chance to buy urban property at comparatively discounted prices against the skyrocketing prices found in their suburban communities.
Still, this door may close soon, as also in the mix are foreign investors (now that travel restrictions are easing) and first-time buyers who are heading to urban markets looking for the opportunity to purchase a larger property at more affordable prices.
Experts are predicting that city markets may well see stronger returns on investment than their suburban counterparts, which are already reporting a slowdown in the acceleration of their price increases.
Emerging City Neighborhoods
While cities are starting to experience an influx of new and returning buyers, some of the best deals may be found in the emerging neighborhoods. Prior to the pandemic, many of these inner, mid-city communities and industrial areas had been on trend for gentrification.
Cities from Vancouver and Toronto in Canada to Atlanta, Austin, Chicago and San Francisco in the U.S. saw their emerging neighborhoods stall in 2020, as people chose to purchase away from the more crowded metropolitan communities.
Today, emerging neighborhoods not only afford buyers better values, but have the potential to create greater equity returns. These are ideal for buyers ready to invest in a property for the longer term; understanding that they are buying early and will need to wait for the neighborhood to evolve and mature.
Opportunity in Compromise
In highly popular luxury markets with little to no inventory, compromise might be the only option. However, it could ultimately be the right one. Opting to purchase a condo or fixer-upper rather than a turnkey property may provide buyers other opportunities worth considering.
Firstly, less popular properties come without the added pressure of feeling desperate to purchase sight unseen or enter a bidding war. Secondly, the longer a property is on the market the more likely the seller will be open to negotiation.
But more importantly, even for highly affluent buyers, getting a foothold in their preferred market despite the property not being ideal, allows them to keep up with price appreciation as well as giving them the advantage of purchasing the property they really want, once it comes on the market.
Home Field Advantage
Two of the pandemic’s effects on the luxury real estate market have been the purchase of properties sight unseen and multiple-offer situations. Unfortunately, this has created a negative trend in which desperate buyers are often feeling the need to make extraordinary offers in order to secure the property—only to terminate the sale when the house proves not to meet their requirements.
While there are usually back-up offers, this still impacts the seller’s timeline and budget, especially if they are already in negotiations for a new property that may be proving equally popular.
This can give a local buyer the home field advantage, especially if there is a multiple-offer situation. Sellers are recognizing that local residents not only know the surrounding community and where they want to live, but given their proximity will have had the time to view the property prior to making an offer.
A buyer who has seen the property in person and who is able to move quickly will almost always be more appealing to a seller.
In 2020 and early 2021, the priority was to purchase larger homes offering more space, privacy and safety—and the value of fulfilling these requirements often superseded the cost factor.
However, as we enter the latter part of 2021, and mainly as a result of the historic rise in property values over the last 12 months, many affluent are now starting to reprioritise their purchases with a keen eye on market stability and potential returns.
Which trends will see better investment return—larger estate-sized homes, properties with views, or those located on expansive land or closer to amenities—are questions being asked of our luxury real estate professionals.
The answer may lie in reviewing the sales data for the last six months, which reveals that luxury mid-sized homes ranging from 5,000 to 10,000 sq ft are proving to be in the greatest demand.
Although people want extra space, they do not want to be overwhelmed. Equally, land and privacy are still important, but as things return to normal the shift back to living closer to amenities and locations closer to work may become the main priority for some once more.
Time to Diversify
On the opposite side, the opportunity to work from home, or anywhere, will still play a significant part in the choices of the wealthy. Now that remote working is mainstream, there is an increasing focus on investing in real estate that aligns with people’s lifestyle choices.
Vacation and second-home properties are expected to see a continued increase in popularity, especially for those who need escape options from their primary property. People are continuing to seek diversity in their lifestyle and owning multiple properties, whether they are in the city, mountains or beach locations, is an important facet in meeting that requirement.
Demand is predicted to drive more development in resort and vacation markets, so properties in well-established second markets will only see an upward pressure on their values.
Growth of Cryptocurrency Buying
One of the hottest topics currently is the immense wealth being generated in the cryptocurrency market—despite its ups and downs.
