I went to RE Tech South (RETSO) last week thinking I would come back from Atlanta and impress my friends with lots of conversations about the "next new shiny thing" and how we can dominate the market using it. Instead, I find that all I really want to talk about is a much higher level conversation about the relevance of NAR and the opportunity within the next 60 days to grab the destiny of the Housing Industry and effect change.
I am a second generation mortgage lender, my mom was a REALTOR for years, and I believe in Causation Political Action. I've lobbied in Washington and Raleigh, I've been deeply involved in County and City issues that affect my industry and Real Estate for years. So the conversations about the NAR REALTOR Party Political Survival Initiative #RPPSI is one that I've followed and been interested in for several weeks.
Like many others, I was just reading along... doing the obligatory day to day activities that generate leads (and money) for our family... putting this issue in the #StuffICan'tControl bucket along with Shadow Inventory, Nuclear Reactors in Japan, the Cost of Gas, Shutting Down Fannie and Freddie and Loan Officer Compensation changes... and then along came Rob Hahn, and his session on:
Now Is The Time for Greatness (my session notes)
What are the forces at play that are affecting the Housing Industry - and what are we, the people whose very livelihood is affected by these forces, doing about them?
We are in a non-war in 3 countries right now, and we have a job-less recovery. We are probably not at a bottom when it comes to the Real Estate market once you factor in Shadow Inventory.
"Jobs is what drives people to buy homes. No matter how affordable a house might be, when you’re unemployed, you ain’t buying no houses. Period, end of the story. This “jobless recovery” shows little sign of turning into a job-creating recovery."
FHA represented half of all housing financing in 2010 – they have publicly indicated that they want to go to 15% of the financing in the coming months. They are increasing fees for these loans and tightening underwriting guidelines, soon they will lower the maximum loan limits.
Down payments will be going up – look at QRM announcements and you will see that the new down payment requirements will shortly go to 20%
"Why are they requiring 20% down payment? Because of the morals of walking away from your home have changed - this is something that is strategically happening. The moral underpinning of mortgages is dead."
The Mortgage Deduction might be going away. NAR is informing members and advocating against it, and while in the short term we might win this – but the political will is not in our favor. Most Americans do not Itemize their taxes, and therefore the mortgage interest rate deduction mostly benefits the rich… Because we have such a huge debt in this country, the tax deduction will likely go away.
"Real Estate grew because of Government support of the “American Dream.”
With the Government saying that the moral value regarding Home Ownership is no longer positive, and that it is in fact now a RISK to be involved in Housing, they intend to shift priories to other Industries like Energy. As the focus and the shift changes, we could easily lose Government financing, subsidies and tax deductions for what NOW appears to be something OTHER than the "American Dream."
"Buyer demand might go lower because of this."
With all of these Disruptive events, the fact that the average age of a REALTOR is now 52, and the number of agents with NO transactions in the last 12 months has sky rocketed... NAR membership is likely to go down by 40%.
"We never talk about fundamental problems that are facing the Industry… The conference itself shows that we are interested in EVERYTHING except talking about the issues that are really facing the industry.
60% of agents in California have not done ANY DEALS in the past 12 months When you go to the number of people who are 2 transactions a year – the numbers are higher!"
And why did we get into this Industry and the business to begin with? The dominate brokerage started out trying to genuinely help the consumer. Because so many agents are unsuccessful, the name of the game for BICs is recruiting! They are in the Agent Portfolio Management Business! They are now forced to only be focused on recruiting and retention… not helping the consumer. And this again goes back to the fact that agents are not producing.
The largest brokerage in SC left the State Association. The Association looked at weather they should do an MLS! There should be a VALUE in the Associations AND in MLS - two separate issues, but there's not. Associations also have their heads in the sand and are in real danger.
Bill Chee (visionary and past president of NAR) did the Lions Over The Hill speech over again in 2008 and said, "I was afraid of the MLS themselves. They could not innovate on their own because there were too many." Rob Hahn said, "I'm not so sure the original speech by Chee was that far off!" There are over 800 MLS in the Country. There are only 2 out of 800 who own their own code. Zillow now dominates that part of it – 3rd party companies have all of the mobile, idx, etc.
"MLS has had the raw real estate data for over 30 years – and yet, 2 professors started Case Shiller, and they are the ones who are the authority on Housing and Real Estate Numbers!"
The large Brokerages do NOT have the R&D for technology – they are outsourcing EVERYTHING. We face a future where technology is almost completely outsourced to 3rd parties as opposed to a Real Estate Company owning and developing the technology for their industry!
In addition to this, we have lost the confidence of the public. We are seen as leeches. What has the foreclosure process, and the short sale process done for the Real Estate Industry? With so few transactions per agent, what's happened to ETHICS, and knowledge? Even REALTORS can't say nice things about those in the industry. How often do you talk about the lack of knowledge and ethics of the agent on the other side?
"So the question is - WHO is leading the the charge in providing Leadership and Innovation for the Real Estate Industry?"
We come as a large group, drawn by the hope for shiny new objects that will distract us from the fact that there's some REAL DANGER out there when it comes to our Industry.
"What do we talk about? QR codes. Really!? Today we need to be facing and discussing what is actually happening in the Real Estate Industry! Instead, we are just rearranging chairs on the Titanic. We are here to place a CALL to actions."
Rob says, "This is not depressing. We have done these things to ourselves... and because we are smart people, we can find solutions." This awful scenario offers us a chance to re-create our industry for the next 100 years.
Our industry crisis is forcing us to question the nature of the profession – now is the Time for Greatness. NOW is the TIME for Leadership.
Now is the time, and as Govenor Christy said in February:
"What is America really about? A chance for greatness. That’s what we came here for. To stop playing around and not waste another minute."
The Greatest Generation faced the sinking of all of the Pacific War Ships BEFORE the beginning of the War. They were able to overcome the Depression, create, INNOVATE and come together as a Nation. Let's look at how and what they did to solve the challenges. Now is the time to STEP UP and the leadership in Associations, at NAR, in Brokerage firms all need to:
1. Acknowledge the problems in the Industry – hope is not a strategy. Say them out load, get people in your community to TALK about what is happening in housing, the moral issues, the change in values, and the shift in the Government's focus.
2. Destroy the box – some of the ways out might seem dangerous, because we must have different ideas, and different strategies to solve these complex issues. We must consider ALL options, including starting a new political party.
3. Set aside personal bias – Volunteer Leadership is nice… you aren't getting paid to be on many of these Councils and Boards. The new ideas might threaten your bottomline. That’s why you are Leaders. You need to be Statesmen. Ben Franklin said, "We must all hang together, or assuredly we shall all hang separately." If what the industry needs is for your association to be absorbed by another one – by God let it go!
4. Communicate and Convince. A leader by definition must have followers. Do whatever you must do to get people to listen. Sending out a batch of emails that never get opened is NOT getting the message out. Get some Dancing bear telegrams if you have to, but REALLY talk and convince the people who are right there in your community that this is important, and worthy of heated discussion!
5. Be Willing to Fail – you have to take risks and be willing to take different paths that might not work. But staying stagnant, and doing NOTHING is not taking control of your destiny. Resign if you are not willing to do what needs to happen!
So what shiny new object did I come back from #RETSO with? Hope.
I came back with a renewed realization that there ARE people out there with a LOVE and a PASSION about the Real Estate Business... and I came back realizing that THIS is a conversation, and a TIME that CAN shape this Industry for the next 100 years. We can believe in our Imagination - or we can allow others to determine our destiny. Either way - change is coming, $40 million dollars at a time.