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REALTOR®: Real estate experiencing its own economic revolution

Wednesday, February 1, 2012

Real estate is caught in a seesaw affected by mixed news about the economy, but things are slowly getting better. The industry is changing too, real estate consultant Carole Rodoni told Palo Alto REALTORS® last week.

One thing is sure – real estate is a very split picture depending on where you are. Northern California is doing much better than the Central Valley, and Silicon Valley is doing better than the rest of the state, said Rodoni.

"Silicon Valley has helped the state of California this year and will continue to do that," the former president of Fox & Carskadon Real Estate, COO of Cornish & Carey Real Estate, and president of Alain Pinel Realtors, and current owner of Bamboo Consulting, told members of the Silicon Valley Association of REALTORS®.

She described the region as "entrepreneurial, with creators, not duplicators." She said there is no recession here; instead, the region is experiencing an economic revolution, thanks to the smartphone, and companies like Facebook, Zyngga, Groupon. She added that nearby San Francisco is "on a roll to become the Internet model of the world," and a major site for health and education.

"Your economy beats to a totally difference drummer. Where you are is the heart of wealth," said Rodoni. "In 18 to 24 months we will see a thousand millionaires buying real estate."

Real estate is going through its own economic revolution, according to Rodoni. It used to be REALTORS® sold real estate based on the American dream, a home in a good school district, community, lifestyle and appreciation. With prices down, homes underwater, and renting becoming a viable option for many, agents can no longer sell that same story.

Rodoni said agents need to sell real estate as "an asset in which you invest with the potential of appreciating over time and building wealth." The value of real estate is in the land, which is scarce here. With interest rates between 3.75 and 4 percent, a loan is like free money. She explained that compounded over 30 years, more of a borrower's money would go toward equity, creating wealth through ownership of the asset. There's also the mortgage interest deduction, which homeowners can choose to save or invest.

Rodoni said it is important for buyers to recognize whether they are in a negotiating market or a competitive market. Palo Alto is in the latter, with some homes receiving as many as 14 multiple offers.

"In a competitive market, the listing price is just the entry price," said Rodoni. "You are competing with other bidders – not the price of the property."

In addition, REALTORS® are facing a new set of buyers these days – the Millennial generation, 25-40 year olds, the children of the baby boomers. This generation is not caught up on emotion, is educated, cautious, concerned about the numbers, and interested in building wealth. Also factor in more international buyers in the game.

Agents must learn how to communicate with these different buyers and deliver the message. "It's no longer a matter of listing and selling a home. It's an asset and you need to show how they can use it to build wealth," Rodoni told the REALTORS®.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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