Trends in Real Estate

Many trends analyzed and predictions made over the past 20 years have already occurred while the collapse of the dotcom market and the housing markets caused some shifts to delay. Wider delivery of broadband, explosive growth, ability and usage of mobile communications, and the maturing of the digital generations (Gen X and Y) have pushed the real estate brokerage business to the cusp of significant and fundamental change.

Now in the 11th annual Swanepoel Trends Report we deliver not only the latest trends but now also delve deeper into uncovering persuasive strategies, providing workable solutions, and identifying companies that are already moving to where the puck is going to be.

Remarks: The Foreword of the 2016 Swanepoel Trends Report, and an in-depth Summary will be available here upon release of the report on February 1st, 2016.

There are always trends… and we have been writing about them since we wrote Real Estate Confronts Reality in 1997. Now, almost 20 years later, as we evaluate 2015 and beyond, we celebrate our 27th publication and the 10th edition of our annual Swanepoel TRENDS Report. A real estate trend is any consistent pattern or change in the general direction of the real estate industry that, over the course of time, causes a statistically noticeable change.

Although trends of course include the economy or a change in mortgage rates, we focus on the business side of the residential real estate industry. We identify those meaningful events, powerful players, ingenious innovations, major acquisitions, key strategic moves, and/or fundamental shifts that are defining or are expected to define or redefine this industry.

We continuously track some 20 mega-trends to see how they evolve and what new iterations time brings. We discard fads, blue sky, and unsubstantiated claims. We monitor meaningful traction and look for movements that show potential for real impact and possible evolution into a mega-trend. Our team of 11 researchers and writers has collectively over 250 years of experience in the real estate industry. This is our world and we care for it.

In 2014 hundreds of new regulations created by the CFPB will become law, the majority of Prudential offices will convert to Berkshire Hathaway HomeServices, Redfin will most likely go public, Zillow or Trulia will pull off another astounding acquisition, Keller Williams Realty will pass 100,000 agent count, there will be a race by Realtors® to secure their dot REALTOR® high level domain, RE/MAX will buy back more of its regions, HomeServices of America will add another two great independents to their portfolio, and most agents will have a better year in sales than they did the last two years.

None of this is inside knowledge, merely extrapolations of activities and trends already visible and therefore fairly likely to occur. In this chapter I give you my sense of where things are now and could be going in the future. It’s interesting to make forecasts, even though it’s hard as no one really “knows” the future. Some downplay trend tracking and some just throw out an opinion with unsupported conjecture. Then there are those of us that try our best to help recognize definable footprints that have been created. With meaningful research, analysis, thought, and yes, after two decades, thousands of companies and topics covered, and about a million words written in 25 books/ reports we have shown that we can, with a high level probability, predict what is going to take place.

Fiscal cliffs, Obamacare, the Mayan’s ‘end of the world’, Greece and the Eurozone collapse, Global Warming, North Korea testing long range missiles…. and that’s just for openers. This decade is setting itself up to be a doozy: The Geopolitical climate is providing a seemingly endless supply of water cooler chatter and cocktail party fodder. Only now there are few, if any, water coolers and cocktail parties – having given way to organic, virtual forms of exchange with limitless capabilities for group and individual expression. The challenge now is to sift through, or perhaps better said – ‘filter in’ the information of most use at the right time.

My strategy is to confine or organize how and what gets through by industry – in this case the ‘Real Estate’ industry. It is hard for me to imagine an industry that has experienced more sustained turmoil in the last half dozen years and there appears to be little to suggest it will abate any time soon. As long as I care to remember, the conversation has always come back to ‘profitability’ or lack thereof. There are a host of very important topics and trends to consider (filtering in) that offer ample opportunity to better understand how tens of thousands of real estate enterprises drive towards that elusive bottom line affectionately referred to as ‘the company dollar’. And that in a nutshell is the purpose of this publication.

Franchises, Independents, Large vs. Small, Boutique, Consolidation, Virtual, Fee for Service, Concierge, the list of Brokerage/Business models are the subject of endless opining and debate. Add to this a substantial dose of ‘enlightened consumerism’ and let’s not forget our 535 friends in Congress and we have the makings of a first class business case study for the ages. But let’s leave the academic autopsy to the class of 2025. For now it is enough to know that, large or small, affiliated or not, the company dollar is under more pressure than ever.

