Florsheim News

December 13, 2007

By: ZACH FOX - Staff Writer
Executives say real estate industry must change in order to survive crisis

SAN DIEGO -- Real estate agents and builders need to modify their business models in order to survive the current mortgage crisis, senior real estate executives said during a conference Wednesday.

The suggestions ranged from copying car sales strategies to conducting more honest assessments.

"The one thing I can tell about you Realtors is that you're all liars," said Joseph Anfuso, president of Florsheim Homes, a builder in California's Central Valley.

Anfuso told agents during a Wednesday real estate conference at the University of San Diego that they need to stop inflating or hiding sales numbers and swallow a hard dose of reality on their cash flow if they expect to remain in business as sales continue to plummet.

Another recommendation was to develop an entirely different approach to sales. Homeowners looking to buy bigger, more expensive homes should be able to "trade in" their current home, much the same way car salesmen accept used cars as they sell new ones, said Dan Holbrook, president of Protivity, a Carlsbad-based real estate consulting firm.

"Let's focus on the client in distress and not the house in distress," Holbrook said. "That's the definition of insanity -- doing something the same way and thinking (the results) will be different."

For real estate agents to survive this downturn, they need to know where their businesses are going over at least the next five years, said Jason Hall, co-owner of RE/MAX Associates in San Diego.

"With fewer transactions, it's going to be a professionals-only field. ... If you don't know where your next five transactions are coming from, you won't be around next year and should start thinking about what you used to do," Hall said.

Some speakers said they thought the housing downturn had positives:

• It offers the opportunity for investors to acquire land at discounted prices or buy into struggling companies.
  
• The financial sector will learn from its mistakes in overvaluing subprime debt.
  
• The downturn will trim weaker real estate agents and builders so the market will return with better, more trustworthy companies.

The conference also provided an outlook of the housing market and the general economy for 2008. While economists said the national and local economies will avoid a recession, they predicted housing sales numbers and median prices will continue to fall.

The audience agreed in a survey, with 89 percent of responders expecting the number of homes sold to decrease and 96 percent thinking median prices will fall during 2008. Two electronic voting controls were placed at each table, so the survey did not gauge individual opinions of the estimated 300 attendees.

The conference also included forecasts from university master's students on the county's housing performance, broken down by area. They predicted North County's coastal region will see home prices stabilize as sales numbers continue to fall, and the inland region will see continued drops in both prices and homes sold.