Connect with us

Real Estate Brokerage

As homeowners move less often, will agents sell fewer homes?

(BROKERAGE NEWS) Did you miss the news about extended tenures in homes that will certainly impact your business for years to come?

Published

on

affordability homes new home sales pending

Homeowners are selling less frequently

Did you miss the news item that will certainly impact your business for years to come?

Homeowners are selling their homes two and a half times less often than they did just a few years ago — and now it is clear that this isn’t a temporary aberration. Homeowners are staying put 50 percent longer than they did in 2007, from six to nine years, which is bad news for real estate brokers and agents who need volume to grow their businesses. Even worse, new buyers plan to stay put for 15 years or even longer.

bar

Looking at the decline

Over the past 16 years, homeowners have been steadily increasing the time that they stay in their homes. For about 20 years, from 1987 to 2008, homeowners sold their homes an average of every six years. When the housing recession hit, homeowner tenure began to rise, and by 2014 homeowners were selling only every nine years. Following a bump up to ten years in 2014, the average homeowner is again selling every nine years, according to a new analysis by NAR’s Amanda Riggins.

Many experts suspected the housing recession, which sucked equity out of millions of homes, was the reason people couldn’t sell. If so, one would expect that since the recovery has almost returned that national median home price to its peak value, lost equity would be restored and owners would be free to finally sell and move.

Except that’s not happening.

What’s more, it looks as though owners will be staying put even longer in the years to come. NAR’s research found that repeat buyers’ median expected tenure rose to 15 years in 2010, and it hasn’t budged in the six years since then. First-timer buyers expect to sell in 10 years.

expected tenure in home

Why homeowners aren’t moving

Clearly, more forces are at work than the rise and fall of home equity. For one thing, the recession spurred an involuntary exodus of more than seven million families who lost their home to foreclosure or short sales. Second, only half of all homeowners have a mortgage, and the equity crunch handcuffed about half of those.

One of the primary causes for relocations — changing jobs — has also declined.

Workers stick with the same job longer today than they did 10, 20, and 30 years ago.

U.S. workers had an average job tenure of 4.6 years in 2012, the last year for which figures are available—that’s up from 3.7 years in 2002 and 3.5 in 1983, according to the Bureau of Labor Statistics. The trend holds up within almost every age and gender category — so it cannot be explained away by women’s increased presence in the workplace, or people working past traditional retirement age.

Moreover, mass migrations driven by opportunities for employment that characterized the Great Depression and continued through the 50s are also a thing of the past. The percentage of interstate movers dropped from nearly 3 percent in the 1980s to less than 1.5 percent from 2010 to 2015 according to Raven Molloy, a researcher at the Federal Reserve.

The decline is pervasive across all age, demographic, and socioeconomic groups, and Molloy finds no complete explanation for the magnitude of the drop.

Analysts say the long-term decline in migration has occurred because the U.S. population is getting older, and most moves are made when people are young. Another brake on moving is the rise of two-career couples since it is more difficult to coordinate a relocation when two jobs are involved.

Homeowners who don’t have to move for economic reasons also are not choosing to move because they like where they are. A recent Pew survey found that stayers overwhelmingly say they remain because of family ties and because their hometowns are good places to raise children. Their life circumstances match those explanations.

Most stayers say at least half a dozen members of their extended families live within an hour’s drive; for 40 percent more than 10 relatives live nearby.

A majority of stayers also cite a feeling of belonging as a major reason for staying put.

Finally, more Boomers are aging in place. Seniors are staying in their family homes rather than downsizing, or moving to retirement communities or rentals. According to AARP, 87 percent of adults age 65 plus want to stay in their current home and community as they age. Among people age 50 to 64, 71 percent of people want to age in place.

What it means for the real estate economy

Here’s a short list of the fallout of longer homeowner tenure:

• Both sell-side and buy-side representation will not grow as quickly as the growth in the number of homeowners. Homeowners buy and sell fewer homes less frequently, so each prospect will generate fewer transactions and less business during their lifetimes.

• The coming of age of the largest generation of Americans in history, the millennials, will have a muted impact on the long term market place because they are buying at an older age. In fact, the entire market is aging; the median homebuyer in 2004 was 39 compared to 44 in 2015. Aging first-time buyers combined with longer tenure reduces the number of homes each household will buy even further.

