In the fall of 2006 — when housing sales had cooled, but before "credit crunch" became a household term — Alex Perriello had some advice for Realtors gathered in New Orleans for their annual convention.
Don’t leave it to the news media to tell the story of what’s happening in your local market, the president and CEO of Realogy Real Estate Franchise Group said, because news outlets emphasize the bad news.
Last month at Real Estate Connect San Francisco, Perriello was singing the same tune. He said consumer confidence in real estate has been shaken by alarming stories that, because they are focused on national statistics, don’t reflect local market conditions.
While some media outlets undoubtedly do a better job than others at covering their local housing markets, the perception that the media cannot or will not give the industry a fair shake is a common one.
In the fall of 2007, Prudential Georgia Realty decided to take matters into its own hands, launching a series of quarterly video reports that look at what’s happening at the national level and compares and contrasts the situation with the Atlanta market.
The videos are narrated by Prudential Georgia President and CEO Dan Forsman, who reads a script from a teleprompter on a studio set that resembles those used for professional newscasts.
"We see sensationalist headlines about the real estate market every day now," Forsman kicks off the brokerage’s latest video. "Yes, that does get attention, which does sell advertising. That is how the media makes money. So let’s review some of the facts and opportunities that will help you make money."
Forsman introduces guests and delves into statistics and projections that are more in depth than what you’ll see in the typical television newscast. Points are illustrated by slides that run in synch with the video on an adjacent screen. Like a PowerPoint presentation, the slides include charts, statistics and a screenshot of the brokerage’s Web site.
The video doesn’t gloss over recent national trends in delinquencies and foreclosures, citing recent record-breaking figures from the Mortgage Bankers Association. But taking a page from the playbook of MBA and the National Association of Realtors, Forsman emphasizes that the problems are concentrated in seven states.
Forsman says California, Florida, Arizona and Nevada "had huge run-ups in prices, driven by speculators and flippers." It’s a different story in rustbelt states of Michigan, Ohio and Indiana where demand is off because those states have been losing population, he says.
Forsman touches on the continuing turmoil in the lending industry, and notes projections by First American CoreLogic Inc. and Moody’s Economy.com that delinquencies are expected to continue to rise for the next 12 months, and that one in four homeowners may be upside down by April 2009.
Having established some credibility with viewers by tackling those unnerving subjects, Forsman shifts gears to a discussion of the Atlanta market.
"We must remember that all markets go through cycles. Like the dot-com bust, the housing market will in fact correct itself. There are some incredible opportunities to buy great properties that will bring handsome returns over time," Forsman says as he segues into the Atlanta market. "We must also remember that real estate markets are local."
Hurdles more than technical
Forsman was the natural choice to present the Prudential Georgia videos, said Tony Floyd, a senior vice president at the brokerage with a background in sales and marketing for tech companies.
"There was never any debate of anybody else doing it," Floyd said. Not only does Forsman speak at many local events, but the company holds regular Webinar presentations for employees over the Internet.
"We have been very blessed in that regard," Floyd said. "A lot of leaders of real estate companies would be petrified standing there when the lights turn on, whether they have a script or not."
It took some convincing to persuade Forsman to use a teleprompter and a script, because he wanted to be authentic and speak off the cuff, Floyd said. But with the volume of information to be presented, the shoots go more smoothly and there’s less editing if presenters stick to a script, he said. Forsman is involved in editing the scripts, which are sometimes changed on the fly once shooting has begun if something doesn’t sound right or new information comes in, he added.
Floyd’s tech experience gave him an understanding of video production and the use of networks to stream high quality video over the Internet. Prudential Georgia works with Atlanta-based Multicast Media, which partners with a "big gorilla" in content distribution, Akamai, to break up the video into pieces that are streamed from servers around the world.
While Floyd said such productions are within the reach of any similarly sized brokerage, he warned about diving into such a project half-cocked.
Done well, video is such an incredible medium for the Internet," Floyd said. "Done poorly, I think it hurts you more than it helps you."
Each video requires extensive research, he said. Scripts are edited and rewritten. After guest presenters have been lined up and video footage shot and edited, the technology must be in place for the videos to be distributed and seen.
"It’s classic producing work that most people in real estate have not done," Floyd said. While there are third-party companies that will produce a video from conception to Web hosting, that can get quite expensive, he said.
The technical requirements of Web video aren’t daunting to those with expertise in the field, but there are human issues to take care of, too. It can take some work to get everyone to agree to what does and does not go into a script, and how the information will be presented.
"There are always people on your teams who are scared to death," Floyd said. "When you tell the truth, people may not like it. Give Dan a lot of credit, the culture of our company has always been more straight shooting and open, with honesty at all levels."
Floyd said the videos strive to present information in an unbiased way, and report details that aren’t found in news media reports.
"We believed that the story wasn’t really being told well in our market, and people get so confused about the local market versus the national market and what that all means," Floyd said. "We decided we needed to take a leadership role and be a thought leader in our market."
Dissecting the local market
In the video, Forsman says problems in housing markets may have begun "as the story of seven states," but that now, "the rest of the country has clearly caught the real estate bug."
