After going through the major political, economic and technological shifts of the past decade, many real estate professionals are probably asking themselves, “When is business going to get back to normal?” And the answer is never — if “normal” is defined as a market that operates similar to the one that existed before 2001.
If the discussions at the National Association of REALTORS® (NAR) Leadership Summit yesterday afternoon in Chicago were any indication, the changes over the next few years could come faster — and hit the industry harder — than the ones experienced during the boom and bust of the previous decade.
About 1,600 association executives, real estate practitioners, and brokers shared their ideas on what’s next for real estate as part of a REThink session, NAR’s new “open source” strategic planning initiative. REThink aims to involve tens of thousands of REALTORS® across the country in high-level conversations about how to adapt to many different futures for the industry. To accomplish this, NAR is presenting various plausible scenarios that have been generated through consumer research, as well as fostering discussions among large groups of members and real estate experts about those hypotheticals.
These scenarios include:
Ostrich: The leaders of associations count on what they already know, while consumers migrate over to so-called “Big Data” providers of real estate information on the Web. Members see their associations as out of touch, and leave in droves.
Beauty and the Beast: Many new real estate brands come into being, and old ones reinvent themselves. The housing market comes roaring back in some places, while others remain depressed, contributing to a growing wealth divide.
Jungle: A flood of new businesses, many of them non-traditional players such as Martha Stewart, Costco, and Facebook, crowd into real estate. Additionally, younger consumers who value access over ownership give rise to new concepts like “lease-r-ship,” a hybrid owning-renting model.
The American Dream Recaptured: By the start of the next decade, consumers still enjoy buying stuff and still believe in home ownership as part of the American Dream. New hotbeds of innovation arise, and energy and food prices remain somewhat low. Life is good, but is it sustainable?
The New American Dream: Resource scarcity and global conflicts have forced a reevaluation of priorities among consumers. The traditional American Dream is seen as largely unsustainable, so the marketplace provides myriad residential models that revolve around communal ownership.
“Hopeful,” “optimistic,” “excited,” “concerned,” “glad,” and “anxious” were some of the terms attendees used to describe their feelings about these potential outcomes.
Amanda Addington, a residential practitioner and chair of the Frederick County (Md.) Association of REALTORS® Young Professionals Network (YPN), predicted that the sudden introduction of several new technologies would continue to change real estate professionals’ value proposition.
“Consumers are going to find the homes they’re going to live in before they ever have to talk to a REALTOR®,” she explained. “The good part is that it can be a time saver for agents. The bad part is that we’ll have to undo a lot of what consumers learn from doing their own research online.”
Robb Pair, president of Harlem Lofts and vice president of the Manhattan (N.Y.) Association of REALTORS®, pointed to Streeteasy, a consumer-facing MLS-scraping site covering the New York metro area, as an example of this kind of disruptive technology. Created just a few years ago, it’s become one of the most popular sources of real estate data in that market.
“Agents go there because it’s better than our MLS,” Pair said. “Real estate associations are threatened in a way they never have been before because of the speed at which other successful business models can spread.”
Pair argued that associations at all levels should closely monitor trends outside of their area — particularly in leading-edge markets such as New York — to anticipate what challenges are headed their way. “Pay attention to hyperlocal issues and look at the broader reach those will have on the market at the national level,” he said.
Despite the potential turbulence in real estate’s future, Sarah Taylor, a practitioner from Port St. Lucie, Fla., and NAR’s YPN and Technology Liaison, is enthusiastic about the future. “It’s exciting to see the prospect of the industry getting turned upside down and discovering what’s important and what’s not,” she said.
To survive the ongoing evolution in real estate market, Taylor recommends having deep market knowledge, seeking out formal learning opportunities on technology and selling techniques, and looking outside the industry for sources of inspiration and innovation.