On REAL Trending Episode 83 we discuss the political party platforms about housing and brokerage, trends in home purchasing and preparing for fall 2020.
From REAL Trends, the trusted source for real estate, this is REAL Trending, episode 83. We're analyzing the most important trends affecting brokerage companies and their agents. I'm Steve Murray, president of REAL Trends.
Today we're discussing the political party platforms about housing and brokerage, trends in home purchasing and preparing for fall 2020. What do these trends mean and how can brokerage firms best deal with them?
So I took the time to read the political party platforms, the Democrat and Republican Party platforms, examining their positions on factors that would affect housing or brokerage. First, the Democrat Party platform, interesting enough among other things that may affect housing, directly affecting brokerage is number one.
They're calling for the passage of the PRO or PRO Act, fully. Among its provisions would be to revert back to the Obama administration joint employer standards, which would make franchisors responsible for the HR employment and compensation practices of their franchisees.
One shutters to think the impact on real estate franchisors, if suddenly they are responsible for the employment practices of their franchisees throughout the United States. That would make for a very, very interesting development in our industry.
But that's essentially what the National Labor Relations Board during the Obama administration wanted to do. Now, their target was McDonald's and other fast food companies, but the PRO Act does not discriminate.
Number two, they call for the national imposition of the ABC Test as put into law in California, for determining who is and who isn't an independent contractor. Now, the California realtors do a superb job getting real estate agents excluded from coverage under the ABC Test for determining independent contractor versus employee.
But the things one needs to understand is, California is very strong. The realtors are very strong. They're very well organized, and they got the real estate agents excluded from the ABC Test.
I think primarily, because agents are among licensed professions, like doctors, lawyers, dentists, accountants, and so on. And they escaped being captured under the ABC standard.
There's no guarantee that every state can do the same thing, or that it may be imposed on a national basis, the ABC standard. In which case, the political fight then would move to Washington, DC to determine whether agents were excluded.
We looked at both party platforms, additionally, a little broader. And of course, they're very, very favorable towards housing. Again, the Democratic Party tends to lean more heavily towards federal subsidization of affordable housing.
Now, both parties' platforms discuss at length, the importance of trying to resolve both affordability and homelessness. Both are critical issues. Both attack it from a little bit different perspective. We'll leave that for another day at another time.
But it is worth noting, that depending on the federal elections this year, we could end up with an administration, who while their target is someone else under the joint employer standards they're talking about, or the ABC Test, could have a significant impact on the structure of the brokerage industry.
Second, housing trends and purchasing trends. We have now spoken with brokerage companies from virtually every part of the country in the last week or two or three. Here's some interesting things to share.
We spoke with the CEO of United Country Real Estate, Dan Duffy, and asked about what was going on in rural property markets, where United Country has hundreds of franchisees in small, rural towns, selling farms and ranches and marinas and other type rural property.
He told us that at the end of April, their web traffic exploded up 300%, that it has maintained that level ever since. And that their business has more than doubled over the last few months, from where it was the same point a year ago. Hence, we get a glimpse that Americans from all over the country are buying property in rural America.
We also spoke with Greg Fay of Fay Ranches based in Bozeman, Montana, one of the top high end Western US ranch brokers. His only comment was his brokers in his organization have never been this busy. That there are literally dozens, if not hundreds of people looking to buy ranches throughout the Western Rocky Mountain region.
Lastly, we talked to a young man who runs a household goods moving company based in Atlanta, called Bellhop. Bellhop reported to us, and this is a very interesting company, by the way, to watch. They've automated the whole household goods service platform, really exceptional platform, we think.
But anyway, he reported that would asked, "Where are the big moves? Are they 200 mile moves, or are they long distance moves? Are they moving from one suburb to another, or are they moving out of the Metro areas?" He reported to us, that over the last three to four months, a majority of the moves coming out of major metropolitan areas are long distance, and they are heading for other parts of the country.
It's an interesting indication. We're all aware that there already was a trend of people moving out of the upper Midwest and New England to Florida and the Carolinas and Texas and Tennessee. His report seems to indicate it's far more pervasive than many of us may think.
Lastly, we talked to brokers in what we'll call, not to remote areas. We're speaking of Rhode Island, Southeastern Massachusetts, the shoreline of Delaware, and we could go on. The resort and second home communities, including places like Lake Tahoe and Breckenridge, Colorado, and others like them are booming.
So people, they're not just moving, but they are considering given everything that has happened, buying at least a second home away from major metropolitan areas. We think this is something we'll have to study more in the times ahead.
For as long as any of us can remember, our organization of our lives was, we lived where we worked. Now with remote working and remote learning, we're shifting to where you will work or learn where you live. It opens up entirely new possibilities for all kinds of workers, students, et cetera, who don't have to be in one specific geography to study or work or perform. Nobody knows right now how big and how longterm that trend will be. More on that later.
Lastly, preparing for the fall of 2020, in July, the National Association of Realtors reported that the annualized rate of sales was over 5.8 million existing homes, which was the highest since 2006.
Brokers tell us to expect pretty much the same thing in August on a close basis. So we have two of the most high-powered markets or high-powered months that we've had in 15 years, July and August of 2020.
First of all, you have to consider that April and May, written business was way off from normal. So you take that demand and you pile it into June and July for written contracts. Number two, you have on top of this, this abnormal demand situation of people looking to exit major cities, or buy second homes, or move to the suburbs, or what have you, and you pile that on top.
Then you have people that are just relocating because of COVID, or civil unrest, or high taxes or whatever the reason might be, people are relocating. All of that took place in the last 75 days. What does that tell us about the fall 2020?
Frankly, because of low inventory, which is offset by continuing low interest rates, we think business will continue well, but not at the rates of July and August. It'd be nice to think that unit sales are going to back off to the 5.2 to 5.4 million existing home rate, where we were a year ago in the fall of 2019.
Nobody really knows, but every broker and agent should be prepared for a normal seasonal slowdown in the fall. There will be a seasonal slowdown at the least. Whether it's worse than that, remains to be seen.
Learn more about industry trends and success tactics for brokerage firms, agents, and teams, as well as listen to past REAL Trending on Apple Podcast, Spotify, Google Play and others. Visit www.realtrends.com/channels/.
This has been Steve Murray until next time.
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