• Homeowners will spend their money on remodeling, not moving. The Harvard Joint Center on Housing Studies projects that annual growth in home improvement and repair expenditures will increase at a rate surpassing eight percent by the second quarter of 2017. The combination of the aging population (another 10,000 Baby Boomers retire every day) and the aging housing stock means more homeowners are remodeling their existing homes so that they can age comfortably in them.

• Purchase mortgages will decline and so will defaults, as homeowners have more time to build equity. Lower migration can also increase demand for second liens, as homeowners decide to renovate the homes they plan to live in for a longer time. Buyers will prefer mortgage products that minimize interest rate risks, such as fixed-rate mortgages or longer-term adjustable-rate mortgages.

• Owners who stayed put over the past decade will realize the benefits of regaining the equity they lost, which will make their retirement years more comfortable.

#FutureOfSales

Steve Cook is editor and co-publisher of Real Estate Economy Watch, which has been recognized as one of the two best real estate news sites in the nation by the National Association of Real Estate Editors. Before he co-founded REEW in 2007, Cook was vice president of public affairs for the National Association of Realtors.

Real Estate Brokerage

How do you know it’s time to become a broker?

(BROKERAGE) It sounds dreamy to open your own brokerage and be your own boss, but when is it TRULY time become a broker?

Published

on

time to be a broker

Everyone joins the real estate workforce for a different reason. Some to flip houses, others to represent buyers, and so forth. And most are happy with their broker of choice, but for others, the itch to become a broker becomes so great that it cannot be ignored.

But how do you know when it’s time to become a broker? Maybe it’s time for a new broker because you’re unhappy, but it’s also possible that you have the skills and drive to lead your own company.

To find out, we asked three brokers with thriving businesses:

Jennifer Archambeault is the Broker/Owner of Urban Provision, REALTORS®, a growing Texas brokerage.

We asked her how to know when it’s time to create your own brokerage:

It is time to create your own brokerage when the limitations of your current brokerage restricts your personal or professional growth, hinders your ability to serve your clientele at the highest level or you are no longer able to see the value your current broker brings to the table.

Regardless of the reason, it is important to be mindful of your competency and ability to handle the responsibilities involved with running a brokerage and/or managing or mentoring agents.

Is there a tipping point?

There are often many tipping points causing an agent/broker to dream about having their own brokerage, but they often only clue in on one when they are parting ways. A lack of respect or dissatisfaction within your current company, the inability to come to terms on differences with management, not seeing eye to eye on the company’s mission or vision and not being able to serve clients to the desired standard often top the list of tipping points if the agent leaves disgruntled.

However, there are times it is purely a natural transition having nothing to do with any reason mentioned above and solely taking your career and income to the next level.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

Personally, I think it is the latter more than the former. Gaps in the market will change over time but often the desire to be independent doesn’t ebb and flow as easily. If someone’s independent streak is unavoidable they often exude qualities that allow extreme focus to continuously keeping their eyes on a prize.

There are benefits of having your own brokerage, but there are also limitations as well. Some people’s independence can be a hindrance to their business especially when they want to start their own brokerage because they simply do not like or cannot continually follow the rules.

I believe it is better to part ways to build your own brokerage or brand because it satisfies a personal or professional growth need rather than leaving your previous company disgruntled. The latter generally allows for a flawed mindset.

What do you wish you had known before starting a brokerage?

Do not always focus on Plan A because often you’ll end up with the most perfect fit with Plan D.

Being nimble is a must-have quality for anyone in the real estate industry, but owning a brokerage often requires stretching far beyond being nimble and reaching for superhero status. Initially, I believed every agent could be molded into a specific model or a way of doing business but quickly realized that there is a not a one size fits all brokerage regardless of someone with decades of experience said so.

The perception of a brokerage with a large number of agents on the surface implies success. However, the old saying quality over quantity rings very true in a brokerage setting. Stop worrying about what others are doing – be different because that’s how you get noticed. Do what you do well and what works with your clients, for your personality or in your marketplace.

