Buyers are sitting tight and everyone is wondering when they are going to get up. Sellers are struggling against increasing competition and the housing market is in a slump with all the continual subprime fodder splashed across the news. Competition out there isn’t getting any easier. We have almost as many real estate agents in the industry today as we did 3 years ago. In fact, as recently as October 2006, NAR hit it’s highest membership level; 1,370,758. Today they still have 1,235,598 members, which is a drop of 10% but still a lot of agents vying for a fewer number of transactions.
It’s no wonder most of the brokerage industry is in a blue funk. But not everyone sees it the same way.
After a recent trip to Europe a good friend commented that it was going to be a long time before they went back. He said that they got “killed” everywhere they went with the dollar slipping so badly against the Euro. In fact, the Wall Street Journal just reported that the dollar has slipped another 8% just since February. I guess it’s certainly not the time to sipping champagne on the Champs-Elysees. But the Europeans look at it with a different set of glasses. And they aren’t the only ones.
In the Northwest there is a new phenomena called “Mall Crawling.” Canadians are enjoying the slipping of the U.S. dollar against their dollar and are coming across the boarder en masse to do their shopping. Makes us kind of feel like the shoe we have been wearing for a long time is on the wrong foot.
Well – not so fast.
Foreign Money
Foreign money is definitely looking very strongly at the U.S. real estate market. In fact there is increased interest by many Europeans in purchasing a second home – right here in the U.S. And it’s not only the slipping dollar that is driving them our way. Many foreign real estate markets have experienced sharp increases in home prices. According to Christian Voelkers of the Hamburg realtor Engle & Volkers Group, “There are markets like Paris and London and the South of France where some home values have gone up 100%, while at the same time U.S. prices have either stayed put or come down.”
And its not just places like Manhattan that are getting strong interest from over seas. In an Associated Press report it was noted that the Research Triangle area – Durham, Raleigh and Chapel Hill, NC – is not getting inquiries from French and Scandinavian home buyers … a new phenomenon. On the West coast wealthy South Koreans are strong buyers for condo towers in the revitalized downtown areas. Canadian’s are looking strongly at the Arizona market where they are frequent “snow birds” – now they are becoming eager buyers versus winter transients.
Even NAR recognized the impact in reporting that between April 2006 and April 2007 that 30% of foreign buyers came from Europe. In the same survey one-third of Realtors® reported having had business with foreign buyers. And more agents are seizing upon the opportunity every day.
Tipping Point
In his 2007 Swanepoel TRENDS Report, Stefan Swanepoel hit the nail on the head in his #8 Trend for 2007 – “The Tipping Point.” He spent quite a bit of time examining the current and future immigrant market. In discussing the Global Market he challenges real estate professionals to take note of this emerging market. He predicted that, just like the foreign buyers, there are foreign real estate brokerage companies that are looking at the U.S. with fresh eyes and strong currencies.
Well, his prediction has already come true. As reported by AP, the company mentioned above, Engle & Volker, which caters to wealthy clients, plans to open 300 residential sales offices across the U.S. in the next few years with a schedule to have 30 opened on the East Coast by the end of 2008.
So is the Real Estate Industry Dead? No, its just become more challenging, but for the astute agent there is another market that may just hold some excellent opportunity. Swanepoel noted in his Report that some of the challenges agents face in dealing with foreign clients involve customs, language and cultural differences. He pointed to several websites as a place to get started exploring the global market:
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