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A Real Estate CSO Discusses The Outlook For The Housing Market, Innovation, And The Magic Of Big Data – Forbes

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Today we talk with Eric Chesin, Chief Strategy Officer at Anywhere Real Estate (formerly known as Realogy), the Fortune 500 parent company of some of the world’s leading real estate brokerage brands and service businesses. In this role, Chesin oversees the development and execution of the Company’s corporate strategy.

David Benjamin: Tell us about yourself. How did you come to residential real estate strategy?

Eric Chesin: After starting my career at McKinsey and learning a lot about many sectors and functions, I entered the startup world, focusing on disruptive innovation, and got the bug for industries that are ripe for reimagination. When I landed in my current role, I initially had no experience in residential real estate, but quickly realized that it’s an exciting space to be in, with lots of opportunity for creativity and disruption. I was attracted to the bigger purpose that exists in this space—helping individuals and families become or remain home owners, and supporting a community of real estate agents, who are essentially independent contractors operating in a true meritocracy to build businesses for themselves and grow legacies for their families.

Benjamin: What do you think is likely to happen in the housing market in the near-term and further out as a result of the pandemic and other factors?

Chesin: People ask me for predictions all the time and unfortunately there are too many inter-dependent variables for it to be possible to predict. We try to put blinders on against short-term market vibrations and focus on the longer term and the things that we can control.

The short-term impact of the pandemic was unexpected, but the work-from-home and live-anywhere dynamics that it accelerated feel real and likely to be sustained. Those dynamics will continue to be very helpful to the industry and to the idea of homeownership because they put even more emphasis on the importance of home and the benefits of owning a home, and despite near-term volatility, will drive new transactions as people continue to migrate to the places they want to live. It will also cause a shift in the types of homes that people are looking for, creating even more reasons for them to buy and sell homes. This is good for both the industry and for some of the underlying drivers of the economy.

Another big impact on the market is the very large millennial generation and their growing spending power. Their homeownership rate has been low compared to previous generations at the same age, but that’s just because millennials are buying homes later, not because they’re not buying homes. We see plenty of evidence of this, including that the oldest cohorts have already reached the same levels of homeownership as previous generations. And that suggests a real tailwind coming up: Over the next five years, the five largest age cohorts of the millennial generation will turn 35 which is about when we see them most likely to start to buy homes. That means we’re looking at major pent-up demand, which is a good thing if you’re a homeowner, seller, or builder. The hope is that the demand will also unlock inventory issues, which are at truly historic lows right now.

There’s the potential for a perfect storm in the industry because of all these factors, which gives us a lot of confidence in its longer-term outlook.

Benjamin: As the CSO of a very large, at-scale industry incumbent, how do you look for signs of disruption in your market, and how do you help your company to innovate and react accordingly?

Chesin: When I chose to join the company I work for now, I was jazzed at the opportunity to lead disruption from within an established player in the industry. Since then, though, I’ve learned that the job I’ve taken on with my colleagues is less about disruption, and more about staying laser-focused on how to improve the experience of conducting business. That focus will inevitably lead to both innovation and, in the end, positive disruption for consumers and those in the industry’s value chain. The key is to continually look for better answers, look for opportunities for innovation, and bend toward progress.

That also means scanning the universe for where innovation is happening outside the four walls of your business because the best ideas can come from anywhere. Keep your eye out for those innovations that are getting traction in the market, and, if from the depth of your knowledge and experience, you see that the innovation is profitable, better for consumers, and the right answer, be all over it; If not, if it doesn’t feel sustainable, or if it feels like chasing shadows, then watch out before jumping on the bandwagon. Rather than making defensive adjustments and becoming distracted from your long game, sticking to your guns (pursuing better answers and better experiences) is usually the best decision.

It can come down to an equation of having the right people around you, plus access to the right information and analysis at the right time, and a bit of luck!

Benjamin: To that point, can you share any wisdom you have about big data and how you get your hands on the right insights at the right time? Have you discovered a “secret sauce”?

