prudential rightsizing CA

http://www.inman.com/inmannews.aspx?ID=58408

Prudential California Realty is "rightsizing" in recognition of the market realities of slower sales, said Sherry Chris, the company's chief operating officer.

"All companies are looking at what the right things to do right now are. We're rightsizing our company, looking at cost-containment opportunities and growth opportunities," said Chris.

The state as a whole has seen declining sales -- the California Association of Realtors reported a year-over-year 31.7 percent decline in existing-home sales in September, and the median home price dropped 4 percent from August to September.

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"One of the challenges is that listings are staying on the market longer, and as such our advertising costs could increase," Chris said. The company has committed to a shift in some advertising dollars to online and away from traditional print sources, she said. The company will be advertising at the Google search engine and has also announced initiatives to place its property listings on the Google and Trulia.com search engines.

Also, the company is working on ways to improve its offices, she said, "so that they're more like community centers -- agents can meet with consumers in a more casual environment." The company has a goal to ensure that its offices are at over-capacity in terms of the ratio of agents to desks in recognition that agents are typically in the field, she said.

While traditional offices were equipped with row after row of desks, agents today tend to visit the office less and use wireless technologies to stay mobile. "It's more important than ever to build a community within your own office," she said, and to reach out to agents with sales meetings and other events, for example.

"We are not looking at closing any offices," she said, and the company is actually looking at potential acquisitions and recruiting opportunities "to help infill into our existing marketplaces. We are definitely encouraging managers to bring new agents into the business and recruit more agents." She did, however, cite an example of an office consolidation in Livermore, a community in the San Francisco Bay Area. The company opened a new office in that community and consolidated its existing office into that office, she said.

Chris said that the market conditions will present special challenges for the huge group of agents who are relatively new to the industry, and there likely will be a decrease in the agent population over the next 18 to 24 months. This shrinkage could translate to an increase in the company's market share and in increased productivity for those agents who remain in the business, she said.

Over the past several years the company has invested heavily in technology for agent Web sites and customer relationship management tools, she said, and also in a new company Web site, enhanced mapping tools and a new company intranet site, she said. And while the company plans to pursue other technology ventures, she said there is some "breathing room" during this slowing market because the company doesn't anticipate major new technology expenditures.

The company has also invested in some traditional approaches, hiring real estate training firm Buffini & Co. to teach its managers to become coaches and mentors to their agents. "It's one of those 'back to basics' things," she said. "In times like this a smart broker-owner will look for that ... approach. It doesn't always have to be the latest technology -- 'What do I have to do to improve my bottom line and the agent's productivity?'"

Prudential California Realty is also holding training sessions to help agents function in the current market -- some agents "have gone from being overjoyed at having one listing" to managing an inventory of five to 10 listings in the current market, she said.

In an effort to improve communication and transparency, the company has launched a blog on the company's intranet, Chris also said.

In its third-quarter report for the San Francisco Bay Area, Prudential California Realty stated that that sales of single-family detached homes shrank 31 percent in the third quarter compared to third-quarter 2006, while the median price of single-family detached homes grew 3 percent to $753,805.

Chris said that while statewide sales are slowing, there are still pockets in the company's operating area where the market is strong. A company office in Claremont, 35 miles east of Los Angeles, reported that most of its latest sales have sold for more than the list price, she said.

"This to me is a market correction. It's just a leveling out of the market. It's not a downturn that is going to be going on for an extended period of time. We're looking at a flat market continuing for certainly the balance of 2006 and at least the first quarter of 2007, with a continued slight decrease in unit sales and a very slight decrease in average sales price."

She added, "The last down-cycle in the market in Northern California about 10 years ago was much more severe because it really was an economic downturn. This is not as severe in comparison."

Prudential California Realty is part of a tri-state Prudential affiliation that also includes Prudential Nevada Realty, Prudential Texas Properties and Prudential Texas Realty, and has 5,000 agents and 139 offices.

az story

http://www.eastvalleytribune.com/index.php?sty=77619

Buyers welcome. That’s the message the East Valley’s new home market is starting to send to people looking to buy homes, especially those who held back as prices escalated to new records.
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Nationally, the median price of a new home plunged in September by the largest amount in more than 35 years, according to the U.S. Department of Commerce. The median price was $217,100 last month, down nearly 10 percent from September 2005.

Locally, the new home median price in September was $271,606, up from $245,017 in September 2005, according to R.L. Brown Housing Reports.

What’s more telling, however, is the average new home price, which was $331,336 last month, down from $343,116 in August. The average price was $290,162 in September 2005.

“There’s a clear indication of a change in direction in the marketplace, but we’re still higher than a year ago,’’ said R.L. Brown, Valley housing analyst. “The bottom line is prices are soft and softening further in both the new and resale markets, and that’s what’s important to the consumer. That’s good news for the consumer, and bad news for the resale sellers and bad news for the homebuilding industry because it’s going to cut into their profits.”

Among sellers, homebuilders have a clear advantage over homeowners, said James Bortz, a real estate agent with Realty Executives in Chandler.

“They’re giving out a lot of concessions to get these houses sold, whereas the people who are already in them and trying to sell are more or less locked into a price or have a price that they have to have,” he said. “I’ve gone out to new home sales with a buyer and they automatically will give them $40,000 off, then they’ll come back and say we can give you another $10,000 if you use our lender, and we can throw in a washer and dryer, etc.”

As for “flippers,” those who buy and quickly resell properties for big profits, “it means that the risk they assumed when they started speculating in real estate is for real,” Brown said.

“They saw exceptionally high potential returns for little effort in a little time, and they’re seeing the size of the risk for that kind of investment,” he said. “Frankly, they shot the dice. Its a tough time to sell right now.”

A lot of people bought houses thinking they could live in them for a year or two, and then they would double in price, “and it’s just not happening,” Bortz said.

“You have a lot of people who took these low interest rates (adjustable rate mortgages) that are now coming due and they can’t afford the payments now, so they’ve got to get rid of the house,” he said.

Homebuilders already have cut back on new home construction, based on homebuilding permits issued Valleywide, Brown said.

“Permits in September were 2,281, and that’s the lowest we’ve seen since December 2001,” he said.

In August, 3,014 permits were issued, and in September 2005, 5,409 permits were issued.

“Homebuilders are desperate,” Bortz said. “You still see a lot of building, but those were the ones that were already started or were planned, or paid for. They have to move their inventory. Worst possible scenario for them is they’ll roll them all the way back to a break-even point for them, which is still in their favor and not the resale person.”

In the meantime, the number of single-family homes on the Valley market was 45,500 last month, up sharply from about 15,000 homes in August 2005, and lots of homes are just sitting on the market month after month, he said.

“We’re going to see this trend continue until the standing builder inventory is down to nothing . . . and until the excess listings on the resale market have diminished by several thousand units, perhaps as many as 30,000 units,” Brown said.

- The Associated Press contributed to this report.