Retail Market, Social Networking, and Software trend & issue

June 24, 2010

3rd day of class, we discussed retail market, technology, social networking, and software trend and issues. The first issue that came up in retail market trend was potential changing in near future, dominated perspective is summarized as “shrinking” because on-line industry, on-line shopping mall, is growing so fast compare to traditional retailers. In reality, on-line shopping mall is so competitive, most of time, offering price of goods are competitive; if not, we can find out chipper goods with couple of clicking anyways, offering promotions such as free shipping and tax benefit are so attractive purchasing goods on internet. Presumably, particular business sectors, such as off-line video rental service and bookstore which are venerable to fallow up these trends will be closed within couple of years and is already happened. In contrast, restaurant and bar industry is still growing up and is even displacing traditional retail area. In developers or owners perspective, this trend could make matter for worse because there is huge finish out cost difference between traditional retail store and restaurant, which is going to be financial burden for developers.

In terms of using internet and social networking at real estate industry, available information of proposed property released to the market has significantly improved in both side, quality of information and quantity of information. As far as I experienced before, sometimes the information taken from on-line was even more accurate than real estate agent, in the same context, I’m quite wondering how this trend may impact on real estate industry, specially, how does it influence on participants of real estate industry such as sales brokers and leasing agents. As one of the article describe, more than 80% of potential buyer start their searching from the internet and require more and more specific information also known as “long-tail’ search, which make real estate agent less important than ever before.

The next interesting issue that we discussed in class was the relationship between property value and interest rate, especially in this economy down turn, as Dr. Forgey noting that purchasing power to buy property is highly depending on interest rate. Recent lower interest rate make buyer more affordable to purchase expensive property, sometime it curses overspending regardless of their earning, however if interest rate has backed up to previous level, the property value will be going down and interest burden on borrower will be increased. Making long story short, during last couple of decade, without anything changing in market, value of property has been going up because of lower interest rate. Eventually, sudden increased interest rate will significantly influence on residential market and on individuals who borrow excessive money from banks. If it happen, consequence will be catastrophe.