Yes, 2012 is a leap year, and an election year in the U.S., the diamond jubilee of the accession of Queen Elizabeth to the thrones of the United Kingdom, Canada, Australia and New Zealand and the end of the mythical creation of the Mayan civilization.
And the residential real estate brokerage industry in the U.S. is also experiencing a significant revolution of its own.

Year after year we explore, analyze and then share with you the trends driving change in real estate. Most years it appears that change is happening slower than most would like. Some years it looks like the momentum of different components are colliding, forcing more change to occur in a shorter period.

2011-2013 is the latter.

We can sense it, see and hear it. This is not just idle chatter but based on the hundreds and hundreds of people we talk to year after year — the most influential people in industry — CEOs of all the largest real estate companies, Association Executive Officers, presidents and CEOs of MLS organizations and third-party media companies.

Associations are at a survival crossroad, third-party companies are again going IPO in a big way, the next generation is pushing baby boomers out of their way and mobile is connecting all the dots into one giant global, yet local, network as we redefine life as we have lived it for most of the last century.

You must do something! You cannot just sit on the sideline and watch! There is no time to wait. It’s now time to redefine your paradigm. Significant and potentially decade-long lasting change is upon us.

When it comes to predicting the future, only one thing is certain: “You will be wrong!” And the more detail you provide, the less reliable the forecast will be.

However, what is true is that often, future events unfold according to a trendline. Almost like a chess game that follows a strategy or plan. Of course there are always options and surprises, but the better you are at chess the more moves you can “see” ahead and the better you will be at preparing for your options. Things that today appear permanent can and will change; and at lightening speed. Consider how quickly the Internet, email, texting, mobile phones, Google, Facebook etc. have become part of our every day lives.

Yes, Rome was not built in a day, but it also didn’t just happen either. It’s a process. A journey.

Be wise – prepare for change.
Be practical – expect the impossible.
Be smart – consider every viable option.

And always have a Plan B. As always, I look forward to chatting with all of you during 2011 – both in person and online.

Although change is an ongoing event – the only constant remaining in life – it doesn’t come all at once.

Fundamental structural change to a belief system, a political system, a philosophy, a very way of doing business or an industry comes in small, incremental steps that are often too small to notice. But over time as those steps pile up and collide with specific events that have a disparate power to cause seismic change and the result is re-engineering on a large scale.

And at this very moment there are many different events indicating that we, as an industry, have found ourselves very close to that nexus. These major shifts often only occur once or twice in a century or in a person’s life. And for us to possibly be at that point in the history of the residential real estate industry is exhilarating.

Please don’t resist – embrace.

Please don’t wait – move forward.

Please don’t criticize – contribute.

Please don’t tear down – add value.

Individually and together we can all succeed.

For the last decade I have been feeling that we, the industry, have not and are not moving fast enough to make the changes necessary to create a better future for the real estate professional. There are of course numerous reasons. Firstly, our human nature is to resist change. Secondly, we were so busy with the business of making money, especially from 2000 to 2006 that there wasn’t time. And thirdly, the motivation to retool was not strong enough.

However, the last two years brought us all back to mother earth and as many businesses failed, for which I am deeply saddened, I have to acknowledge that it’s the much needed stimulant that the industry needs to overcome these three aforesaid hurdles that are standing directly in the way of progress.

There is a beautiful saying that poses the question, “Does the journey create the man or does the man create the journey?” The journey is now reshaping our industry and 2008-2012 will be the most important and formative years in reshaping the real estate and financial service industries for the future.

The more you read the more one realizes that change causes trends and patterns to emerge. Patterns that can be identified tracked and analyzed. While there are many things in life and the future that we can’t control there are many decisions we can make today to help shape tomorrow’s outcome. And making those decisions requires a clear vision of where you’re going, what that will entail and a good strategy for getting there.

This Report hopes to serve as a passageway through uncertainty. As always it is my hope that this annual synopsis of where we are, what patterns and models are most likely to cause the greatest impact and which scenarios for the future will have the largest impact will be a significant contributor to the creation of your personal and company roadmap for the future.

