Grading Time! Reviewing My 2014 Predictions


Welcome to another edition of an annual tradition, in which I go back and grade myself on my predictions made at the start of this year. My track record so far:

  • 2010 Predictions: 6 of 10 (.600)
  • 2011 Predictions: 4.5 of 7 (.642)
  • 2012 Predictions: 2 for 7 (.286)
  • 2013 Predictions: 4.5 of 7 (.642)

When I made my 2014 predictions, I wrote: “In any event, it’s customary here at Notorious to make predictions that are sure to go wrong, or your money back! 2014 should be no different in that regard.” Given how gloomy my predictions tend to be, I’m happy to report a solid no-good outing in 2014!

Let’s get into it.

1. The Housing Market Slows Down, Unexpectedly: YES

I suppose the way to grade this is around that word “unexpectedly”. Fact is, the housing market did slow down in 2014, but whether you expected that or not is unknown. Nonetheless, I’m giving myself a Yes on this one because the “rebound effect” from investors was tamped down this year. Here’s Jed Kolko, Chief Economist of Trulia:

Why are home prices rising faster in these markets than in places like Little RockBaltimore, and Rochester, where prices are rising minimally or even falling year-over-year? In part because the housing market is still recovering from the bust, and the local markets where prices had fallen most are now seeing larger price gains – that’s the “rebound effect,” which was fueled by investors and other home buyers scooping up relative bargains. But the rebound effect can’t last forever: once those bargains are gone, there’s no more room to rebound. We’re already seeing price gains slow dramatically or even reverse in some of the boom-bust-and-rebound markets.

The slowdown isn’t necessarily a bad thing, however, as it signals a return to sanity. Here’s Stan Humphries, Chief Economist of Zillow:

Now, some of those incredibly hot markets are coming back to earth, as those more artificial influences slowly work their way out of the market. In Los Angeles, home-price appreciation slowed from 18.5 percent annually in the third quarter of 2013 to 8.3 percent over the past year. Annual appreciation in San Francisco slowed to 8.2 percent, compared to 23.5 percent over the same time period last year.

Is there anyone who wasn’t cashing commission checks in San Francisco area who thinks 23.5% year-over-year price appreciation is a positive, healthy market? Certainly not their buyer clients….

In any event, the market did slow, the investors did retreat, and all of that may be a good thing.

2. Say Hello to Regulation: NO

This one surprised me a bit. Yes, the Qualified Residential Mortgage (QRM) rules were finalized in October, but they were hardly the devastating thing they were in the first set of proposals. NAR and its allies won a victory on that front. So yeah, there will be some changes, but not really disruptive ones.

But the core prediction was that we’d see at least one significant piece of regulation on real estate brokerages and agents. That was simply and happily dead-wrong. Perhaps 2014 being an election year cooled the ardor of our betters to tell us how to run our lives, but thankfully, we escape 2014 without major regulation.

3. The Gap Widens: YES

The gap between the Haves and the Have-Nots in real estate continued its growth in 2014, as predicted.

At the brokerage level, we have the top two brokerages — the NRT and HomeServices of America — continuing to acquire companies large and small. The gap between them and other brokerages continues to grow. The NRT, for example, acquired 14 companies in 2014, including  top local companies like Martha Turner Properties in Houston, as well as ZipRealty’s brokerage operations. HomeServices of America acquired Intero, a large Northern California brokerage with $6 billion in volume in 2013.

At the agent level, we saw Keller Williams launch Mega Agent Expansion, as clear a sign as any that some agents at the top are getting more and more and more by leveraging their systems and expertise and staff. Meanwhile, the average NAR member had the same volume and transactions in 2013 as she did in 2012 — zero growth. And 31% of Sales Associates had five or fewer transactions, according to NAR.

I’d say the gap is widening, yes. We’ll see if the trend continues in 2015.

4. The Fall of Organized Real Estate: NO

Happily, not only was I wrong about this, but the reality ended up being 180-degrees from a “fall”. The unexpectedly bold move by NAR — driven, it is said, by Dale Stinton himself — to impose new “Core Standards” suggests that organized real estate isn’t falling but rising (at least in 2014). But on top of those Core Standards, we saw various moves — including a proposed Code of Excellence — that suggest that the leadership of Associations and MLSs recognized the problems and acted on them. Or at least tried.

The vagueness and uncertainty that surround many of these proposals does somewhat undermine the idea of resurgence a touch, but it cannot be denied that the prediction of “significant decreases in membership numbers, and real debate by the industry as to whether Associations are necessary at all” was about as wrong as it could be.


5. Keller Williams Goes Public: NO

Well, not much to comment on here, is there? 🙂 I was just wrong. Perhaps KW will go public some day, but that day was not any day in 2014.

6. Portals Take The Next Logical Step: NO

At the start of the year, I really expected that and Trulia would make some sort of dramatic move to compete with Zillow. I thought perhaps they would launch a set of real services (such as virtual assistants and transaction coordinators) or that they would do an of model of referral-based income.

Instead, Trulia took the unexpected step of agreeing to be acquired by Zillow, and Move took the wholly unexpected step of being bought by Rupert Murdoch.

Perhaps my predictions might have had a chance had those mega-deals not happened, but that world is not the one we live in. So yeah, I’d say I was pretty much wrong on this one.

7. Rise of New Discount Models: YES

I think 2014 did see the rise of the new discount models in real estate.

First of all, companies like Realty One and HomeSmart have shown massive growth in 2014.  Realty One did 25,000 transactions in 2013, and was the 7th largest brokerage by volume then. HomeSmart did over 19,000 transactions and $4.8 billion volume in 2013. Word is that both companies have grown significantly, with HomeSmart going over 8,000 agents. A few years ago, both of these companies were non-existent.

Second, on the heels of United Real Estate, we have seen other low-cost discount models arise. The poster child is likely Nexthome, a new low-cost franchise launched by James Dwiggins of RealtyWorld.

Third, on the consumer front, we’ve seen a couple of new efforts launch as well. The most important is, a venture from Keith Rabois, a serial entrepreneur from Silicon Valley, which promises extremely fast closings (the original promise was close-in-3-days). It’s not a typical discount model, but if time is money… then, yeah, it is. Another startup going with a discount model is Surefield, which I’ve profiled. The thought there is that by replacing the typical home tours with a virtual walkthrough, the company can sell a home for half the cost.

And of course, there is the move by Redfin to advertise on TV, following the big boys like Zillow, Trulia, and

Hidden at the end is the “1.5% listing fee” piece. I’d say that’s a significant attempt, though we’ll see how it all plays out.

In any event, I’m giving myself a Yes on this prediction.


So, all in all, I’m at 3 of 7 for 2014 for a .429 batting average in 2014. Thankfully, most of the misses have been on the big disruptive things, and the hits have been on somewhat smaller, longer-term things (like the gap widening).

I’ll do my 2015 Predictions probably after the New Year, and I do plan on some extended family time over the holidays. So let me take this opportunity to wish all of my readers a Merry Christmas and a very Happy New Year!


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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