As a result, there has been an increase in the number of sellers and developers who are making their properties available to crypto-buyers. For holders of cryptocurrency, looking to diversify their portfolio, real estate’s stability and long-term growth potential is proving to be an asset of choice.
The volatility of cryptocurrency has long been its biggest challenge for those looking to divest funds out of this digital currency. Equally how sales are handled using cryptocurrency have not been standardized in the real estate industry yet, so working closely with a broker and an attorney in the negotiation and preparation of the contract is of the utmost importance.
Ultimately as different options emerge, including borrowing against the value of crypto currency and the ability to do direct trades within this digital world, we can be assured that crypto-buyers who have generated immense wealth are going to have a major influence on the luxury real estate market.
Read the full report here.
For more information, please visit www.luxuryhomemarketing.com.
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Elm Street Technology recently announced the acquisition of OutboundEngine, a marketing automation software company based in Austin, Texas. The acquisition of OutboundEngine complements and expands Elm Street’s Elevate platform, which provides an end-to-end suite of real estate technology and marketing services.
“Elm Street Technology and OutboundEngine share a similar vision and culture, which we are confident will make this a powerful combination,” said Prem Luthra, president and CEO of Elm Street Technology, in a statement. “Both of our companies are striving to create a streamlined, simplified user experience for the real estate community and complementary industries. Joining forces allows us to collectively focus our attention on creating a true ‘one-stop shop’ for all aspects of real estate marketing and productivity.”
“We are in a time of sweeping digital change and customer-focused product evolution,” stated Marc Pickren, CEO of OutboundEngine, in a statement. “OutboundEngine’s ability to align with a progressive and forward-thinking company like Elm Street Technology will empower us to evolve our products and services at an aggressive pace that’s never been seen in the real estate sector.”
“Not only does OutboundEngine’s tech stack add an additional layer of opportunity for our current real estate client-base, they also are focused on servicing a larger audience segment such as mortgage and lending,” adds Prem Luthra. “As we expand more aggressively into these markets in 2022, an alliance between our organizations was an obvious choice and we’re thrilled to welcome the entire team into the Elm Street Technology story.”
Early in 2020, Elm Street Technology announced a strategic partnership with Aquiline Capital Partners, a private investment firm based in New York and London investing in companies across financial services and technology, business services and healthcare. This partnership has enabled Elm Street Technology to accelerate its organic growth and to pursue strategic acquisitions. OutboundEngine is the tenth acquisition for Elm Street Technology since the company’s founding in 2016. Past acquisitions have included companies such as VoicePad, FlowROI, IDX Broker, eMerge, AgentJet, Listingbook, RLS2000, Morris Marketing / IXACTContact, and Consolidated Knowledge.
For more information, please visit tryelevate.com.
John L. Scott, a full-service residential real estate company serving the Western U.S., celebrates 90 years of business. What began in 1931 with a young, Scottish immigrant named John L. Scott setting up a shop in the burgeoning city of Seattle has since evolved into over 100 offices with more than 3,000 agents throughout Washington, Oregon, Idaho and California.
While this past Labor Day marked the official 90-year milestone, John L. Scott has been celebrating all year long with a myriad of community-focused initiatives.
In an effort to support diverse students and educators in the communities that need it most, John L. Scott announced it has committed to funding four scholarships for diverse candidates, totaling $90,000, through the University of Washington’s College of Education. These scholarships will provide candidates with necessary funding for obtaining teacher’s certificates to teach into the school system.
“For 90 years now, our higher purpose has been devoted to ‘Living Life as a Contribution,’ and I can’t think of a more worthy cause than creating opportunities for diverse teaching candidates,” said J. Lennox Scott, chairman and CEO of John L. Scott, in a statement. “The need for more diversity in education is at an all-time high, and research shows that if a youth of diversity has even a few teachers of diversity, there is a 38% greater chance of individuals graduating high school and a 32% chance of them moving on to obtain higher education. We have high hopes that this initiative will assist in creating a quality education experience for more youth of diverse backgrounds, which in turn will lead to the creation of more jobs, inclusion, advancement and equity.”
