As 2006 Nears, A Look Back At Real Estate Predictions From 2005…

By now you’re probably getting sick of year-in-review articles and predictions for the coming year. But nevertheless, we’re going to bring your attention to one more. In the past few days we have taken a look at what the South Florida real estate experts think will happen to the market in 2006, as well as what some notable industry analysts believe will transpire on a national level. Now, let’s examine how Inman News, an online real estate publication, fared on some of its predictions for 2005, now that the year is just about over…

Prediction 1: Homestore will start a lead generation program and quickly become one of the leaders in that particular field.

Correct. A leading source for home listings, home finance resources, apartments and rentals, contractor information, and other real estate services, Homestore did in fact launch an online lead generation product for Realtors called Top Marketer. It offers consumers free comparison reports (for home sales) in exchange for their contact information. Realtors who sign up receive a call when consumers sign up online.

Prediction 2: A major mortgage company will attempt to purchase a large real estate company, setting off legal fireworks within the real estate industry.

Incorrect. To our knowledge, no major mortgage lenders have attempted to buy a big real estate brokerage firm, but many lenders continued to create affiliatepartnerships with real estate companies, aiming to offer consumers a one-stop real estate / mortgage shop, of sorts.

Prediction 3: A movement to privatize the Multiple Listing Services (MLS) will take off like wildfire as brokers move to control their listing inventory.

Incorrect. There hasn’t been a widespread effort to privatize the MLS. Yet.

Prediction 4: The Justice Department will crack down on the real estate industry for a number of alleged antitrust violations.
Correct. The U.S. Department of Justice launched a multilevel attack on alleged antitrust practices in the industry in 2005. The DOJ’s actions included a lawsuit against the National Association of Realtors over its online property listings policy and several letters of opposition to states considering implementing minimum-service real estate laws.

Prediction 5: There will be a large regional MLS security breach, causing the National Association of Realtors to create a tight data security policy that all MLSs must follow.

Mostly incorrect. No huge security breaches were reported in the past year. However, more Realtor associations started looking seriously into data security, with some already having implemented systems to curb password abuse.

Prediction 6: Google will test a special real estate search engine that crawls for available home listings. The search feature will be local, but will allow Internet surfers to set search parameters and scour multiple ZIP codes.

Mostly incorrect. Google hasn’t launched a “real estate search engine,” however, it did launch a new service in called Google Base in test mode. The service enables people to quickly create a free post that will appear online and can be found by searching on specific terms. For example: “real estate for sale.”

Prediction 7: The National Associatin of Realtors (NAR) will end 2005 with fewer members than it had on January 1, 2005, due to the easing of the housing market and other sectors of the economy picking up pace. Thousands of newfound real estate companies / investors will exit the industry.

Mostly incorrect. While membership grew to an unprecedented 1.2 million members by the end of 2005, a cooling housing market has become evident in some areas, mostly in the second half of the year.

Prediction 8: Interest rates will continue to fall as President Bush takes more aggressive action against the U.S. trade deficit.

Partially correct. Across the country, mortgage rates increased this year, despite reaching record lows in the summer. They are still relatively low by historical standards as well. The U.S. trade deficit has increased substantially since 2004, reaching a record $66 billion in September.

Prediction 9: Bush will will eliminate the deduction for property taxes, and increase the capital gains caps on housing sales, in an effort to further his tax reform agenda

Incorrect. Just the opposite has happened regarding the mortgage tax deduction. The Bush tax reform panel has made recommendations that would drastically reduce the interest deduction on mortgage loans, generating major protest among real estate industry groups including the National Association of Realtors and the National Association of Home Builders.

Prediction 10: Fannie Mae and Freddie Mac will go private and eliminate the ceiling on home loans that they will purchase.

Partially correct. The two government-sponsored mortgage giants did not go private in the past 12 months, although proposals to reform both are still on the table. Neither went so far as to eliminate the ceiling on home loans this year, but the jumbo loan amount was bumped up to $417,000 for 2006.

CONCLUSION: It’s hard to predict any industry swayed by so many different factors 12 months in advance. Inman did as good a job as any group could have. Still, the experts don’t know any more than we do about a great number of pressing issues, so the best way to stay on top of things (whether you’re looking for your first Florida home loan or to invest) is to keep your ear to the track.