Jim Czapiga of CATIC joins Stavvy’s Finside Chats to explore the role of technology, digital transformation, eClosing, and RON in the title industry.
With the Federal government hiking interest rates 11 times since 2022 and rates reaching a 22-year high, many industry professionals want to know what’s next.
We recently discussed predictions with Patrick Stone, chairman and founder of Williston Financial Group (WFG). He has enjoyed a lengthy career in real estate, including three C-level positions and serving as a director on two Fortune 500 boards.
Inman News named Patrick one of 2013’s “100 Most Influential People in Real Estate” and, in 2015, one of the “Top 101 Real Estate Industry Doers.” During 2019 and again in 2021, he was one of Housing Wire’s Vanguard Award recipients.
Patrick joins Kosta Ligris on Stavvy’s Finside Chats® podcast to discuss what’s next for the real estate industry, interest rate forecasts, AI, and how title companies can prepare for the future.
In this episode of Finside Chats, you’ll learn about:
- Recent trends in inflation, interest rates, and commercial real estate, and how these areas might trend into the future
- Demand factors that could influence the real estate market in 2024
- Ways for title companies to prepare for next year and beyond
Listen now: Real Estate Market Update and Outlook for Title Companies in 2023 and Beyond
Thinking beyond supply and demand
While the real estate market depends on supply-and-demand variables, Patrick suggests there are elements in the demand category that aren’t always considered.
“If you look at real estate, everybody talks about supply and demand,” says Patrick. “But they don’t necessarily break it down like they should. Supply is obviously resale plus new construction, but we also need to consider desire and affordability when considering demand. Between Gen Z and millennials, you have a population bubble coming into home buying, and you’re going to have a lot of people buying homes.”
Patrick suggests that the younger generation’s desire to purchase homes is much higher than many anticipate. “All we need is affordability to come back into line, and that’s a function of interest rates,” says Patrick.
Tips for title companies and operating more efficiently in today’s real estate market
As title companies look to the future and take steps to prepare, Patrick recommends focusing on what you can control.
“Instead of spending half of the day talking about where the markets are going or how bad things are, spend time looking at operations and what you can control,” says Patrick. “Come up with metrics to tie your expenses to the volume of business. It’s very easy, for example, to track open files per employee because employees are typically 40%-50% of business expenses.”
Patrick says when tracking this metric, you can be very humane about it. “You can do work shares, partial time off, or other actions to manage employee expenses.” He suggests slowing down, looking at all the expense lines, where money is flowing, what is tied to the client’s perception of the operation, and what has no market impact. “Outsource or move the things that don’t impact the market to some more viable and less expensive source, replacing fixed costs with variable ones.”
Another area to focus on is technology and how it can help control expenses and improve operational efficiency. For example, integration has become increasingly important. And while using APIs and integrations is becoming more popular, continued improvements are critical to future efficiency.
Additionally, with so much recent discussion about AI, Patrick points out that artificial intelligence isn’t anything new; it’s just evolving.
“AI has been around in this industry for about 23 years,” says Patrick. “Will it be a factor in the future? Yes, it will grow over time. But right now, I don’t think AI is really where people should be putting intense attention. They should be talking to their underwriter and looking for automation sources that will help them do more integrations, allow them to access more information online, and do things on a more automated basis because it’s faster and less expensive. Foster all the integrations you can so you don’t keep rekeying the same data over and over again — and making mistakes while doing so.”
Leveraging innovation and technology can help title companies prepare for whatever comes next. And as the industry closes in 2023 and launches into a new year, Patrick is optimistic about the future.
“I’m confident that by the end of this year, we’ll see mortgage rates and inflation continue to come down, and 2025, in particular, will be a very good year,” says Patrick. “Improvements will be gradual and slow. But I’m pretty confident it will happen.”
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