Q&A with Kyle Anderson, CEO, Greater Gateway Association of Realtors, and Deb Treat Frazier, CEO of the Realtor Association of Southwestern Illinois

    IBJ: Home sales seem to be on a continuing increase, don’t they?
    
    Frazier: Sales are very much on an upswing. Our June numbers show that YTD St. Clair county is up 5.5 percent, Clinton county up 6.3 percent and Monroe County 55.9 percent. There are always factors that can change a trend – a natural disaster, interest rates going very high, low inventory. Dr. Yun, NAR’s chief economist, says that we need a booming new construction market to help slow inflation and lower housing costs to keep interest rates low.
    
    Anderson: Consumer confidence is up a little bit, and it makes it easier for people to make that long-term commitment. Housing is the first indicator, I believe, of a strong economy.
    In 2010, the Illinois Realtors did an economic impact study. On the Illinois side of the MSA, we averaged between $14,000 and $20,000 in local economic impact per house sale. That’s commission, taxes, roofs, furniture, flooring, painting — all those services that are tied in to the typical transaction of selling and buying a house.
    
    IBJ: That was 2010, the numbers are probably higher now. Are the median sales prices higher?
    
    Anderson: Right around the same, or up a little bit. As you know they took a pretty good hit in 2008. We didn’t suffer as much as the coasts. We didn’t lose as much.
    
    Frazier: Median home prices are trending higher. St. Clair County’s median price in 2017 was $149,900 in July 2017 and is $154,900 in July 2018. Average home price in St. Clair County was $173,180 in July 2017 and is $176,951 in July 2018.
    
    IBJ: How about inventory? Lower-price homes that millennials could afford are being snapped up quickly.
    
    Anderson: Oh — so quick. You look at pending sales, they are up. The more pending sales, the less inventory. Demand is totally there.
    
    Frazier: It is not a big problem in our area. We are hearing that the coasts and the large cities (Chicago, for example) are having that problem. St. Clair County in the $100,000 to $150,000 range has 2.22 months of inventory. Would we like it to be 3? Sure. Then you get to the $200,000 – $250,000 range, and we have 3.93 months of inventory. That’s a healthy number. $250,000 to $300,000 has 5.33 months of inventory. I think what happens is if a buyer can’t find just the right house they want, then they think inventory is low. HGTV has taught them to either want to be “flippers” or find the “perfect” home.
    
    IBJ: How about time on the market?
    
    Anderson: If it’s in the right price point, they are moving very, very quickly. Higher price points, say $500,000 to $750,000 are not moving as quickly. But a $225,000 house, it’s selling.
    
    Frazier: Average days on the market in St. Clair County went from 65 days in June of 2017 to 68 days in July 2018. Not much has changed year over year. Clinton County’s average days on the market tells a different story — 113 days on market in 2017 and now 85 days on market in 2018.
    
    IBJ: What are you doing to bring in or keep people in the industry?
    
    Frazier: When the housing market is good, we have more and more professionals enter our industry. When the market takes a downturn, then we lose some of those professionals. Some agencies are now hiring salaried agents and that helps the younger group of agents pay their health insurance and college loan debt. The IRS has also proposed a favorable new tax deduction that would include Realtors. You also see a lot of families that have the younger generation getting into the industry. Housing is essential to our economy and real estate is a fun and exciting career. There is never a dull moment.
    
    Anderson: We developed a Young Professionals Network, which is really designed for already existing members to help them stay in the business. Every industry has a timeframe in which you’re either going to make it or not make it. If you can get over that first two or three years, there’s a good chance you’re going to make it. We designed our YPN to help educate newer agents. We invited a Tom Ferry real estate coach to come in. It’s a lead-generated sales approach. Staying on your social media radar, and your email radar. It’s a top-of-mind approach so when you sell your house you think of a (certain) Realtor. We’re trying to offer business-minded courses to help keep our younger agents.
    We’ve also talked about going to job fairs to expound on the benefits of having a real estate license and becoming a Realtor. It’s a tough industry but one that allows you to set your own schedule to a degree. And it’s done differently than it was previously.
    
