Today, Erion Shehaj makes his debut here at Agent Genius. Erion is a real estate broker in Houston, Texas at Signature Real Estate specializing in the niche of conservative real estate investments. Erion has a BA in Accounting & Finance and combines that with his passion for people in his practice. Erion’s writing has proven to make waves, so we look forward to his joining us- we’re sure he’ll make your gears turn!
The greatest market economy at work
When I was born in 1981, my country was under one of Eastern Europe’s most repressive communist regimes. How communist? Let’s just say that we broke our alliance with the Russians and the Chinese because they were “getting too soft”. A decade later, as the winds of democracy were blowing south from Berlin, I heard terms like “pluralism” and “market economy” for the first time. When I finally made it across the pond as an 18-year old finance student, I got to see the greatest market economy at work and I was amazed at its sheer size, efficiency and modus operandi.
Like it often happens on your first visit to Manhattan, once the amazement wore off, I started paying attention to the actual details. To my surprise, I noticed that at this stage of this mamoth economy, growth trumped performance. It wasn’t about profitability as much as it was about how many more stores were being opened, small companies being swallowed, loan applications being taken, or new homes being built. This blurred focus on growth alone was further being fed by a “get in and out” culture of daytraders, derivativers (I just trademarked that term), flippers and speculators looking to make crazy scratch on the latest market figures uptick. One hell of a party. Now, we need to “get back to the basics”, tighten our regulatory belts and return to boring old Monday. Right?
I think exclusive focus on growth while neglecting timeless business principles inevitably leads to bad decisions, bubble-bust cycles and as the latest recession showed, even possible death of the economy.
The evidence for bad decisionmaking caused by exclusive focus on growth is everywhere. More than a business, Starbucks was an unbelievable phenomenon that took the world by storm one uberpriced latte at a time. During its expansion in the 1990s, they were opening stores at a rate of one store per weekday. Focus on growth alone led the company to open stores in locations that had no chance of thriving. In 2008, the company closed 900 underperforming US stores and it’s now focusing on the profitability of the rest. Same thing with McDonalds in 2002. The latest financial crisis also offers a plethora of examples (i.e. Countrywide, Merrill Lynch, AIG) where once solid businesses seriously underestimated risk due among other things the need to “hit the number”. Real estate brokerages that rode the high of ever rising prices opened sometimes unnecessary offices with lots of fatty overhead.
Hyperactive Growth is Unsustainable
At this point, many of you are thinking I’m against growth. Not so in the least. Real, natural growth is great for business when supported by (wait for it) actual profits. The level of growth that is expected of companies in boom times is unreal, unsustainable and it leads to boom-bust cycles. Do you really think that Starbucks or Wal-Mart can continue to open 400 new stores a year forever? There’s got to be a point where they will run out of countries. Lowes and Home Depot can convince customers to “do it themselves” but those remodeled kitchens and backyard paradises would not be possible without all those HELOCs. The Countrywides of this world cannot get people to ATM their homes enough without defaults coming back to bite them. In turn, real estate companies cannot keep up with the cost of bloated staffs when sales drop due to inventory spikes courtesy of those defaults. Full Circle.
We don’t need to get back to the basics. We must never forsake them.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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