The End is Near!

I regularly read articles about the imminent demise of real estate agents. You’ve seen them too. They go like this:

The internet is changing how real estate is bought and sold; see websites A, B and C. Consumers now have access to information they never had before. As more folks peer behind the curtain, real estate agents are going to suffer from fewer deals and lower commissions. The end is near!

Although I agree with much of the standard template, there are usually two critical assumptions that get glossed over, resulting in a conclusion (real estate agents are the next dodo bird) that I disagree with.

The first implicit assumption is that the only thing real estate agents do is match buyers and sellers. That’s the most visible part, but there’s actually more to it than that. We’ll save that story for another day.

The second implicit assumption is that real estate agents will ignore the internet revolution and cling to the status quo. Hopefully this blog is evidence enough that at least some agents are working hard to evolve their business to capture the best features of the internet.

Recent history has provided two examples of service industries that have been reshaped by the internet; travel agencies and stock brokerages.

Our family used to buy plane tickets through a travel agent – there was no other option. Now, nearly everyone that I know uses the internet to book their own trips. Yet travel agents remain. Successful agencies seem to focus on corporate travel, where the agency is able to manage and report on the travel of a diverse group of people, or packaged trips and other value-added services that capitalize on an agent’s unique knowledge. Travel agencies seemed at especially high risk for significant change because of the small transaction sizes, the relatively frequent purchases and the standardized products (all flights are basically the same).

In a similar way, stock brokers used to be the only access point to the financial markets. The internet was able to open the investment world to dramatically more participants, and the industry evolved in response. Today, financial advisors focus more on providing strategy and advice and less on gathering data and executing transactions. One could argue that financial services firms have benefited greatly from the internet because they are now able to provide higher-margin services to a more sophisticated and knowledgeable set of clients.

The real estate market will also evolve with technology, just like the travel agencies and stock brokerages. Despite the regular proclamations that the apocalypse is upon us, real estate agents will continue to play an important role for the foreseeable future. Buyers and sellers will continue to seek out professional advice for their very large and infrequent transactions that involve a completely unique property.

Like the NBC public service announcements, the more you know the better. Technology helps buyers and sellers know more about the markets and the process. Technology also helps agents stay on top of their markets more effectively. Most importantly, technology reduces busywork so that real estate agents can provide a higher level of service and advice, becoming more of an advisor throughout the transaction.  As Michael Scott would be happy to report, it’s a win, win, win!

Students in Downtown Hartford

Once upon a time, Trinity College was located just across Bushnell Park from Downtown Hartford. The college had a 10 acre (relatively small) campus that the City of Hartford offered to buy in 1872. The Trustees accepted, and moved the school to its present location in 1878.

As a general rule, I try not to second guess decisions that were made more than one hundred years ago.  Eighty-six is my limit.  Once you get to one hundred, it just doesn’t seem productive.  However, after spending a little time in and around the Yale campus this weekend, it seemed obvious that the hustle and bustle of students would be a tremendous addition to downtown Hartford.

Trinity in Hartford
Suppose Trinity College were still downtown and occupied a campus represented by the blue figure, which is the original 10 acres and numerous adjacent lots. The Bushnell would be part of the campus. The vast parking lots would be replaced by academic buildings, dorms or athletic fields. Sure there would need to be some parking, but perhaps it would be tasteful garages rather than asphalt wastelands. Most importantly, there would be 2,240 full-time students to help support a vibrant residential community.

Trinity isn’t moving back, of course. Fortunately, others have recognized the benefits of bringing students downtown and have been taking steps in the right direction. The UConn Business School opened the Financial Accelerator on Constitution Plaza. Capital Community College is in the G. Fox Building. There was even some student housing built in conjunction with the redevelopment of the Sage Allen building. Someone recently wrote a letter to the editor of the Courant that UConn should move some of their schools downtown (sorry, couldn’t find the link).

Hartford today is a very different place than it would have been with Trinity right across the park.  Hopefully the momentum to bring excitement downtown will continue in the coming years and will include student-residents.  It’s just unfortunate that the burden now seems to be on private developers that are far more sensitive to the economic environment.  If 2,000 students lived downtown they would help stabilize the downtown economy, and there would definitely be a grocery store by now…

Property Taxes – Troubling Economics

revenue & EXPENSESProperty taxes are a sensitive subject in Greater Hartford. Just about every year there is a budget referendum in at least one local town as angry residents fight yet another property tax increase. The debate in some towns is more heated than in others (but we won’t mention any names).

