Professional Documents
Culture Documents
Ben McDaniel
benjaminmcdaniel@email.arizona.edu
Table of Contents
Table of Figures...........................................................................................................................................3
Understanding Active Listings and Months of Inventory............................................................................4
Understanding Listed and Sold Price...........................................................................................................5
Local Trends in Tucson...............................................................................................................................5
The Importance of Closed Sales..................................................................................................................6
Value of Property Based on Environment...................................................................................................6
Special Training for Real Estate Brokers.....................................................................................................7
Technology Future Outlook.........................................................................................................................7
Online Presence in Real Estate....................................................................................................................7
COVID-19 Impact.......................................................................................................................................7
Crowdfunding..............................................................................................................................................8
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
Table of Figures
Figure 1 Active Listings by Months............................................................................................................5
Figure 2 Months of Inventory By Months...................................................................................................5
Figure 3 Median Listed and Sold Prices by Months....................................................................................6
Figure 4 Amount of Closed Sales for Top Companies in 2018....................................................................7
Figure 5 Value of Property by Proximity to Riparian Corridor...................................................................7
The following document was ordered to be created to provide industry specific information such as
general information and recent trends. The information below includes an explanation of terminology
such as active listings, followed by general information including closed sales, and finishes with recent
trends and changes in the industry such as COVID-19.
This figure shows the active listings by months throughout the years of 2018-2020.
Figure 2 Months of Inventory By Months
This figure shows the number of months of inventory from month to month through the years 2018-2020.
In order to understand inventory in real estate, it is important to understand both “active listings” and
“months of inventory.” “Active listing” is the term used to refer to a property that has been put on the
market for sale. “Months of inventory” is the amount of time that it would take for the inventory of a
market to sell completely. As the seen in the data from Warren (2020a) figures 1 and 2 from Warren the
amount of active listings increase, the amount of inventory increases, therefore the amount of time it
would take for the inventory to be bought up completely increases as well. Understanding both of these
terms and the relationship that they share is important to understanding how both inventory is referred to
and how it works.
Understanding Listed and Sold Price
Figure 3 Median Listed and Sold Prices by Months
This figure shows both the median listed and sold prices for every month through the years 2018-2020.
When going into real estate it is imporatant to know the difference between the listed and the sold price of
a property, as well as how they interact with one another. The listed price is the original price of the
property that has been listed by the owner when the property is put up for sale. The sold price is the actual
amount of money that the property was bought for. According to the data seen in figure 3 from Warren
(2020a), the price that a property is sold for tends to be lower than listed price. They have a positive
correlation with one another, meaning that as one rises, another rises. Understanding this concept is
important especially when buying or selling property.
This figure shows the amount of closed sales for the top 12 real estate companies for the year 2018.
The number of closed sales can be used as an indicator of a real estate company’s success. A closed sale
is a term used to refer to when property has been purchased in exchange for something of value, once this
transaction occurs, it is considered a closed sale. According to the Encyclopedia of Global Industries
(2020b), the three real estate brokerages who closed the most transactions in 2018 were HomeServices of
America Inc., NRT LLC, and Hanna Holdings Inc. The encyclopedia (2020b) states these companies and
more in a section titled “Industry Leaders.” The Encyclopedia of Global Industries using the number of
closed sales a company makes as evidence of a company’s success shows that closed sales are a valid
indicator of success.
Value of Property Based on Environment
Figure 5 Value of Property by Proximity to Riparian Corridor
(“Quantifying the influence of desert riparian areas on residential property values”, 2002)
This figure shows the relationship between property value and proximity from a riparian corridor.
The natural environment that a property resides in has a significant affect on the value of said property.
For an example, according to Bonnie et all (2002c), the proximity of a piece of property to a riparian
corridor has a positive correlation with its property. A riparian corridor is an environment that has
vegetation such as plants or trees growing near a body of water. They found that the increase in property
value can go up to 6% when a property is 0.1 miles away from a riparian corridor (2002). The increase of
property value shows due to the property being near a riparian corridor is one of many examples of a
natural environment affecting the financial value of a property.
COVID-19 Impact
COVID-19 has had a significant negative impact on real estate as an industry. According to Conner
(2020g) revenue growth for real estate sales has decreased by 6.2%. This decrease is due to the lack of
demand because of how uncertain the market is, because of this uncertainty, residential and nonresidential
participants are unwilling to buy (2020g). Conner (2020g) explains that the lack of commissions from
sales and rentals has led to a decrease in the profit margin as well. This overall decrease in sales,
commissions, and profit margin from COVID-19 has had a significant impact on the real estate industry,
such as participants being less willing to buy property due to the uncertainty of the market.
Crowdfunding
Crowdfunding is a needed resource for real estate that benefits the industry in multiple ways. 13,207
million USD was the estimated global crowdfunding real estate market (GlobalNewswire, 2020h). Global
Newswire (2020h) states that crowdfunding has contributed to the use of online transaction portals,
meaning that the use of online services has been used more frequently for real estate transactions. They
(2020h) also state that the demand for crowdfunding has increased due a global increase in commercial
real estate. The demands for crowdfunding and the benefits that it provides to real estate cause the
industry to become more reliant on the method, which in turn causes more demand and continues the
cycle.
Conclusion
Real estate is a complicated industry that requires an understanding of terminology as well as
relationships between figures. The industry has taken steps such as crowdfunding and services such as
Zillow to adapt to the rapidly changing internet-ruled economy. COVID-19 has affected the industry by
decreasing revenue growth and creating an uncertainty in consumers. For questions or to request further
information about the real estate industry, please contact Benjamin McDaniel at
benjaminmcdaniel@email.arizona.edu.
References
Warren, A. (2020a, November). Long Realty Company. The Housing Report. Retrieved from
Long Realty database.
Real estate. (2020b). Encyclopedia of Global Industries. Retrieved from Business Insights:
Essentials database.
Colby, B. G., & Wishart, S. (2002c, July). Quantifying the influence of desert riparian areas on
residential property values. The Appraisal Journal, 70(3), 304-308. Retrieved from
Proquest database.
Snyder, J., Claffey, G., & Cistulli, M. (2011d, July). How similar are real estate agents and
human-service workers?: A study of real estate agents' responses to distressed
clients. Journal of Business Communication, 48(3), 300-318. Retrieved from EbscoHost
database.
Saull, A., Baum, A., & Braesemann, F. (2020e, May). Can digital technologies speed up real
estate transactions? Journal of Property Investment & Finance, 38(4). Retrieved from CB
Insights database.
Hiner, J. (2020f, March). IBISWorld Industry Report OD5572. Real Estate Agency Franchises. Retrieved
from IBISWorld database.
O’Connor, C. (2020g, September). IBISWorld Industry Report 53121. Real Estate Sales & Brokerage in
the U.S. Retrieved from IBISWorld database.
Global real estate crowdfunding market size will reach to USD 868,982 million by 2027: Facts &
factors; according to the [220+ Pages] research report, the global real estate
crowdfunding market was estimated at USD 13,207 million in 2018 and is expected to
reach USD 868,982 million by 2027. The global real estate crowdfunding market is
expected to grow at a compound annual growth rate (CAGR) of 58.3% from 2019 to
2027. Top players are American homeowner preservation LLC, brickfunding, cadre,
crowdestate oãœ, crowdstreet, inc., estateguru oãœ, fundrise, LLC and others. (2020h,
December). GlobeNewswire. Retrieved from Nexis Uni database.