The company also committed to funding an additional two scholarships in the Portland Metro area and one in the Spokane Metro area. These two markets, alongside Seattle, are the three major segregated areas in the Northwest due to the tragic, former government and societal practice of redlining limiting where people of color could live— which we are still dealing with the ramifications of today.
In attempts to further diversity, equity and inclusion in real estate, John L. Scott is also advocating for mandating diversity education for brokers and associates, as well as removing racist and discriminatory language from all property titles. John L. Scott chairman and CEO J. Lennox Scott is also joining the leadership of the National Association of REALTORS® Diversity Committee. With all of these efforts combined, John L. Scott aims to inspire and spur change within other companies across the country that will produce a lasting impact and greater equity for all.
For more information, please visit www.johnlscott.com.
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What are ADUs? Some call them “granny flats.” Others call them “she-sheds” or “in-law suites.” Recently, “tiny house” became a trendy topic among certain builders.
Nearly all of these—regardless of terminology or function—will fall under the category of “accessory dwelling unit,” or ADU. Amid a nationwide housing crunch, this alternate model of living, investment and space-sharing has seen massive growth as developers and homeowners seek ways to integrate post-pandemic lifestyles and policymakers scramble to address an acute shortage of living spaces.
But what is the value of an ADU, from a real estate perspective? Are consumers seeing them as worth the significant time and monetary investment? Will the trend of local authorities relaxing restrictions change the current market, and if so, how? Can ADUs outlast the current unprecedented housing crisis?
Not all of these questions have answers. But according to the people who are building, regulating and studying ADUs, if you are not asking about them right now, you might be missing out.
Amy Allgeyer is the founder of Architect Inc., a building company in Boise, Idaho, that has come to specialize in ADUs. She said that in her market, interest in these specialized structures has been creeping up over the past five years, but exploded after the onset of the pandemic as people sought more living space or more value in their fast-appreciating properties.
Recently, she said she gets multiple calls a week from people interested in the possibilities of an ADU.
“Sort of a perfect storm—it’s a lot of different things that are coming together to help people get ADUs that they want, and encourage people to want ADUs,” she says.
The ABCs of ADUs
The first question most people have about ADUs is quite simply, what are they?
That, like a lot other things in the ADU world, depends on where you are. At the basic level, ADUs are separate living spaces on the same lot as another primary structure—sometimes physically separated from it, sometimes not.
Most states allow cities and counties significant latitude in defining and permitting the structures. Building codes in some cities restrict free-standing cottage-style ADUs more than attached structures. Often there is a requirement they offer separate amenities—bathrooms or kitchens—but not always. Maximum sizes can range from a couple hundred square feet to over a thousand. Permitting ADUs can be as simple as a quick visit to a county office or as complex as a multi-month public hearing process.
Local officials also seek to conform ADUs to local conditions or preferences. According to Sarah Berke, program officer at the Family Housing Fund in Minnesota, ADUs in that area must have frost-proof foundations so they can endure the harsh northern winters. Voters in the historic Boston suburb of Salem recently voted on a new ADU ordinance that, among other things, requires property owners to replace any trees they chop down when building an ADU. There are literally hundreds of other potential requirements, from street setback to paint scheme.
Across the country, though, policymakers are trending toward loosening these restrictions, making ADUs easier and cheaper to build and massively expanding the number of properties and neighborhoods where they are allowed, which potentially creates a new market and vast new opportunities for both homeowners and renters.
Why It Matters
There is one thing that nearly everyone agrees on in regards to ADUs: they have a tremendous value right now in a tight housing market.
“We do have more people who are interested in having their property help pay their mortgage in the wake of COVID,” Allgeyer says. “Definitely in the past two years, I’m seeing a lot of home offices going into ADUs.”
It is not clear yet whether a new interest in ADUs will have a lasting impact on the market—the kind of impact that could address supply scarcity or significantly alter regional trends or consumer behavior.
But the “perfect storm” Allgeyer referred to is a combination of policy, market conditions and consumer attitudes that right now are making ADUs a red-hot opportunity in the real estate market.