Chesin: I think data is the most amazing business asset. I’m no data scientist, but I’ve been lucky enough to work with some really smart people who are, and that’s opened my eyes to what can seem truly magical. I’ve seen firsthand that when you have access to a sufficient scale of good, clean, well-maintained data, the things that can be predicted with accuracy are fascinating and often counterintuitive. What I’ve noticed, though, is that you can’t unlock the magic of big data without smart business strategy. It’s not just about bringing in the necessary skill set and building the right tech stack and infrastructure; the true value creation comes from knowing what questions to ask, what predictions to make, and how and where they will be applied.

For example, much of my company’s success is driven by recruiting and retaining amazing real estate agents, and we have to work hard to attract the top ones with our superior value proposition. To that end, we built a model that would predict which agents were likely to grow their businesses fastest over the next three years so that we could focus our recruiting activity on them. The model had millions and millions of data inputs—some obvious and some not, some public and some proprietary—and in the end, we used it to rank-order a list of 600,000 agents, chose who to focus on based on those predictions, put that into the CRM our managers use, and set up business incentives for those agents and bonuses for our people based on their success with them. Three years later, we’ve spot-checked the group of agents predicted to grow fastest by the model, and sure enough, they grew 80% faster than the rest.

The magic of big data is that you can’t know what factors formed the basis of the predictions, just that they were very accurate. The power, though, comes from knowing the insights you need, the business application of those insights, and how to insert them in your processes to create an outcome. If we didn’t use levers like incentives and bonuses to ensure focus on the right agents, if we hadn’t communicated the strategy well with the managers and had a CRM system in place to help them apply it, without all that, this magical prediction wouldn’t have had any business impact.

Benjamin: Do you have any parting thoughts you’d like to share?

Chesin: Our company just hosted an investor day, and in preparation our CEO and I spent time talking about how to host a whole day focused on the next five years, when short-term volatility is such a hot topic and everyone wants to talk about the next five minutes instead. His approach, which he used publicly with investors and privately with our team, was: “We’re going to push past the headlines to focus on what matters”.

I find that approach to be very grounding. Keep your focus on what you can control, keep your head in the game, avoid the noise, and don’t let the distractions of the moment push you off course.

This interview has been edited and condensed for clarity

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Canadian Real Estate Correction Is Becoming The Deepest In Half A Century: RBC – Better Dwelling – Better Dwelling

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Canadian Real Estate Correction Is Becoming The Deepest In Half A Century: RBC – Better Dwelling  Better Dwelling



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Real estate prices continue to fall in Waterloo region – CTV News Kitchener

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The average sale price for all residential property types in Waterloo region continues to fall. The newly formed Waterloo Region Association of Realtors (WRAR) says the average price across all property types in July was $752,301.

This represents a 4.9 per cent decrease compared to June 2022, and a 1.2 per cent decrease from prices seen in July 2021.

“In the wake of July’s interest rate hike, home sales in Waterloo region continued to slow,” says Megan Bell, president of WRAR, in a media release. “We’re seeing a clear shift in the market and what people can afford to purchase or are willing to pay. On the bright side for buyers, it’s not the extreme sellers’ market it was.”

This is the fifth straight month the average home sale price in Kitchener-Waterloo has fallen.

Monthly sales by property types. (WRAR)
  • In July, the average sale price for all residential properties in Waterloo Region was $752,301. This represents a 1.2 per cent decrease compared to July 2021 and a 4.9 per cent decrease compared to June 2022, according to WRAR.
  • The average price of a detached home was $842,241, representing a decrease of 7.0 per cent compared to June 2022 and a 6.0 per cent decrease from July 2021.
  • A townhouse’s average price is $642,750, representing a decrease of 3.3 per cent compared to June 2022, but a 3.6 per cent increase from July 2021.
  • The average sale price for an apartment-style condominium was $521,731. This represents an increase of 4.1 per cent compared to June 2022 and an increase of 20.4 per cent from July 2021.
  • The average sale price for a semi was $661,087. A decrease of 5.4 per cent compared to June 2022, but an increase of 1 per cent compared to July 2021.
Average sale price in July across Waterloo Region. (WRAR)

Real estate sales in Waterloo region also saw a major decline in some property types.

