Industry

Responding to a rant against homeownership

Author
Marc Davison
No.
1097

Last week, social media shock jock Gary Vaynerchuk released a video clip in which he rants about homeownership. (See the full interview here.)

“It’s fucking bullshit and a bad use of upfront capital,” he said about owning a home. His opinion is that homeownership —  and even a college education —  are no longer necessary to build wealth.

I could understand if he felt remorse about his own decision to own a home. But his public proclamation is an attack against an industry that has supported him, his message and his companies for many years.

Not a good look for the author of “The Thank You Economy,” a book about loving your customer.

Beneath the insults and profanity lies an argument worth having: Long-held beliefs and “good ideas” often expire over time. Could buying a home be one of them?  

For perspective on this, I turned to Steve Harney of Keeping Current Matters – who provides real estate research and content focused on helping real estate advisors educate and serve their clients on the merits of homeownership.

We spoke at length about Gary’s comments. Here’s a transcript of our dialogue:

Steve, you saw Gary’s video. What was your first reaction to it?

My first reaction was anger. I have spent most of my adult life educating people on the benefits of homeownership. I felt that Mr. Vaynerchuk, a person of enormous influence, was undermining my life’s work with a flippant remark. Luckily, the anger dissipated quickly.

What was your follow-up reaction to it?

A quiet resolve. I decided to challenge him to a debate on the subject. The tone of my video challenge was misconstrued by some. It didn’t come from anger, but instead from the firmness of my belief in the importance of homeownership.

Why do you believe he backed away from your challenge?

Only he knows the answer to that question.

Out of fairness to him, he might not have had the time. He says a lot of provocative things and probably can’t debate every person who disagrees with him.

Or perhaps it was a thought that just popped into his mind and fell out of his mouth during the interview. After being challenged on the issue, maybe he realized the value of homeownership was a subject he knew very little about and didn’t want to face the fire.

But again, only he knows the reason he didn’t accept my challenge.

Let’s assume for a moment that Gary’s statement was not about getting attention. What do you believe could have created his point of view?

In today’s world, we can easily surround ourselves with same-thinking people. Mr. Vaynerchuk is a serial entrepreneur and serial investor. Many people in his circle are either the same or want to be the same. For that slice of the population, perhaps it makes sense to put every single penny into your businesses or the businesses you believe will have great success.

I also think that, with home prices softening and inventory increasing, there may be some people concerned that the housing market is heading for difficult times over the next few years. Also, there are three separate surveys which have economists, market analysts, and CFOs calling for a recession sometime in the next eighteen months.

If Gary entertained your invite to debate him, can you give me the basic foundation of your argument?

It’s hard to debate an opinion without fully knowing the scope of that opinion.

If I have guessed correctly on your previous question, I would explain that not every person desires to be on Shark Tank as an entrepreneur or as an investor.

Some people are called to be teachers, nurses or firefighters… or any number of other careers that are not chosen for their ability to drive great financial wealth. They are chosen out of a desire to serve, and thank the heavens people make that decision. These people need a way to create wealth. There are a multitude of studies proving homeownership gives them the best opportunity.

I would also come prepared to alleviate the concerns some have about the market slowdown we have experienced over the last seven months.

For those who may not understand how to think through a slowdown, could you provide a few insights that would alleviate those concerns?

Morgan Housel, a highly respected financial analyst, put it best. Let me read you a short quote from him that I keep on my desk:

“People like the feeling of predictability and clean narratives… and that’s a problem. When everyone has experienced a fraction of what’s out there but uses those experiences to explain everything they expect to happen, a lot of people eventually become disappointed, confused, or dumbfounded.”

That’s happening in real estate right now!! Prices are softening, as they should. But consumers, and many agents, remember the devastation caused by the crash of 2006-2008 and are projecting that on today’s market. That can create confusion, fear and even panic.

I would explain to consumers the reasons that this is nothing like 2008:

Today, it is difficult to get a mortgage. In 2008, it was difficult not to get one.

Today, 48% of all homes in this country have at least 50% equity. Last time, people were using their homes like ATMs and pulling all their equity out.

The list of differences goes on and on. Basically, what I’m saying is that last time the plane crashed. This time, we’re coming in for a very soft landing.

The biggest challenge is, as an industry, we are failing to convey what is actually happening to the American public.

For years, NAR has positioned real estate as a one-size-fits-all American Dream fit for everyone. How is that different from Gary’s opposing point of view that homeownership isn’t good for anyone? Aren’t they different sides of the same coin?

I have to laugh a little at the premise of your question. I only wish NAR’s messaging was coordinated and powerful enough to impact the thinking of the American public.

Historians have documented that the concept of homeownership as a pillar of the American Dream predates the existence of NAR (founded in 1908). It goes all the way back to the frontier days when families traveled across the country in horse-drawn wagons to acquire land and build a home of their own.

That being said, talking in the “absolute” on a subject usually destroys any argument.

Homeownership is not for everyone. A family should be “ready, willing and able” to buy a home before doing so. If they are not “ready”, they should rent. If they are not “willing” (like some of Mr. Vaynerchuk’s followers), they should rent. And, obviously, if they are not “able”, they should rent.

If there is a middle ground — in a world where so much of our thinking and behavior is shaped by advertising and messaging, has the real estate industry missed the mark on better educating the public about homeownership?

I think there is way too much selling in real estate. The great marketer Seth Godin says: “People almost never listen to someone else, but they always listen to themselves.”

I believe we should stop telling families what to do and instead teach them about what options they have. Let them pick what’s best for their family.

What can the industry do to combat perceptions like this in the marketplace?

I believe every agent needs to know three things:

  1. What is truly happening in the market
  2. Why it is happening
  3. How to simply and effectively explain it to their clients

Then, and only then, can we build the trust a family desires to have in their agent.

The opportunity

As Steve put it, there is no black and white here. But Gary’s sound bite can be responded to convincingly by those with a different story to tell. This includes both homeowners and the tens of thousands of quality agents and brokers in real estate who feel and live the value of homeownership, but often miss the opportunity to express it publicly.

This is the rubber-meets-the road opportunity, as Steve put it.

People in real estate are great at selling. They need to get great at informing.

This requires a different strategy and focus. It requires strong storytelling and messaging.

Homeownership is important. This is a founding belief of 1000watt and has, since day one, served as a guidepost for us.

This message is too critical to mess up.