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"Top Economist Looks Ahead!"


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John Tuccillo Photo
1/8/10 Interview with John Tuccillo

JTA, LLC
PO Box 7487
Arlington, VA 22207
Biography

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Recovery and the Real Estate Sector

  1. Though there is some disagreement among economists, Tuccillo expects the economic recovery to gain strength during 2010 and continue upwards.
  2. The tax credit stimulus to housing will continue to bolster the market by drawing out suppressed demand; the bulk of stimulus spending will occur in the first 6-9 months of 2010.
  3. A gradual improvement in the economy will be reflected in job creation in the second, third and fourth quarters.
  4. The year 2010 may still be below average, but it should be positive for GDP growth and the economy in general.
Residential vs. Commercial Markets in 2010

  1. The residential market went into a slump first and continues to be far ahead of the commercial market by a year or two; the commercial side will do worse in 2010 than the residential.
  2. A few commercial markets will not react to the downturn, but most will suffer from the lagging effects of job losses and consumer tightening of spending; retail was overbuilt to begin with.
  3. Residential real estate should recover in 2010, but the commercial slump is likely to continue throughout the year.
  4. The kind of commercial market that may not slump is a metropolitan area that is relatively isolated and has not been impacted much by the economic recession; Spokane, WA and Springfield, MA are examples.
Looking Farther Ahead

  1. By 2011 and 2012, the job slump should be ending; hopefully, the most important aspect of the stimulus package—investment in education, new businesses and new technologies—should have picked up by then.
  2. As a result, renewed entrepreneurship should help drive the economy in those years; history demonstrates that sustained growth must have real estate or technology as a driver—for 2011-12, new technology.
Demand for Real Estate

  1. In 2009 and into 2010, real estate has been driven by the availability of tax credits for first-time buyers and by low interest rates; also, first-time buyers have gotten money back from the government, but these factors will fade by the end of 2010.
  2. Going forward into 2011 and 2012, demographics suggest that a new cadre of buyers will be the market drivers; expect baby boomers to sustain the second home market and generations X and Y to sustain the primary home market over a period of five or six years.
  3. Baby boomer dominance is giving way to greater influence of generation X and Y; combined, they are much larger that the boomer generation, and their preferences will be shaping the real estate market.
  4. Tuccillo’s two-part webinar on generational change deals with how real estate pros should handle gen-X and gen-Y as consumers and as colleagues; it is available as a podcast from HousingMatrix.com.
How Technology Is Changing Real Estate

  1. Over the last ten years, the technology tool kit of the average agent has changed dramatically; the next challenge is learning to use social media as part of your business.
  2. The motivation is that younger buyers and sellers (gen X and Y) prefer to communicate electronically; Facebook, Twitter, LinkedIn, Active Rain, etc. are essential communication channels for them.
  3. Real estate pros need to learn how to be present in those channels, how to effectively present themselves and how to attract consumers within those channels; the typical agent is in the mid-50s, so dealing with buyers under age 35 (the bulk of first-time buyers) is a generational mismatch.
  4. Statistics show that RE pros who use technology have greater income than those who do not; tech tools increase efficiency, allowing agents to serve more clients and make transactions go more quickly; technology also opens opportunity with a whole new class of clients.
  5. Reaching tech-savvy buyers and sellers is vital to building a real estate career in the future.
A New Way of Doing Business

  1. Transactions are becoming more highly concentrated; over the next several years, polarization of earnings in the real estate industry will continue.
  2. Agents who understand the new communications channels and the motivations of new, young consumers will do increasingly better.
  3. Although the number of agents has not declined much since the real estate slump started in 2005, the numbers who are not making much money or any money are growing.
  4. The message for RE pros is to “get younger” in their approach to the market; utilize the good resources available about the demographic shift of consumers and how to employ a social media strategy.
  5. Agents who attempt to use Facebook as a substitute for print ads are on the wrong track—the ways to get involved are more subtle; the traditional emphasis on networking and building relationships face to face is transferring to virtual space.
  6. The new way to succeed is to build relationships via social media.
The Real Estate Market Environment

  1. The combination of low interest rates, low prices and government incentives make this an ideal time to buy real estate.
  2. Over the next four or five years, real estate is likely to outperform the more conventional financial investments because of the slow economic recovery; real estate is a good bet to be ahead of the economy.
Favorite Places on the Web Contact Information for John Tuccillo:

(v) 703-629-0770
(e) tumler@aol.com
(w)www.johntuccillo.com


Real Estate Sites & Tools in this Briefing:

JTA, LLC: www.johntuccillo.com
Webinar on generations X & Y: www.HousingMatrix.com
Popular social media sites:
www.Facebook.com
http://Twitter.com
www.LinkedIn.com
http://ActiveRain.com
RISMedia: http://rismedia.com
Inman News: www.inman.com