Cover story: 2020 Predictions

by Timothy Inklebarger

It’s almost 2020, if you can believe it, and the future of the real estate industry is, perhaps, more uncertain than ever. Agents not only will contend with the potential of rising interest rates and an economic recession ­– the presidential election next year and continued rise of iBuyer companies and other new technologies will further contribute to the reshuffling of the deck for those in the industry.

We caught up with some of Atlanta’s real estate industry leaders to help us read the tea leaves and predict what the market will bring in the coming year. Without further ado, we’ll leave it to the experts to tell the story.


Also in this issue

What do Atlanta agents predict for the coming year?


 

The Market

Can you share one outdated idea about real estate that you keep hearing people repeat, regardless of the fact that it’s not accurate or pertinent to the real world?

Steven Winokur, Angel Oak Capital: That today’s non-prime marketplace is the same as the old subprime; that couldn’t be farther from the truth. The big difference is today’s loans require a substantial down payment (skin in the game) as well as establishing an ability to repay. These have created a market of default rates that are much lower than conventional default rates.

Torrence Ford, RE/MAX Premier: I keep hearing there will be a real estate bubble in the next year where values will tumble to unbelievable lows due to buyer perception of happenings in the U.S. political scene. I do not foresee a bubble here in the Atlanta market because of the strong job market that remains. As of October, Atlanta had over 100 hotels slated for construction. This much investment wouldn’t be pouring into a city destined for economic failure.

Laura Rittenberg, Coldwell Banker Residential Brokerage in Atlanta and the Carolinas: One outdated idea about real estate is that technology will overtake it and eliminate the need for real estate agents. Real estate is, and always will be, a person-to-person transaction. Technology assists our agents and needs to be adopted to streamline their business and meet the needs of the consumer; however, the nuances involved in real estate transactions require an agent, whether representing the seller or buyer.

Collette McDonald, Collette McDonald & Associates: That flipping property is easy money.  Most “investors,” or people who have watched too much HGTV, anticipate a much larger return on investment than is realistically possibly. Once they figure out the cost associated with acquiring property, fixing property, then reselling the property, most realize they should keep their day jobs or become an “Insta influencer”, which is more profitable.

 

Where will the hottest communities and neighborhoods be in 2020?

Caroline Harris, eXp Realty in Georgia: Westside, Upper Westside, English Avenue, Grove Park, Bankhead and anywhere close to Bellwood Quarry.

Rittenberg: Communities that offer an exciting lifestyle, entertainment venues, outdoor living and affordability are generally desirable neighborhoods for first-time homebuyers. Areas that are close to public transportation and hot job areas will also remain popular, such as Buckhead.

Ford: Atlanta has a few suburbs surging quickly in the Canton, Woodstock and Holly Springs areas. New construction under $300,000 will continue to be hot within a 15-mile radius from the center of the city.

McDonald: ITP will always stay strong. The key to Atlanta is staying near the transportation corridors. Traffic is only going to get worse, and people want to enjoy their lives versus being stuck in traffic all day. The baby boomers, however, are increasingly moving north outside of the city to enjoy places like Avalon and downtown Roswell. There is definitely a shift of millennials wanting to be closer to work and good schools while baby boomers are looking for a more social lifestyle close to great shops, restaurants and fun. This can be OTP or even Midtown!

 

Technology

What new technologies will your company be adopting over the next year?

LeAnne Long, RE/MAX Around Atlanta East: RE/MAX will be using booj; our new neighborhood search will be a game changer. This will allow clients to have a more personal search tool to their exact needs and be the first to see new listings as they hit the market – it’s essential because inventory is so tight!

McDonald: Cloud brokerage, so we’ll be sharing ideas, education and coaching across the nation versus just one part of the metro market.

Rittenberg: Listing Concierge, our exciting new technology platform that integrates service and marketing with the needs of the agent, was launched this year. Coldwell Banker will be launching more of these business solutions in 2020 to provide agents with the best technological tools to service the consumer and solutions to meet the unique circumstances for each listing.

Ford: We are adopting automatic handwritten note companies and automatic video messages to clients via BombBomb. We are using companies like Opcity and First2Contact to prospect online leads for us. We are also using RE/MAX traffic maps to guide clients on the best community purchase to cut down on time spent in traffic.

 

What impact do you see iBuyers having on the Atlanta real estate market over the next year?

Long: I genuinely think it’s another fad ­– fads come in fast and go just as quickly! After 20 years in the business, I’ve seen so many. Buyers and sellers are already starting to see these companies are gimmicks. Nothing takes the place of personal service, and great real estate professionals who have their interest first over profits. My motto is: “If it sounds too good to be true, it probably is.” Beware!

McDonald: Atlanta has a lot of locations that look great on paper but in reality are nightmares for schools, transportation and commercial infrastructure. I think 2020 will be the year that iBuyers buy and get burned by poor investments without the proper advice from their trusted real estate advisers.

Ford: The iBuyer market is causing rental rates in Atlanta to continue increasing. These investors require a 6 to 10 percent return on investment, which pushes up rental rates. With rental rates being increased, it continues to place pressures on the hotel and tourism industries because investors are also buying homes and doing Airbnb. iBuyers in Atlanta will also help separate the full-time agents from the part-time agents, as the cream of the crop will have to rise above to compete with Zillow Offers, Opendoor and Offerpad. I’ve been successful this year by offering additional services such as cutting lawns, staging homes and offering deeply discounted contractors. I’ve also offered to manage repairs for free, plus a few other ideas to stay ahead of the curve by offering a full level of services to sellers in Atlanta.