Rest assured that knowledge, hope and a love for our country, industry and the customers we serve will carry us through this difficult time.

It seems that every decade or so a year comes by that really defines a period in our industry – a year when certain events really took shape, the bottom fell out, innovation became mainstream, paradigms that had ruled for decades started eroding … yes, a year in which the path’s direction was forever changed.

Only history, maybe 10 or 20 years from now, will or will not view 2007 as such a year. However, as we stand here in its last few weeks it looks as if 2007 is destined to be a landmark year.

To capture 2007 in a bottle I have detailed those who will be forever eulogized in the history of 2007 in the Trendsetters, Newsmakers and Events of 2007 sections. But it’s not the companies, people or activities during the year that this report is all about. It’s rather about what occurred that may, going forward – especially in the coming years (2008/09) – have a significant impact on our industry.

As you read through the Top 10 Trends I selected for 2008 you will notice several trends that have taken significant turns during the last 12 to 18 months and have, like a winding river, carved out a new direction.

No sir, this is not a static industry and it’s not like any other.

Real estate continues to be dynamic and during this “Changing of the Guard” period (1995-2015) things are occurring that surprise us every day.

As always, I hope that my research, analysis and interpretation of what is happening and is going to happen will be of value to you as a real estate professional in dealing with all of the decisions that you are going to be making during the ensuing year.

The Times They Are a-Changin’ is the third album by Bob Dylan, released in 1964. Now some 43
years later the title seems as appropriate today as it did back then.

It has been said that if you were to condense the last 3,000 years into 60 minutes, then:

11 minutes ago Gutenberg invented the printing press
2.5 minutes ago we discovered the telephone
2 minutes ago we started listening to the radio
90 seconds ago the TV took its place
60 seconds ago the fax came existence
25 seconds ago the PC started changing our lives forever
12 seconds ago the Internet networked the world
9 seconds ago Google started cataloging the Web
2 seconds ago YouTube was born
This simple but effective timeline shows us just how fast change actually does take place and much of
what we take for granted today really is less than a generation old.

And so my fellow real estate professionals please note – Change Is Here. On the lighter side, for those
who are confused I drew the diagram on the opposite page … it might just provide more clarity than
the predictions in this Report. But you can rest assured that although the industry is undergoing a
complete re-metamorphosis, the species known as Realtors® will almost certainly survive as the primary
link between Americans and the American dream. But they will be very different in the future
– more automated, more online, more knowledgeable and more consultative. They won’t be just
focused on closing the sale but rather more consumer-centric than before.

Smart brokers and agents will research every market and model, every nook and cranny, every
book and course – searching for that one idea that will spark a new direction, a new strategy, a new
method or a new service that will lead to improved achievement.

We appear to be about half way through this 10 -15 year industry transition – one that is creating
confusion, turmoil, retirement, regret, frustration but above all huge opportunities.

I would not dare to purport that I know what the future will bring. I don’t. And as most predictions about the future are given to fallacy, I claim no exclusive insight or magical perspective that any other astute person could not also ascertain, given he or she dedicated the same time and effort to this task.

So this report isn’t about making spurious predictions, nor is it solely about the future. It is more a state of current affairs in the real estate industry combined with a compendium of national research. This research carefully monitors shifts in thinking, evaluates innovation, and tracks existing trends that, according to our analysis, show a strong tendency towards change, longer term growth, and the possible structural impact on the residential real estate brokerage industry.

This impact, if continued over time on a national scale, will, in all likelihood, cause change – change that has the power to affect your future and that of the entire industry. Change, it is said, is what most people fear most – not because it is wrong, rather because it is simply uncertain. We cannot predict change but we can prepare for it.

Therefore, the goal of the Swanepoel TRENDS Report is to alleviate uncertainty by introducing, at an early stage, important information that will most likely shape your future. My sincere hope is that the introduction of this quality information will enable you to respond ahead of time, thereby preparing yourself against and for many possible future scenarios.

Scenario planning will empower you. Knowledge will allow you to strengthen your skill set and service offerings. Tomorrow will become part of today, and your earlier concern will forge building blocks towards your continued success.