Aggregators and Profits

Q: What do you predict happening with third-party aggregators, especially the possible Zillow/Trulia merger, and anything with realtor.com?

Hugh Rider: The News Corp purchase of the operator of realtor.com is a game-changer. News Corp offers a range of expertise that can only enhance the reputation of realtor.com. The resources this media giant brings to the table will add to the breadth of this online space to benefit consumers.

Thad Wong: The syndicated sites have now become larger than the largest brokerage companies.  They have also won the hearts and minds of the consumers.  The leadership teams they have put together are incredibly sharp and impressive. I see them playing a much stronger role with brokers moving forward.  If a brokerage company is not enhancing all of its listings to feature the listing broker exclusively alongside his or her own listing, they’re doing their brokers and clients a tremendous disservice, and they’re going to lose market share.

Jeff Gregory: I expect the Zillow/Trulia merger to be completed. I look for realtor.com, under its new ownership, to be much more competitive and aggressive than it has in recent years. I predict the emergence of at least one other key player into this arena in the next 12 months – and such an occurrence could redefine the “norms” of what the industry expects from these aggregators. A year ago, I suspect that few predicted where we are today. I think the next 12 months will prove even more exciting than the last.

Q: How confident are you that your real estate brokerage business will be more profitable in the next 12 months than it is today?

Linda Feinstein: A lot of profit in any business comes from within, meaning the feeling of confidence and renewed hope. There’s certainly business out there for the ambitious agent. I feel interest rates are going to remain low the next 12 months, and I know in Hinsdale there were more new housing starts than there have been in the last four years. That is a very positive sign about the future of the economy.

Kathleen Malone: I do a lot of tracking – current deal tracking, past deal tracking, month-by-month deal tracking, future sales projections – so I’m very confident. My estimates for projected transaction volume are looking very good for 2015, so that’s encouraging. For people who have felt that the fall has been slow, it’s been a really good time to assess what was effective in the past and what things need to be improved upon. I’ve taken a lot of time, money and energy over the last six months really investing in my business, building a team and building better infrastructure and really working on how to better client relationships, communications and technology. I’m very hopeful and confident that that will pay dividends in 2015 and 2016.

Q: Is the industry attracting more agents?

Hugh Rider: Real estate continues to lure new agents. We continue to see an increase in the number of students in our Realtors real estate school, and in our association membership. They see the opportunity to capture the momentum of a rising housing market.

Jeff Gregory: Historically, as the market becomes more active, the number of agents increases. That trend has held true for the past few years, and will likely continue.

Jim Kinney: Yes. I’m currently president of the Illinois Association of Realtors, and right now, we are seeing about 400 new licensees a month. We’re looking to see that continue, and I think that as the market continues to solidify and get better, you’re going to see the real estate arena again being viable for young people to consider as a career choice. I expect we’re going to see more people coming back into the ranks of Realtors.

Scott Lackie: I think the number of agents nationwide will increase, but not like it has in previous recoveries.

New Construction

Q: What do you see happening with new construction?

Kathleen Malone: In general, in 2015, we’re going to continue to hear a lot of announcements for slated new construction. It’s a matter of when do these new buildings get out of the ground. I don’t think anything is going to deliver in 2015, but we’re going to see a lot of new construction contracts. There’s buildings in the Gold Coast, River North and River West, and they’re all doing extremely well with projections, but they need to be built in order to close.

As far as single-family home inventory, West Town has had a huge surge in new construction. Lincoln Square, Roscoe Village, Lakeview and Lincoln Park, have as well, but the cost of land went up significantly in those areas. There’s always that margin for a new construction builder for a single-family home. For example, there are land purchases that were $400,000 or $450,000 two years ago, and now they’re pushing $600,000 in value. And in some parts of Lincoln Park, there are standard Chicago lots going for over a million dollars. That certainly can impact things. Construction costs have also gone up, so it’ll be interesting to see how that impacts projects not currently underway.

Christine Lutz: There are plans already for mid-sized (40 units or less) new construction for-sale housing. Because the rental market is so overheated, there might be an opportunity to convert some rentals into for-sale housing, but it’s going to get tricky with them being able to take up their lenders. I don’t know how quickly that’s going to happen, but I’m hoping that we’ll see some larger conversions with the luxury rental.

Q: What new development trends have you seen in 2014 that will likely stick in the future?

Christine Lutz: The taste and expectations of the buyers just keep getting more and more and more. The bar keeps getting raised for quality.

Kathleen Malone: For new construction homes, we’re seeing a lot more contemporary design, at least in the city, and certainly in West Town, Bucktown and Wicker Park. We’re seeing a lot more cool, contemporary finishes, as opposed to very ornate, traditional brick and limestone homes. We’re seeing more green energy practices throughout homes, and more steel and glass construction with slicker kitchens.

In larger developments, proposed new construction for condominium buildings veer more toward steel and glass construction, people are very interested in views, floor-to-ceiling windows and high ceilings. Buyers want designer kitchens that are very high-end, and have a big focus on amenities and parking. They want to be sure that these buildings are stable, and buyers are much more savvy about what the building makeup will be. The trend in the condo market in River North and the Gold Coast is definitely steered more towards large condominium inventories with fewer units but larger square footage.

The trend is largely the result of people staying in the city and raising their families, as well as empty-nesters returning. The suburban market is catching up, as well, so people are finally selling their homes for a palatable number and coming back to the city. However, they’re not going to live in a 1,200-square-foot condo. Suburban emmigrants are going to want 2,500 or 3,000 square feet of space.

Q: will the market continue to be dominated by wealthy buyers?

buzz Ruttenberg: I think we’ll certainly see some of that because of the prime land locations are still there. I think that the wealthier had less negative impact on their overall well-being, but we found that buyers in the $500,000 to $1 million range, they’re certainly financially comfortable. They’ve been dominating a lot of our sales activity and we’d like to develop more property for that segment of the market