In Salem, Amanda Chiancola serves as the city’s Deputy Director of Planning. She is also a long-time advocate of inclusionary housing who recently helped spearhead an ordinance that serves as a major overhaul in how the town regulates ADUs.
In the three months since that ordinance was approved, the city has already surpassed the number of ADU permits it received over the previous three years, she says.
“We get calls all the time from people…who say, ‘I can’t afford to live here, I’m driving two hours to work everyday,'” Chiancola says. “We hear these calls and emails all the time.”
With a large proportion of their housing tied to single-family zoning, a lack of living spaces—and affordable units in particular—Salem needed to find a way to expand and diversify its housing stock in a meaningful way. Enter the ADU.
The focus for Salem is affordability, according to Chiancola, and so the ordinance actually set a maximum rent for ADUs—$1,635 for a two-bedroom and $1,214 for a studio. Even with this limitation, Chiancola says that estimates by her office projected that a property owner financing an ADU through a home equity loan or second mortgage will pay less than half of that cost a month—$500-700 on average.
That will hopefully make building an ADU an attractive investment for existing homeowners, she says.
In Boise, Allgeyer says that many families use the rental income from an ADU to allow them to move into an otherwise unattainable neighborhood, seeking better schools or shorter commutes.
“Younger families who wouldn’t be able to afford that property in the really good school district, but they want to raise their kids there and so they buy a house with an ADU they can rent out,” Allgeyer says
“It helps a first-time homebuyer be able to afford a mortgage,” Chiancola adds.
An ADU also adds “fantastic” resale value to a home, according to Allgeyer, because even if the buyer is not interested in renting the unit, ADUs are incredibly flexible no matter the demographic or needs of the homeowner, serving as everything from a caregiver’s apartment for an older resident to office space for young professionals.
“Anywhere between [age] 30 and 90—it’s pretty evenly split,” Allgeyer says.
How ADUs can be used is something in flux across the country, driven mostly by policy at the local level. Many places—Salem being one of them—have banned short-term rentals like Airbnb from utilizing ADUs. Town officials actually scan those company’s websites to make sure homeowners aren’t surreptitiously listing them, according to Chiancola. Boise and other places allow Airbnb rentals, which Allgeyer has seen become very lucrative for homeowners especially in hot housing markets.
“I see ADUs really being enticing in an urban area,” she says.
Berke says that as the price of construction falls, more and more people will be ready and willing to build ADUs. A handful of developers are actually adding ADUs into their single-family constructions in the Twin Cities area, according to Berke, offering that kind of flexibility from the start.
“You can build a single-family home with a basement space that is suitable for conversion ADUs, and that creates a value addition opportunity in the future,” she says.
Minneapolis was ahead of Salem and many other cities, expanding their policies for ADUs in 2014—partly in response to an acute housing shortage that a recent study by the Minnesota Population Center rated as the worst in the country.
Just changing the policy created a huge influx of ADUs as many homeowners found that rooms they had rented off the books or garage conversion projects now qualified as ADUs—with the potential benefits of being able to advertise the structures more traditionally when selling or renting. Many only cost a few thousand dollars to permit or finish up, according to Berke.
All of this is coming together to allow more mobility, more flexibility, and potentially a shift in attitudes as people find new rental opportunities and a new way to look at work-from-home and age-in-place scenarios.
Despite all this, Allgeyer says that she does not personally see the run on ADUs outlasting the current housing crunch. Once urban areas get their fill of new ADU construction, she says the trend will peter out in suburbs and rural areas where space is less of an issue.
But for the cities and neighborhoods that are seeing an ADU boom right now, the potential for a transformational change is there, Berke suggests. Though Minneapolis has seen a relatively small increase in ADUs since they changed their policies, adding those structures to just 1.5% of eligible properties would make a huge difference in the local market.
“That could be 11,000 new housing units. So the impact on any one block…won’t change anything on how your neighborhood feels. But if you add a little here and there, it really does add up to a lot of housing,” she concludes.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to email@example.com.