Inman is interviewing industry thought leaders to find out what’s next in 2016. Here’s John “OB” Jacobi, president at Windermere Real Estate.
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Are you optimistic about 2016? The economy? Why?
Yes, I am. Based on input from our chief economist, Matthew Gardner, I believe the U.S. economy will grow at a reasonable rate in 2016, with GDP (gross domestic product) growth of about 2.5 percent. There’s a presidential election next year, and historically nothing significant happens in the economy in an election year, so I expect things to remain pretty stable.
The housing market? Why?
I think the housing market will continue to move along at a positive pace. An increase in homeowner equity should lead to a modest increase in inventory. This should help address the substantial pent up demand that markets like Seattle and Portland are experiencing.
Nationally, I’m expecting home prices to appreciate by about 4.5 percent, so they’ll continue to rise, but at a more modest rate than 2015.
Your success? Why?
I’m very optimistic about Windermere’s success in the coming year. As of third quarter, our year-over-year sales volume is up 20 percent and the number of transactions is up 14 percent.
Yes, a lot of this can be attributed to the hot housing market, but it’s also because we spent the down years getting our systems in place so we would be well-positioned when the market picked back up. And it’s working.
Over the past three years, our average gross commission income has grown from $92, 300 in 2012 to $128, 429 in 2015, with an average of 13.7 transactions per agent. These numbers are what make me very optimistic for next year.
What are you worried about?
I wouldn’t say I’m worried, but I am always watching what our competition is doing — both traditional and nontraditional real estate models. But I see this as a good thing because it keeps us on our toes and forces us to always strive to be better.
How much do you fret about global events?
You’re not a smart business leader if you’re not keeping your eye on what’s going on around the world. So, while I’m not fretting, I am very much aware that global events can have a significant impact on our economy and country’s well-being.
Will mortgage rates go up or down next year?
I look to our chief economist for insights on interest rates, and he believes that we should see a gradual increase to about 5 percent by the end of 2016. So, yes, it’s an increase, but it shouldn’t have a significant impact on the housing market.
Which market are you in?
Windermere is based in Seattle, but we have about 300 offices in 11 states throughout the western U.S. and Mexico.
Will unit sales go or up or down in your market?
In Seattle, sales will continue to rise. We have an incredibly strong economy that is poised to just keep growing, so I expect home sales to grow right alongside it.
Will home prices appreciate in your market next year?
Home prices in Seattle will continue to appreciate in 2016, although probably not at the same pace we’ve seen this year. We’re predicting about a 6 to 6.5 percent increase in home prices in the greater Seattle area in 2016.
Will agents be more productive next year? Why? Or why not?
I can’t speak to agents outside of our company, but I’m very confident my agents will be more productive. We’ve invested heavily in tying together our technology with our education programs to create a seamless sphere-based system that enables our agents to stay in flow with their clients. I strongly believe this system is largely why our aforementioned GCI numbers have grown so steadily over the past three years.
What will be the biggest source of real estate leads next year?
This piggy-backs onto the previous question. Because we believe real estate is a relationship business, our biggest source of leads is repeat and referral clients. We choose to work with people we know, like and trust. That’s why we’ve invested so heavily in building a sphere-based system for our agents. This enables us to not be dependent on Internet leads, which are unpredictable at best.
Are you making plans to expand, contract or maintain your business this year?
We are definitely in expansion mode. We see significant growth opportunities in California (both North and South), as well as Colorado, which we expanded into about a year ago.
What is your biggest challenge in the coming year?
We’re perfectly positioned for growth in the coming year, but one of our biggest challenges is to grow with the right people, and not move too quickly. There’s a lot of interest and excitement in the Windermere brand right now, but our mantra is to not grow for growth’s sake.
It’s important to find the right people who fit well within the Windermere culture. We’re not for everyone — and everyone’s not for us.
