Peter Gilmour, Chairman of RE/MAX of Southern Africa, says that as a prominent figure in the educational and analytical side of real estate, Steve Murray is sure to paint an interesting picture of the future the industry faces on a global scale.
Much of Murray’s newly launched book titled Game Plan: How Real Estate Professionals Can Thrive in An Uncertain Future, which was co-authored with Ian Morris, CEO of Market Leader, centres on the future of real estate.
The residential real estate market has changed dramatically, for consumers as well as real estate professionals. But what’s really happening? What’s driving that change? And what role will real estate professionals have in the future?
Game Plan answers those questions with a look at the forces shaping the industry and their impact on who will be the winners - and losers - in the future. This excerpt from chapter six specifically looks at ten trends that will drive real estate in the next five years:
When talking about the disruptive forces of competition, technology, and demographics, it’s essential to note that, for the most part, our industry has done an excellent job of absorbing rapid change. Of course, the bull market for housing had a lot to do with that. When housing prices double and concurrently volume increases substantially, the rapidly increasing pie enables those who execute effectively to tolerate quite a bit of adversity.
To quantify this, just look at the long-term average annual amount of sales commissions, which had held steady at around $40 billion per year. At the height of the bull market, this number climbed to nearly $80 billion per year. Then came the great recession and downturn in housing which brought commissions back down below the levels of ten years earlier.
Locally, Gilmour says that South African market conditions are currently at the same levels they were in the early 2000’s. "Mortgage interest rates are at historically low levels and house prices are at levels seen in the early 2000’s and are still decreasing in real terms,"
Very few industries can survive that kind of cratering without an extremely high level of attrition. In real estate, while many professionals washed out, many others streamed in after being laid off from jobs in other industries. As a result, while the pie got cut in half, the number of people trying to make a living in real estate stayed near record levels.
And that’s where we find ourselves today. We’ve largely adjusted to disruptive new business models which have now become a part of our reality. We’re still dealing with the Internet and incorporating innovate new ways of doing business into our models. At the same time, we are dealing with significant changes in the housing consumer and their needs. And of course we are doing all of this in the backdrop of a slow housing market where we all must work much harder to earn the same commissions.
It’s an environment that demands all of our attention and responsiveness. To succeed we need to have a keen understanding of how our environment will continue to evolve and what it will take to win in the years ahead. These are the ten trends that we believe real estate industry professionals will need to watch carefully.
The Ten Trends That Will Drive the Next Five Years:
- A slow recovery in housing sales and prices.
- Changing consumer demographics.
- Pressure on commission levels.
- The continued advance of new business models and industry segmentation.
- The growing importance of lead generation.
- The use of integrated technology platforms.
- The evolution of how consumers will select real estate professionals.
- The importance of leadership.
- The emergence of real estate teams.
- A stiffening regulatory environment.
No matter which strategy or business model you pursue, understanding these ten trends and what they will mean for your business will put you ahead of the game.
Gilmour concludes by saying that in order to succeed in such a rapidly changing environment, real estate professionals need to keep their finger on the pulse in order to stay ahead.
