Market Update 2019: A Sea Change in Real Estate
In real estate, the ability to anticipate subtle change in the market and capitalize on shifts in the industry often come with great reward. The agent that stays on top of an ever-changing wave of economic conditions, customer preferences, technological disruption, competitive pressures and other forces is the one who wins.
That’s why 9,000-plus Keller Williams agents pack the Austin Convention Center each summer at Mega Camp to listen to co-founder, chairman and CEO Gary Keller and president Josh Team speak on the present and future conditions of their industry and their company and business’s place within it. Alongside Jay Papasan, vice president of learning, and Ruben Gonzalez, chief economist, Keller handily summarized a collection of esoteric economic and financial data in his signature, plain-spoken manner.
The overarching theme of their analysis? Profound, material change. “Several times now I’ve made the statement, ‘You wouldn’t recognize the real estate industry by the end of 2019,’” said Keller. “And we are the company that’s changing it. YOU are the company that’s changing it.”
Keller and Team pointed to their unique partnership with Keller Williams agents in developing award-winning technology such as Command as evidence of this change. “When [the industry] said we couldn’t build [technology], I’m not sure that they understood that all we had to do was ask our people,” explained Keller. And, the people have delivered.
Each week, Command expands its capabilities via hundreds of improvements. “It’s an evolution,” said Team. “If you don’t log in for three weeks, you’ll miss a thousand updates.” Some recent developments include functionality for small teams and the new Designs application, with even more progress on the immediate horizon. “By building the platform we have and being in direct contact with agents on a minute-by-minute basis, it allows us to innovate in real-time,” explained Keller.
At an industry and company level, the change is obvious. Yet movement within individual markets and even at a national scale is less pronounced. With total home sales in the United States on pace to reach approximately 5.2 million this year and an annual median home price sitting somewhere around $267K, market conditions don’t appear very different this year than last.
One surprise? Both unemployment and interest rates are nearing record lows. This trend, along with a seller’s market sustaining higher home prices, may mean a different market soon. “I tend to think about the market that I’m heading into and not the market that I’m in,” said Keller. “It’s time to start preparing for the market that’s coming.” What does that mean? According to Jay Papasan, it means keeping expenses down and more lead generation.
Despite a different market on the horizon, advising clients to wait may not be in order. “There’s always a good time to buy the right piece of real estate regardless of the economy and interest rates,” Keller explained.
Zooming out once again, Keller and Team reflected on the sheer volume of investment capital that continues to flood the industry, with a significant majority of funds going toward the iBuyer space. “None of the money is going toward helping consumers and agents have better experiences,” Team pointed out. This is where Keller Williams directs the entirety of its strategy and where it is currently disrupting both traditional brokerages and start-ups.
And although investment funding seems to be going vertical, the overall number of venture capital-backed deals has dipped this year. “[Investors are] doubling down on the players on the chessboard,” summarized Keller. The winners have been crowned and are now focused on consolidating.
Who are the winners? Keller has a theory. “There was a belief that old dogs couldn’t learn new tricks. And, the second the oldest dog in the industry showed it could learn new tricks, the money dried up,” he surmised.
The new trick in question is the creation of a true platform connected by big data and AI that empowers agents with more time, more insights, more everything. Imagine this: You receive a notification that your client has been using your app in such a way that may indicate that they are likely to buy in the next 90 days. You’ll get a notification that suggests a day, time and how to reach out to them. With the new KW App and Command, this isn’t just pie-in-the-sky conjecture – it will soon be reality.
“Every consumer will have a curated experience based on their preferences,” explained Team. “That’s how you get customers for life.”
KW Agents, download the slides here: