How the Real Estate Industry is Evolving in the Next 5 Years

Oscar Gonzales Copyright 2013

Are You on the Bullet Train to
Irrelevance?


What changes do you see coming in the
Next 5 Years?

Socially? Economically? Real Estate Industry?


Continued Uncertainty in the Economy and Marketplace

Attractive affordability conditions generated by very low mortgage interest
rates appeared to be bringing some buyers back to the market.

Pace of a home sales recovery still depends more on job creation and an
accompanying rise in consumer confidence.

Recent trends in oil, producer and commodity prices are raising concerns about
another round of “recession.”

Mortgage rates are expected to remain low for awhile but qualifying for a
mortgage is still very challenging.

The Euro…..


Evolution of the MLS


For the first time in history there are 6
living generations in America.

• GI Generation (1901-1926)
Generational • Silent's (1927-1945)
Differences • Boomers (1946-1964)
• Generation X (1965-1979)
• Millennial’s (Gen Y) (1980 -1998)
• Generation Z (1999 – present)
• And………


The Next 5 Years ??????


4 of them are working together in the
The generational disconnect can be
workplace and exist side by side.
bridged.

• The traditional industry models
Generational We need to recognize the growing
become less appealing and relevant to
differences in the consumers
each succeeding generation.
Differences needs, preferences and values
and do something about it,
otherwise they will deem you
irrelevant.


Realtors operate in markets.
• None operate in the same market in
Market which they were composed,
structured or functioned.
Structure: • Consolidation is a common trend in
Consolidations many markets.
• Realtors are more different than they
& are similar because of the demands of
Specializations the marketplace.


It will not be Business As Usual!


The Tipping Point
Is defined as:
• The moment of critical mass, the threshold, the boiling point.
• “Mysterious” sociological changes that influence our everyday
life.


When Did the Power Shift to the Consumer?
• In 1950 with the introduction of a game-changing technology

Newton’ s second law of thermodynamics
was now in play:

Objects at rest tend to stay at rest especially
if they have had a long day at work.


When Did the Power Shift to the Consumer?


Consumers listen Technology
more to one another damaged the
than they do to traditional
marketing messages purchase funnel.
of advertisers in
the traditional
media.

People are It’s not a question
increasingly of technology, it’s a
individualist. They question of
escape any customer
categorizing. relationships.


Organizational Responses
• Many brokers and agents spend all day
defending what they do, how they sell
services and try to prevent their organizations
from being devoured by the “NEW.”

• Unaware that everything that is happening in
the real estate industry is ever more likely to
happen on a screen or handheld device.

• Denying that traditional Media is in a death
spiral

If You Strap An Engine on a Horse do you
have a Car?

• Every Broker and Agent must
ask themselves what business
they are in and whether their
traditional idea of “how to be in
that business” is still relevant to
what the customers want.

• You can’t solve a problem
before you know what the
problem is: otherwise you wind
up strapping engines on horses.


What’s Driving the Shift?

The industry faces not one but four
interlinked and influencing variables

Where a change in one influences the other three


Four Factors Shaping Our
Future

Consumers
Content
Curation
Convergence


Consumers

Choose what, how &
when they consume


Profile of Realtors & Homebuyers
• Median age of a Realtor is 56 • Largest share of homebuyers
years old are 25-34 years old; Median
age overall is 45 years old
• 57% are female
• 37% are first-time
• 75% of Realtors have real homebuyers
estate as their only
occupation • 21 % are single females; 12%
are single males
• 9% of Realtors are foreign
born • 15% of first-time home buyers
are foreign born; 7% are
repeat


Profile of Realtors & Homebuyers
• 56% of Realtors have a smart • 88% of homebuyers used the
phone with wireless internet internet to search for a home
and email access
• 89% used a real estate agent
• 91% of information on the or broker
website is the members own
listings • 30% of buyers used print
newspaper ads to find info on
• Almost 1/2 of members are homes for sale
using social media.
• 2% of buyers found the home
• Realtors spend a median of they purchased using print
$250 to maintain their ads
websites


Shift from Dependence to Choice
•More choices: accessed more easily
•Smart phones and iPad’s
•More kinds of choices
•Not just when and how but increasing variety of features
•Great ease of use
•Voicemail vs. Text
•Choice not to commit
•They expect an option to make full commitment
•Increasing sense of entitlement
•As each new generation is offered choice, their standards go up
and brokers and agents must respect the new standard


Shift from Dependence to Choice

Success in managing consumer choice
depends on giving up the habits of the
old uneven power relationships and
forming a new more equal partnership.


Content

………becomes King!!


Content……..becomes King!
The Internet makes its possible for buyers and sellers to find
information and each other without the middleman.

Consumers have little reason to
pay for delivery that isn’t digital
anymore, and digital delivery
doesn’t create comparable
monopolies to support content.


Curation

Managing Information Overload


Curation
“Often what I need to
know before I use any What consumers trust has changed:
of their expertise is Instead of an expert, they want to hear
more about myself and from the source –
my community, • The person who stayed in the room
meaning the people I • Ate the meal
trust. • Drove the new car
• Got the home loan
I could figure it out • Bought the house
myself, but so often
time is exactly what I Informati
on
Scarcity
Informati
on
Abundan
Information
Overwhelm

don’t have.”
ce

~ The Consumer


Convergence

The Forms of Communication


Convergence
• Many platforms that seem important today will likely be replaced
in a few years.

• The ongoing convergence of technologies, media forms and other
aspects of our lives will continue to intensify the previous three
factors.


Convergence
• To focus on who will win is to miss the point about convergence:
The new doesn’t replace the old; the new and the old combine.


Disruptive Business Models


The Definition:

Disruptive business models focus on creating, refining,
reengineering or optimizing a product/service, role/function/practice,
category, market, sector, or industry.

The most successful companies incorporate disruptive thinking to
gain distinctive competitive value propositions.


Disruptors


Are You Disruptive?

• When was the last time your company embraced change
and did something innovative?
• When was the last time you rolled-out a new service
offering?
• Are your management and executive ranks void of youth?
• Do people in your brokerage laugh at new ideas?
• When was the last time you sought out a strategic partner to
exploit a market opportunity?


Are You Disruptive

• Does your organization focus more on process than success?
• Are agents who point out problems looked down upon?
• Do you settle for just managing your agents or do you inspire
them to become innovators?
• Has your brokerage embraced social media?
• Does anyone on your executive team have a coach or mentor?
• Has anyone on your executive team attended a conference on
strategy or innovation in the last year?


Reading Recommendations


“We can't solve problems by using
the same kind of thinking we used
when we created them.”
Albert Einstein

“Being Disruptive helps to keep you off
the Bullet Train and Relevant”

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