He begins his presentation on the Atlanta market by acknowledging that since last summer, it’s not been immune from the impact of the national downturn. In the spring of 2008, sales volume was down 33 to 36 percent from the same time a year ago, he says, citing figures from Atlanta-based forecaster SmartNumbers.
"The expired and withdrawn listings continue to set new records, signaling frustration from sellers," Forsman says, continuing with the straight-talk theme.
Some Realtors have little use for the Case-Shiller index, saying its limited coverage area and methodology exaggerate price declines (see story). But Forsman is comfortable citing a Case-Shiller finding that Atlanta home values were down 6.5 percent year-over year in March. He even takes the Case-Shiller index a step further, predicting the next round of numbers will show even greater price declines.
"Property values have been driven down by large numbers of foreclosures, aggressive new-home incentives, and very motivated sellers of resale properties," Forsman says. "We believe that Atlanta home values have actually dropped 8 to 10 percent from last year."
But then the Prudential Georgia CEO switches gears. Atlanta is at or very near a bottom, he says, presenting "an incredible opportunity for buyers."
He introduces David Ellis, executive vice president of the Greater Atlanta Home Builders Association, who presents a segment on the new-home market — the third of five chapters of the video.
Ellis lays out a scenario where a cutback in housing starts, coupled with higher building and development costs, will inevitably push new-home prices up.
"The facts are clear," Ellis says. "There’s no better time to buy a new home in Atlanta than right now."
Forsman issues a similar warning and "call to action" in the video’s concluding chapter.
"There is no guarantee that these wonderful buying conditions will last," he says. "It is an election year, we have a potential recession looming, inflation could return due to gas prices, and natural disasters or terrorist events could occur at any time."
In the video, Forsman says he thinks home values will begin increasing in 2010 and 2011 as inventories drop and population increases.
"We will actually see a seller’s market return in 2010," Forsman predicts. "Resale inventory will be back to normal, foreclosures will be down, and new-home engines will not be able to crank up and start quick enough to catch up."
But before that happens, "Hotlanta" can expect to continue to see elevated foreclosures for the next year to 18 months, and the video devotes an entire chapter to the subject.
Forsman kicks off the segment by stating that the area’s foreclosure rate was the sixth highest in the country, and that there are enough vacant lots in Atlanta to supply builders for the next five years. But Atlanta didn’t see rampant speculation during the boom, and has a healthy, diverse economy, he said.
Another guest presenter — David Cook, president and CEO of Equity Depot — tells viewers that changes in mortgage lending practices should bring foreclosures back to the normal range in 12 to 18 months.
Equity Depot is a data aggregator that tracks foreclosures. Cook says Atlanta’s foreclosures have been driven by loan products that allowed buyers to purchase homes they couldn’t afford, and the state’s speedy, nonjudicial foreclosure process that allows lenders to repossess a home in as few as 37 days.
Of Georgia’s 8,500 new foreclosures in June, 6,401 were in metro Atlanta’s 13 counties, Cook said.
Forsman takes the opportunity to plug the brokerage’s new foreclosure search tool, also available on its agents’ Web sites, and notes that many Prudential Georgia agents specialize in foreclosures.
By the end of the video’s fourth chapter, "Atlanta Foreclosures," Forsman is ready to haul out NAR’s oft-ridiculed "it’s a great time" to buy slogan.
"There is no doubt that it is a great time to buy in Atlanta, Georgia," Forsman says. "Whether you want a resale, a new home, or a foreclosure property, we can help. Remember that every community, and every area, is different. Your Prudential Georgia Realty agent can tell you the facts in your local area. Now let’s look at the future trends for ‘Hotlanta.’ "
Prudential Georgia is not alone in crafting messages to draw consumers into the real estate market.
This summer, the National Association of Realtors rolled out a "Surround Sound" media campaign with state and local Realtor associations "to get the word out to consumers about the opportunities for buyers in today’s housing markets."
The campaign is intended to come at consumers "from all sides of the theater" with messages "backed by statistics and solid logic to make a very plausible case for buying a home now," NAR states on a Web page dedicated to the campaign.
The Columbus, Ohio, Board of Realtors has launched a "Grass is Greener Here" media campaign that includes a dedicated Web site, ColumbusHousingFacts.com, with several videos, for example.
While many Web video producers warn that most viewers don’t have the patience for pieces that run longer than a few minutes, Prudential Georgia’s quarterly market reports are sliced into chapters. Along with the informational slides that run in synch alongside the video, chaptering is a "real trick" for grabbing viewers, Floyd said.
"People can cut right to whatever piece they’re interested in, or come back and refresh their memory on what was said, Floyd said. "They can listen for two minutes and they have what they need."
The videos can be seen on a dedicated site, AtlantaRealEstate2008.com, and Prudential Georgia’s 1,400 agents also have the ability to link to the videos on their own sites or in e-mail blasts, which most do, Floyd said.
Floyd said a competitor that was trying to interest a group of investors in buying properties in the Atlanta market even asked if it was OK to use the videos — "We said, ‘Sure.’ "
"A lot of businesses around the brokerage business are using these (videos) extensively," Floyd said. "They don’t have access to this kind of data. We’re just trying to do our part to be the thought leader in the marketplace, and help our agents get the most accurate message out to clients and customers."
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