Leading the way was semi-detached homes with a drop of 41 per cent in sales and only 36 sold, followed by a 39.3 per cent drop in condominium units with 65 sold. Townhouse sales dropped 32.9 per cent with 112 sold. Detached home sales dropped 30.4 per cent with 337 sales.

In total, 550 residential homes were sold through the Multiple Listing Service System of the WRAW.

LOCAL REALTOR ASSOCIATIONS MERGE

WRAR is an amalgamation of the Cambridge Association of Realtors (CAOR) and the Kitchener-Waterloo Association of Realtors (KWAR). The groups announced their amalgamation on Wednesday.

The amalgamation of the two means housing prices from Cambridge will now be included in the average monthly sales and prices of properties. Prior, KWAR only included the sales and prices of homes in Kitchener and Waterloo.

Bill Duce, who has served as KWAR’s Executive Officer since 2008, is the Chief Executive Officer of the new regional association.

“Bringing these two associations together just makes sense,” says Duce in a media release. “As one board, we can better serve the needs of our Realtor members and stakeholders and give a voice to the region’s real estate market.”

The board of directors of WRAR appointed Megan Bell as president, Christal Moura as president-elect, and Val Brooks as immediate past president as officers of the new entity.

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GTA home sales tumble nearly 50% from last year, real estate board says – CBC.ca

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The moderation of the Greater Toronto Area’s housing market intensified last month as the region’s real estate board found July sales fell 47 per cent from the same time last year and 24 per cent from this past June.

The Toronto Regional Real Estate Board revealed Thursday that last month’s 4,912 sales were almost half of the 9,339 homes that changed hands the July before and are an indication that the market is easing from the frenzied pace seen in the first half of the year and at the end of 2021.

The board and real estate agents have attributed much of the moderation to the increased cost of carrying a mortgage after Canada’s key interest rate was increased by one percentage point in mid-July, making it the largest hike the country has seen in 24 years.

The hike has encouraged people to rethink their housing intentions. Prospective buyers are holding out for further drops they and brokers anticipate could materialize in the fall, while sellers are debating making what they can from their home now or waiting for the market to turn in their favour again.

Some sellers are even terminating their listings to take advantage of the hot rental market, where vacancies are dropping and prices are up.

While January’s hot market saw 380 terminated condo listings in the GTA, real estate company Strata said June brought 2,822 — a 643 per cent increase.

The moderation taking shape within sales is taking longer to appear in home prices.

TRREB found the average home price was $1,074,754 last month, a one per cent hike from $1,061,724 in July 2021, but a six per cent drop from $1,145,994 in June 2022.

The composite benchmark price was more than $1.1 million, up by 12.9 per cent year-over-year.

Detached home prices were down three per cent on a year-over-year basis to $1,362,598 last month, while their sales dropped by 46 per cent to 2,203.

Prices of semi-detached homes were up by nearly five per cent from last July to $1,077,750, while sales fell 45 per cent to 474.

Townhouse prices crept up by six per cent to $903,899 as their sales fell by 52 per cent to 816, and condo apartment prices saw a seven per cent leap to $719,273 and a 48 per cent fall in sales to 1,365.

The market also saw a drop in new listings, which amounted to 12,046 last month, down four per cent from a year ago.

TRREB felt the numbers necessitate government intervention, including boosting housing supply and reviewing mortgage policies.

Data firm Urbanation Inc. said Tuesday that it expects almost 10,000 GTA condo units to be delayed this year as increasing mortgage rates weigh on home sales.

“Many GTA households intend on purchasing a home in the future, but there is currently uncertainty about where the market is headed,” said TRREB CEO John DiMichele, in a release.

“Policymakers could help allay some of this uncertainty.”

He recommended the government review the Office of the Superintendent of Financial Institutions’ stress test. The mandatory test set the qualifying rate on uninsured mortgages at either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.

Kevin Crigger, TRREB’s president, echoed DiMichele’s plea, saying longer mortgage amortization periods of up to 40 years on renewals and switches should be explored.

“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” he said, in a release.

“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs.”

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