You may be happy to know that rising property taxes are a hot topic in other cities and states as well. An editorial in this weekend’s Wall Street Journal highlights a number of areas that are experiencing increasing taxes at the same time as they see falling home prices. In Arizona, where there is a state property tax, property values have fallen 17% on average in the past year. But taxes are on the rise. Ouch!

Unfortunately the root cause of property tax tension throughout the US is likely to get worse. The economics of running a town are deteriorating. Let’s consider the revenue and expenses separately.

Nearly all of town revenue comes from property taxes. Although real estate has historically been an appreciating asset, that is perhaps not the case today. Let’s assume that property values have stagnated. Therefore town revenue has also stagnated.

Expenses, on the other hand, are rising even more quickly than their historical rates. Education (much of a town’s budget) is rising at 2.5x general inflation, healthcare (another significant piece) is rising at 2.0x general inflation. We all know about energy prices, which impact many of the services the town provides (police, fire, trash pickup, snow plowing, heating city buildings, …).

Revenue is stagnant while expenses are accelerating. We all better sharpen our pitchforks and ready our torches because in the current global economic environment, this dynamic looks like it will only get worse.  Other than protest, is there anything we could or should do?  Or should we just ride it out?  This is shaping up to be a big problem throughout the country.

A Day at the Park?

I wish it was a day at the park … but there is no park where I can play with other dogs!

Lonely at Home

Hello all, Libby here.  I’m making Kyle write about our exciting trip to West Hartford Center in hopes that you will also support a town dog park.  The event was organized through the West Hartford Dog Park Coalition, and noted by Amy on Friday.

On the move

Dogs of all sizes, and their people, paraded through the Center to raise awareness.

Socializing

We were all well behaved, patiently waiting to cross the street.

Behaving

I had a wonderful time and was exhausted by the time we got back to the car.

Exhausted

And when we got back to the house I drank a whole bowl of water before taking a little snooze.

Thirsty

Socializing and meeting new friends is an important part of life. And it is much more difficult without a dog park. How would you like it if you never got to see anyone face-to-face and had to do all of your correspondence through pee-mail?

That’s what I thought. Do the right thing. Libby out.

Condo Association Meetings: The Good, the Bad & the Ugly (Part 2)

Yesterday we reviewed the good aspects of the annual homeowner’s meeting that I recently attended for the complex in which Amy and I own a unit.  Today we’ll get into the Bad and the Ugly.

The Bad

1. This particular complex was built as apartments in the 1960s and converted to condos in 1979.  If we assume that major maintenance was performed in anticipation of selling the units, then most of the improvements are approaching 30 years old – which is the useful life of lots of stuff.  We spent a fair amount of time at the meeting talking about repairs to boilers and roofs.  So despite the board’s planning, the Association is probably going to need to increase revenue in the next few years as more systems fail.  This means either higher condo fees or dreaded special assessments.  Boo!  Hiss!

2. The meeting was run using Roberts Rules of Order, which most people don’t really understand (myself included). The formal procedure made it difficult for everyone to participate effectively since folks would not know when to speak or how to speak. I could imagine that after one person’s question received a curt, “You can’t say that now,” others were intimidated into silence.

3. One civic-minded resident is working very hard to address energy efficiency and preventative maintenance, but seems to have a contentious relationship with the Board. Which leads directly to…

The Ugly

The meeting turned ugly as our civic-minded activist grew frustrated with the Board’s responses to his concerns and their use of precedure to prevent him from speaking his peace. As the discussion became more acrimonious, we transitioned from calling people by first names to using surnames (Mr. Smith, Ms. Jones …) and citing condo association bylaws as threats. Ultimately personal issues were raised in an uncomfortable manner.

Conclusion

Now that I have a better sense of the cast of characters, I’ll be interested to see how the drama unfolds.  Energy efficiency is an issue that everyone is concerned about in this day and age, and our activist had some good suggestions for how individual owners can make a difference.  Whether he will have community-wide influence remains to be seen.

I certainly got my money’s worth in terms of entertainment, and also learned quite a bit about the complex.  I was glad to hear that the community is in such good shape (despite Part 2’s observations).  If you own a condo I would definitely recommend attending your next homeowner’s meeting.  I bet you’ll see much of what I saw; different faces, but similar characters.