As certain as the weather coming from the west, the things people know for sure will change. There is no knowing for a fact. The only dependable things are humility and looking.
— Richard Powers, The Overstory
How do we know?
We like to be told: think about this, be prepared for that, this is the future, that is the past.
It is this wave, building beyond the horizon, that will crush your village and scatter your kin.
Our thirst for certainty and special insights is most intense when things around us are changing.
That’s a long way of saying this: I have some things I’ve been thinking about, and I’m going to share them. Because I’m feeling around in the dark too, looking for something to hold onto as I make my way toward a new year.
But this is me, a dude who runs a brand and strategy agency in the real estate business — one who is no less likely to be wrong than you.
So, shit, who knows what will happen next year, or what will materially impact the real estate business.
But I’m going to keep looking, and sharing what I see.
Consumer behavior is weird, unstable… and maybe more malleable than ever
Homeowners are selling their homes to companies that didn’t exist a few years ago. Young people lust for housing they can’t have. We are buying acreage, fleeing boredom, living “van life,” working from the dining room table, and more or less re-thinking everything.
What a great time to be a marketer and brand builder! Your customer is open, listening, and ready to hear different things from different places.
Step toward the uncertainty.
Climate, climate, climate
Houston’s on a floodplain. Millions of Californians live in or near tinderbox forests. Louisiana’s serial battering is a tragedy to which we have become numb. Zillow predicts that 13% of Florida’s housing stock will be underwater by 2050.
I’m struggling to identify anything that will shape our housing market next year and every year hence more than climate.
In our own consumer research this year for 1000watt Inside, both homeowners and aspiring homeowners expressed how deeply climate impacts their thinking about housing. Yet many do not have the luxury of choosing climate-secure places to live. Research from Redfin finds that areas with the highest climate risk are seeing a significant influx of people.
How is this not going to be a big, big thing? And look, as I suggested last year, it may even be a boon for the real estate industry. But it is happening. I’m not a hysteric — I’m just seeing what’s in front of me.
Forget about politics or morality for a second: It just seems kind of stupid, from a business standpoint, not to be speaking about this in the marketplace.
Redfin is leading here, Zillow is not far behind. Where are you?
The real estate journey is getting longer, with more forks in the road
Inventory is scarce. Home prices are insane. Money is still cheap, but mortgage underwriting standards are (for better and for worse) still stringent.
The resulting affordability challenge has produced new ways to own a home.
Companies like Halo, Divvy, and Landis are extending the onramp to homeownership, and circumventing the mortgage/credit bureau complex, by buying homes for people who then build equity as renters before they become owners.
I’d be surprised if these variations cease any time soon. If you’re not creating one yourself, I think you’re going to need to understand, and account for, all of them.
The real estate brokerage value chain turns into a jangly necklace
Agent, broker. Broker, agent. Team. Expansion team. Virtual brokerage. License shop. Boutique. Broker/franchisor. Paper broker. Brokerage-as- legal-concept-only.
Who does what, for whom, and how that is valued, is in flux. It’s complicated, and far from settled.
Companies like Side, a brokerage that powers independent boutiques operating as DBAs under its license, and Place, a “managed services company for real estate teams,” are both scrambling pre-conceived notions of who does what in the broker/agent world. These two companies alone raised over $300 million in 2021.
This chaos creates tons of opportunity. But we’re high on some primo home price appreciation right now. When GCI starts to contract meaningfully, some will come down… and out.
It’s worth thinking about what that might look like.
The unified transaction: redemption or delusion?
There’s a ton of money and brains chasing the “all-in-one” real estate transaction, the supposedly harmonious, profit-unlocking, consumer-delighting unification of real estate, mortgage, title, insurance and more.
So many bets being made on this model!
Compass, Homelight, Rocket, Zillow, Opendoor, Knock and dozens more are hoping that big money, big brains, and big data will allow them to do at scale what local real estate brokerages have done for years.
The bets have yet to pay off. Zillow bought a mortgage company three years ago and is still kind of hacking around at it. Compass has a thousand engineers and oodles of data, but its much-touted mortgage venture won’t launch until next year.
In other words, the state of affairs many are counting on to save their businesses, or redeem their investor stories, is still farther on. Moreover, it’s not clear that consumer enthusiasm for the all-in-one dream matches that of those conjuring it. Our own research on this issue is mixed.
What if we have the wrong goal?
Okay, enough from me. That’s what’s trending in my brain’s real estate lobe right now.
Nothing more, nothing less.
Enjoy the weekend.