    IBJ: Really? How so?
    
    Anderson: It’s much more technology-driven. There are transactions that go on where people don’t see each other. It might be a buyer in Ohio who wants to buy property here. He uses a Realtor to buy the property and they might not even meet.
    
    IBJ: A lot less personal then?
    
    Anderson: I wouldn’t say less personal, it’s just different personal. Our members are very flexible to communicate however their clients need. Realtors are still in the people business, through and through.
    
    IBJ: What’s been the trend with commercial buildings?
    
    Anderson: It’s a still a very viable marketplace for commercial buildings. We have a lot of niche industries, like Alton, where there are a lot of antique shops in old buildings. It varies by market. On-line competition has drastically changed it but it’s not done it in. There’s very much of an entrepreneurial spirit in this area and there are a lot of startups in brick-and-mortar buildings that are very successful. Look at the Plum Creek development in Edwardsville, with Peel (restaurant) and a wide variety of businesses that are all doing pretty well. There’s definitely money to be made in brick and mortar.
    
    IBJ: What sort of action is expected this year in the Legislature that might affect the real estate business?
    
    Anderson: A license law rewrite is next year. Here at the local association level we deal primarily with cities and counties.
    
    IBJ: Local ordinances? Those can also be very oppressive if you’re not careful.
    
    Anderson: The majority of issues start at the local level. We are very cognitive of those changes.
    First of all, our members are amazing. We do what we call “call for actions” where we mobilize our membership. We send information on an issue and ask them to take action if they are inclined. That might be a phone call that might be an email to their respective legislators, and asking them to support.
    
    IBJ: Generating grassroots support?
    
    Anderson: We are one of the very best at it. Last time, in our association alone, we had over 200 members involved in a call for action to extend the national flood insurance program for another four months. It would devastate the housing market if that program went away.
    
    Frazier: National flood insurance is a huge issue and especially in Illinois. Congress has given it a four-month reprieve, but what happens then? Flood insurance in the private sector can easily cost as much as the mortgage. Many people can’t afford that. Locally we are seeing more inspections and ordinances going into effect. We have also not heard if there will be another BRAC on the horizon. Scott Air Force Base has gone through two in the 21 years I’ve been in the business. We have a government affairs director provided by Illinois Realtors that watches over to make sure homeowners property rights are being fought for.
    
    IBJ: In terms of local ordinances, are there other areas of concern?
    
    Anderson: Anything that prohibits the ease of a transaction going through, either a transfer of property or home ownership – keeping your local housing stock viable. Communities don’t want to do anything that’s so cumbersome that it prohibits somebody from moving to that property.
    A lot of cities believe (rules) will increase property values. But demand is the only thing that’s going to increase property values.
    
    IBJ: And if covenants are too restrictive, there’s not going to be the demand …
    
    Anderson: Correct. We believe municipalities should allow for a variety of housing and let the market dictate those decisions.
    We recently disagreed with the city of Edwardsville on the I-55 Corridor. The city, the village of Glen Carbon and Madison County are all in portions of the corridor plan. The initial plans for the corridor mandated brick, brick veneer, masonry, masonry veneer, stone etc., on three quarters of the house. Fifty percent of the first floor on three sides. We expressed concerns regarding mandating that. What if some other building material comes up that’s beautiful and is all the rage? They said a lot of builders are demanding the 50 percent brick. But that’s their business model, and I’m not so sure a city should be mandating that type of stuff. A city is not an HOA, it should allow for market changes. Glen Carbon pulled out (of that demand), Madison County pulled out, but the city of Edwardsville pulled out, then put it back in.
    The city of Collinsville did two really good things. They did a homebuyer incentive program where they allocated some money. And they also did another one that would make you eligible for city assistance if you bought rental and converted it to owner-occupied.
    We believe incentivizing — not disincentives — goes a lot farther. We believe that home ownership is the American dream. It’s the largest wealth creator in the country.