Steve Jakubowski, writing here on March 16, 2006, may have been the first to connect the two words "subprime" and "tsunami" when he wrote:

"History has shown that ‘hockey stick’ growth patterns in the subprime industry are more likely caused by looser adherence to underwriting standards than by increased demand for subprime products among qualified borrowers. If, in fact, looser credit standards have driven the current exponential growth since 2000 in subprime lending, then waves of defaults will be "tsunami-like" in proportion."

As we now know the waves of subprime defaults that Mr. Jakubowski presciently cited grew massively into system-scraping, spare-no-institution monster waves now rolling through world economies. The great Real Estate Investment Tsunami (REIT?) of 2008 will reshape the banking, housing and real estate landscapes — indeed, the global economic landscape — for years to come.

It is understandable that most of us didn’t hear the "waves breaking far outside." As Fareed Zakaria pointed out recently in Newsweek:

"Two decades of easy money and innovative financial products meant that virtually anyone could borrow any amount of money for any purpose. If we wanted a bigger house, a better TV or a faster car, and we didn’t actually have the money to pay for it, no problem. We put it on a credit card, took out a massive mortgage and financed our fantasies. As the fantasies grew, so did household debt, from $680 billion in 1974 to $14 trillion today. The total has doubled in just the past seven years."

That same fantasy thinking especially applied to housing. Many started to believe that our houses were infallible investment vehicles, and that home values would climb ad infinitum. Many thought that flipping this house or that condo would lead to unflappable wealth. We understood that spending easy-to-secure home equity loans would increase personal debt, but high-margin profits at sale would more than cover our accumulating debt load. We celebrated, with self-satisfied winks and nods, the hyper-inflated appraisals our houses received when we put them on the market.

Advertisement

Brokers and agents with experience and expertise should energize these newly fertilized grounds by collaborating openly with home buyers about all aspects of buying, selling and remodeling homes.

They should become experts in conversational marketing and know how to use digital tools like blogging, widgets, RSS feeds, IM and Twitter; they should know how to market on social networks like Facebook, MySpace and LinkedIn; they should fine-tune the use of e-mail and mobile alert applications.

They should host online home-buying workshops for first-time home buyers and hold free home investment "bar camps" for consumers in local environments and online. They should integrate neighborhood-matching and advanced mapping on their own Web sites. They should blog and vlog, not just to themselves, as many do now, but to the information-hungry, safe-haven-seeking consumers trying to understand the new real estate market in their area. They should hold staging seminars for their clients both in person and online. They should develop and participate in online real estate forums. They should proactively collaborate with homeowners, appraisers, builders and other brokers and agents to enhance the image of their local markets.

And more. They should develop Web sites (and Facebook pages) for their clients’ homes with complete listing details, video home tours, two-way interactive chat rooms, pictorial remodeling histories, community overviews and more. They should produce well-crafted videos, high-resolution photographic, even 3-D slide shows. They should distribute those videos and listing details across the Web for maximum reach, targeted specifically to potential buyers. They should also demand instant, accurate and informative click-stream metrics to better understand consumer behaviors around those listings.

The tsunami that just hit us will not wipe us out completely, but it will remake the landscape. Now’s the time to re-plant, re-grow and revitalize our real state markets. And now we have some pretty awesome digital tools to do so.

Channing L. Dawson is the senior advisor to Frondoor.com.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×