Harris: There is a place for iBuyers, but it’s not for every seller. If sellers need to sell fast for whatever reason, this could be a good option for them. But most of the time, there is money (or seller’s equity) lost at closing, and I don’t foresee many sellers wanting to sell for less than what a non-iBuyer sale could bring, unless their situation calls for it. Atlanta already has several cash buyers ready to buy without all the added paperwork and fine print. Once sellers understand equity they could lose, they may think twice before committing to iBuyer or they may prefer to work with a local cash investor instead.

Rittenberg: We don’t see it going away, but it’s a small fraction of the market. Smart companies will continue to develop programs to meet consumer needs. That’s why we launched RealSure, which offers sellers with qualifying properties a cash offer upon listing, while a Coldwell Banker real estate agent markets their home for an even higher price. RealSure is already in select markets and will roll out in Atlanta in the near future.

 

How are tech changes going to affect the day-to-day business of agents and brokers?

Harris: Technology changes every day and real estate is definitely becoming more and more tech driven. We are cloud-based, meaning I log in to our world campus and appear as an avatar to attend local, national and even global meetings. I no longer have to drive in Atlanta traffic to attend meetings, and I am able to collaborate nationally or even internationally with other agents, brokers, vendors and clients.  We have done away with the brick-and-mortar office building because it is really a waste of money, space and time. This is just one example of how technology is changing our day-to-day business.

McDonald: Broker profit margins are decreasing and agent profit margins are increasing because they are becoming more autonomous and efficient. Companies like eXp that are cloud-based will continue to grow with the technology momentum.

Rittenberg: Any technological platform for real estate must be both easy to understand and use. Besides Desk and Listing Concierge, our Agent X real estate voice assistant is a game changer. Our agents can talk with Agent X on the Amazon Alexa platform, and it allows them access to their suite of productivity tools.

 

Politics and the economy

Do you expect the economy to help fuel the housing market in 2020? Why or why not?

Rittenberg: There are a number of factors that fuel the housing market. Inventory levels, cost of renting versus owning, and of course job growth.

Ford: The housing market will continue to be driven by interest rates. As long as interest rates remain in the 3.25-4.25 percent range, the market will remain as-is with inventory levels remaining unbalanced compared to actual buyers in the market.

McDonald: The reduction of interest rates is helpful. However, historically speaking every election year the housing market gets a bit volatile and slow.

 

What impact do you think the 2020 election will have on the economy and/or real estate market?

Harris: Home buyers and sellers could become more cautious or maybe less motivated as they may want to wait to see what transpires, but no matter the result, life and real estate will go on. I believe it is in the best interest of the homebuyer or seller to do what is best for them in their current life and not let a presidential election deter them.

McDonald: When the election rhetoric heats up, consumer confidence decreases and the markets cool.

Rittenberg: Historically, home price increases can slow during an election year but the impact will be determined by the local market. The job market in Atlanta continues to be strong, which in turn drives the local real estate market.

 

How can agents prepare to deal with a changing economy?

McDonald: Become more efficient and understand what they can do to advocate for their clients. All agents must understand how technology is changing the way their clients view marketing of their property and how buyers view property prior to physically accessing it.

Harris: As agents, we should always be prepared for whatever changes come our way. One way to prepare for changes in the economy is to make sure we have a solid pipeline; stay persistent with tasks and goals; and stay active and present. Be prepared to zig if the market zags and understand that change is a constant and we should embrace it.

Rittenberg: Aligning themselves with a company that provides the tools and services to help agents drive productivity and protect and grow personal wealth. Prospecting and keeping in touch with your sphere of influence is vital for customer care and insulating your business. Agents who keep in touch with their clients give themselves more business security, and that’s for any economy.

 

Development

What impact do you think The Gulch, and other proposed mega-developments in the city, will have on Atlanta’s real estate market?

McDonald: The Gulch is not in a desirable location for transportation, jobs and entertainment. More infrastructure needs to be developed before it becomes a destination for the majority of buyers.

Ford: The Atlanta real estate market continues to center around exciting real estate developments in the city. The market continues to surge even further with these developments being connected to trails and paths such as the 400 Path and The Beltline. It creates amazing walkability for a work-live-play atmosphere, it lowers commute times for consumers and also breeds amazing festivals and events, bringing culture into communities versus everyone having to venture downtown.

Rittenberg: New developments are exciting for the local area, with indications that the market is appealing to investors, which gives local buyers confidence and desire to move to Atlanta. The city remains a technology port and affordable city that draws millennial buyers.

 

New opportunities

What will be the biggest challenges and opportunities for agents, lenders and brokers in 2020? 

Winokur: We see the biggest opportunity to be in the area of non-qualified mortgages – those borrowers that just miss qualifying for a conventional loan. In that area, marketing to self-employed borrowers is an excellent avenue to increase production. They may be excellent borrowers but have issues because their tax returns don’t show their true situation. While that area has been growing, there is a large number of both originators and borrowers that don’t know these products exist. The current market size is 20 percent of what is generally accepted as its potential size.

Ford: The biggest challenge for agents is staying focused. Everyone is looking for a silver bullet set of tools to sell more homes and capture more market share. The number one thing that agents will need to do is stay in touch with clients and be in flow with their lives and offer free advice to customers. A few of the agents in our office are having their best year ever by following [business coach] Brian Buffini. Agents will have more opportunities in working closely with other agents in “off market” opportunities.

McDonald: Our competition has expanded. We see more and more services online offering clients discounts, but in reality they are adding junk and admin fees that actually equal to what a traditional broker charges and sometimes more. There are a lot of companies that are actually hustling sellers out of their properties with scare tactics and misleading information when it comes to home values. Real estate professionals will have to step up and show that not only are they advisers but advocates for their clients to ensure they are treated fairly and professionally. There is great opportunity for agents who believe their jobs are to facilitate, negotiate, and sometime protect their clients, unlike many of these online companies.