The good news is that, based upon the predictions of many industry experts, only eleven months remain in the current real estate down market that started for many real estate professionals in the Fall of 2005.
The second event, and the not so good news, was the announcement on Sunday by Federal officials of an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans that they back.
The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington's most dramatic attempt yet to shore up the nation's housing market, which is suffering from record foreclosures and falling prices. This action puts the real estate community on notice that 2009 is probably going to be one of the most challenging years in real estate industry history. These challenges will touch every industry participant.
Perhaps the most interesting aspect of the past three years has been the fact that, by and large, organized real estate seems to not have taken notice that tens of thousands of its members in both the broker and agent ranks are close to, or are in, dire straights. By way of example, at many regional and national meetings held over the past ninety days, these circumstances were not even mentioned.
This state of affairs seems to be the case at the state and local levels as well. A recent survey suggested that many associations’ concern about the current market environment extends only to the loss of members and the financial ramifications of that trend. Leaders seem to be more focused on hunkering down than supporting members in need. In other words, at the very moment that their members desperately need their assistance, some associations are fully engaged in saving themselves.
The past thirty-six months have been, at the least, harsh and in many cases brutal on the real estate brokerage community. Bankruptcies are occurring at higher and higher levels. Some brokerages have been forced into “roll up,” arrangements in which competitors have been asked to assume ownership of the business in return for assuming its debts. (An arrangement that the current Harvard Business Review suggests is a disaster in the making). It is safe to say that the vast majority of real estate brokerages have made significant changes in their expense structures and that these changes have significantly impacted the brokerage’s ability to carry on its basic functions.
Part of this conundrum is that, by and large, the brokerage community does not see organized real estate as a part of the solution to their current business crisis. Accordingly they have not asked for assistance preferring to “go it alone”, in some cases dying a silent death mere blocks from the association office.
It seems prudent to suggest that all of the parties to this situation want to do the “right” thing. The problem might lie in the fact that one of the legacies of the thirteen-year boom, where no one seemed to need anything, was a massive breakdown in communications between brokerages and organized real estate.
In any event the following fact seems obvious. When the market returns to sustainable levels the survivors are going to ask many questions. One that will surely be asked by brokerages, and the almost 50% of REALTORS® who are members of the X and Y generation will be, “when the market was down and I was facing the biggest challenge of my career what did my association do to help me though the crisis?” The answer to this question will in many ways define the relationship between these folks and their association for many years to come.
Organized real estate in America is an amazing institution. It is ubiquitous, powerful and controls impressive levels of financial, intellectual, and human resources. It has everything it needs to play a critical and constructive role in the business and professional lives of its members during 2009. Most importantly it has the time to get up to speed to meet this challenge.
The missing element in this situation is communication. Brokers and associations must open up the lines of meaningful and productive communications. They must meet together and set aside whatever “baggage” currently exists in favor of a joint triumph in 2009.
This movement should start with a daylong facilitated interaction between association leaders and the brokerage community. This event must occur in a neutral, non-judgmental and non-demeaning venue and format. The agenda must be designed not to rehash the past but to discover, develop and design ways in which brokerages and associations can work together to meet the challenges of the day.
Three classic examples of this dynamic in action can be found in Houston, Grand Rapids and Contra Costa County.
In Houston the HAR leadership team and representatives from the brokerage community recently completed an intensive two-day strategic leadership retreat, which was focused on today’s real estate consumer. Over the two day meeting the participants heard from nine nationally recognized experts relative to every aspect of the new real estate consumer. Vicki Fullerton, the 2008 HAR Chair Elect commented, “We understand that one of the major challenges our community will be facing in 2009 is the rapid emergence of new areas of required knowledge. We want our members to know that their association is prepared to work with them to provide this knowledge in a format that best suits their business configuration.”
Earlier this year the Contra Costa Association of REALTORS initiated a program to re-engineer all of its programs and member services to meet the current market reality. Steve Reiser, 2008 CCAR President Elect, pointed out that “the Association’s highest priority must be to positively impact and support the success and profitability of its member brokerages as they prepare to meet the challenges of the 2009/2010 marketplace.”
Reiser points out that “every member of our leadership team and staff are directly involved in this project. As individuals and as a team we are committed to rising to this occasion.”
Finally, in Grand Rapids, 2008 President Elect Greg Carlson, who also happens to be the broker/owner of one of the largest brokerages in that city, is leading the way for that association’s new market consciousness. Carlson says, “2009 may be the industry’s ultimate challenge. This is the time for all REALTORS® to work together to address the issues, solve the problems and harvest the opportunities.” Carlson goes on to say, “there is no greater tribute to the past 100 years of REALTOR® history than to come together and demonstrate that working together in trying times is the ultimate test of a great culture and a relevant organization”.
There is serious work to be done. NAR President Dick Gaylord is doing a superb job bringing us together. Now we must work together. Get out your calendar and begin to match the solutions to deadlines. We can do this.