Tyler Forte, Co-Founder & CEO of Felix Homes saw a need to marry technology and real estate.

Here is his take on starting a brokerage:

Prior to starting Felix, I was a venture capital investor and I can tell you that any successful business, whether or not it’s a brokerage, is started because the status quo does not solve the market’s distinct needs.

Speaking specifically to why we started Felix, home sellers are facing a number of challenges that the traditional brokerage model does not address. When I sold my home last year, I saw firsthand how the home selling process is broken. I knew that starting a disruptive real estate brokerage was what I needed to do in order to make the experience of selling a home better.

The challenges homeowners currently face include hiring an agent who does not have their best interest in mind, to the uncertainty of not knowing if their home will be sold and for what price. At Felix, we are looking to provide consumers with the best home-selling experience period.

As far as the challenges we faced when starting a new brokerage, there are many. For one, the real estate industry is slow to adopt new innovative models. This is because current incumbents have built moats around the data and distribution of homes all at the consumer’s expense. In addition, because real estate is governed on a state-by-state basis, educating ourselves on the laws and regulations of each state was a challenge.

Jeff Brown, Owner of BawldGuy Investing has been a broker for decades and is never ever EVER shy about telling it like it is.

How do you know when it’s time to create your own brokerage?

I’ve always contended Dad was right, as you always thought most folks didn’t know when to create their own firm. Over the years I’ve spoken with countless brokerage owners about this very question.

Roughly a third of ‘em actually thought they knew the right time. Me? I did it WAY to soon, though in my defense, I had my dad’s infinite brokerage experience IN the office daily to back my rookie play, stop mistakes BEFORE I made ‘em, and generally mentor the crud outa me.

Most brokers told me they knew when decisions made by their broker bosses just were not what they would’ve done. They usually came a tipping point, where the decision made itself. But again, that was just a third of those with whom I talked. The rest just did what I did, rush in willy nilly. The huge advantage I had was a decades experienced brokerage owner mentoring me daily, in real time, and who, you know, actually gave a damn about me.

So what is that tipping point?

The most often heard tipping point was the feeling of being constrained by their boss’s operating policies. For example, and a gigantic tipping point, was a friend of mine who wanted to run his own office using the Broker-Centric model, not the Agent-Centric model run by the broker for whom he worked.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

The latter is merely personality. Sometimes it works to breakaway, and sometimes it’s been catastrophic. Being independent has nothing whatsoever to do with knowing what you’re doing as the person in charge.

The whole ‘gap in the market’ thing has always puzzled me as a reason to open a brokerage. The exception clearly would be that the policies of operation under which you’d run your own office would substantially improve your chances of taking advantage of whatever market gap you perceived. I find that to be uncommon, at least in my experience.

What do you wish you had known before starting a brokerage?

Without even a hint of maybe having a doubt, I wish I’d understood the good news/bad news joke that says: “Well, Jeff, the good news is you’re now the Go-To Guy. The bad news? See the good news.” 🙂

The difference between signing the backs of checks and the front of those checks cannot be overstated. Every single buck stops at your desk, period, end of sentence, over ’n out. Some folks find that to be too daunting.

Continue Reading

Real Estate Brokerage

Why women don’t self-promote at work as often as men

(CAREER) Being visible and owning good work done well continues to be a conundrum for women in the workplace. So stand up and be heard!

Published

on

women empowerment

Ladies, if you recently met with your broker (or corporate) for an end-of-the-year review and you failed to share all of your successes and the ways you shined over the last year, you aren’t alone.

A recent study revealed that regardless of the situation, women do not promote themselves in the workplace as much as their male colleagues.

What is clear from the information gathered – women need to realize they are badasses in the workplace and be unwavering in their belief in themselves. And, be ready to share this information with their supervisors or clients if they wish to earn more.

The study, conducted by Christine Exley, an assistant professor of business administration at Harvard Business School and Judd Kessler, an associate professor at Wharton, found there is a broad (no pun intended) gender gap when it comes to self-promotion in the workplace.

As many raises and promotions to higher level roles are dependent upon an employee’s self-evaluation, women are more at risk of missing out on getting hired or higher earning opportunities. In real estate, this quality limits earning potential and can have rippling long-term effects.

The pair considered multiple hypotheses from whether women were less confident and men more, to whether it was a matter of taking advantage of systems where self-promotion leads to incentives, to whether a boss would eventually find out the truth about a worker’s ability.

“In every setting we explored, we observed a substantial gender gap in self-promotion: Women systematically provided less favorable assessments of their own past performance and potential future ability than equally performing men. And our various study versions revealed that this gender gap was not driven by confidence or by strategic incentives, and that it was robust both in the face of ambiguity and under increased transparency,” the pair stated.

What could be at play? If women are punished for excessive self-promotion in the workplace more than men, they are more likely to keep their successes to themselves, the researchers speculate. Prior research into self-promotion in the workplace found that excessive self-promotion suggested gender differences in backlash.

As if we were still living in the 1950s, women often face backlash for being too vocal about their abilities, and risk losing out on promotions because being visible and self-promotional goes against the idea of how a woman should behave. So, while being visible and taking ownership is the way to get ahead in the workplace, for many women the risk of backlash means they sit and remain quiet, being passed over because they fear being labeled “a bitch,” as the study found.

What Exley and Judd determined is there is the need for more research into they “why” of this conundrum.

Meanwhile, the pair’s message is this: Employers (and brokers), don’t overlook women on your team; they may not be as vocal about how good they are, but that doesn’t mean their performance is inferior. And to women out their busting ass and closing deals – take note of your accomplishments and promote your worth when in the field and in the office!

Continue Reading

Real Estate Brokerage

Why real estate brokerages are NOT startups

(REAL ESTATE) Brokerages are popping up nationwide that are sleek and modern, and also misinformed as they call themselves startups. Let’s talk about the technical definition.

Published

on

real estate startup

Businesses that are just starting out often refer to themselves as startups (which is inappropriate given that startups are funded differently, scale differently, and have completely different KPIs). Take real estate brokerages, for example. An increasing number call themselves startups, but when you look at the definition of a startup, can you really call yourself one?

Small businesses and startups have very different definitions (and there’s no shame in being a small business or an “innovative brokerage”). Let’s discuss.

1. Startups have a different goal altogether.

Typically, startups are about growth. They’re designed from day one to scale extremely quickly. Small businesses are often limited by a target market or geographic location. There’s nothing wrong with that, but they aren’t scalable the same way an international software brand is. Think about scaling in terms of a beauty salon versus MatchCo, an app that uses technology to create a foundation just for you. A franchise does not a startup make.

2. Startups generally seek outside funding to accelerate growth.

Startup founders often give up equity shares to generate funds before becoming profitable. Small businesses are typically self-funded, bootstrapped into profitability, and owned by one or a select few. A small business venture is typically less risky than a startup, too. The idea behind a small business venture is profit, and you want the business to last. Startups are structured to be sold or acquired once it hits critical mass – a “startup” is temporary.

3. Startups disrupt the industry.

Think about these companies – AirBnB, Google, Dropbox, Facebook, even Apple, a long time ago. In their early days, they were startups. It was risky to invest in these companies as they were trying something new (not iterating on something like the real estate practice which is one of the oldest professions in America), but they have outshone their competitors. They disrupted the marketplace. That’s what a startup does. And it doesn’t always work. Sonitus Medical attempted to disrupt the hearing aid market. They raised almost $90 million in funding before the Centers for Medicare & Medicaid Services decided the product wouldn’t be covered. The company held an auction and closed its doors. Brokerages have experimented with paying salaries, going paperless, or having all agents working remotely – these are all fabulous innovations and iterations, not disruptions.

The takeaway

We’ve been on the forefront for over a decade of ushering in the era of indie brokerages, paperless real estate brands, and counter-culture companies, but brokerages are simply not startups, and this is not up for debate. Iteration is not innovation.

Don’t call yourself something you’re not – be an “innovative broker” and rock it, because you’re not a temporary company seeking to scale so rapidly that you’re acquired for your indisputable disruption.

And finally, don’t fall for real estate brokerages pitching themselves as “startups” when they’re misinformed and really mean they’re simply, and beautifully “modern.”

Continue Reading
Advertisement

Our Parnters

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox