Real Estate Career Interest Fluctuates With The Market

As the Millennium dawned, the word went out: real estate was “hot,” and therefore, being in real estate was very cool.

Again.

It’s no news that the real estate industry is cyclical, or that real estate sales reach peak levels every 15-20 years (with a few exceptions). Santa Clara University economics lecturer Fred Foldvary, in an October 1997 article in the American Journal of Economics and Sociology, demonstrates that dramatic downturns in real estate sales are due in part to speculation that consistently occurs when real estate pricing nears its highs. In short, when things look their best, licensees probably should prepare for the worst.

This trend did not seem to concern men and women who, since 2001, decided to enter real estate sales as a career choice. Their numbers were booming (and that noise you hear in the background is the raucous cheering of school owners). As 2005 ended and the decade hit its halfway mark, the Association of Real Estate License Law Officials (ARELLO) reported there were more than 2.64 million real estate licensees in the United States. That figure rose more than 4 percent over 2004’s 2.53 million licensees, and was 14 percent higher than the 2.31 million licensees counted in 2001.

While a hot market is a prime reason many people cite for entering real estate, it’s not the only one. They may crave the security of a second income that real estate sales will hopefully provide. They may be moving from another job where the prospects for success are less hot, or even numbingly cold. They may have been wowed by their own experience in buying or selling a property, and decided they could profit by wowing others as well. On the other hand, a few industry wags suggest, some investors have been so disappointed with the service of real estate agents in the past that they obtained a license themselves as a defensive or protective measure.

Surprising Champions Of Real Estate Career Growth

Media coverage of the industry also influences its career growth. Witness the rise of the Home And Garden Television network (HGTV), operated by Cincinnati-based E.W. Scripps Company and distributed via cable to 89 million United States households. Among its top shows? “House Hunters” and “House Hunters International,” both of which showcase real estate agents assisting buyers; “My House Is Worth What?,” “National Open House,” and “What You Get For The Money,” all of which focus on home values and pricing; and “Designed To Sell,” which touts improved cosmetics and home staging as ways to move properties faster at higher prices. The real estate business likely has never had a more enthusiastic broadcast cheerleader than HGTV.

There are others, too. Although the name Donald Trump is synonymous with many ventures – from casino gambling to bottled water and men’s cologne – real estate made and continues to drive The Donald’s fortune. When Trump’s “The Apprentice” television show began attracting 21 million viewers during its first season in 2004 on NBC, “being in real estate” gained a certain cachet. And Edith Lank, long-time member of the Real Estate Educators' Association (REEA) and nationally syndicated newspaper real estate columnist, has given hundreds of thousands of devoted readers reason after reason to consider real estate for its job potential, decades before either Trump or HGTV had any impact.

But Edith, and Donald, and the myriad stars of those how-to TV programs all know that fame is fleeting and nothing lasts forever. Like the temperature of the real estate market itself, the number of students to be found in real estate classrooms over coming years will continue to rise and fall. More important than changing enrollment numbers, however, are the changing demographics of future students.

Future Students Will Be Younger

Real estate has long been an “older” business. The NAR in 2006 said the median age of its membership was 52, which means that 50 percent of its 1.3 million members were 10 or fewer years from claiming Social Security’s minimum retirement benefits. NAR membership accounts for about half of the nation’s total licensees, and so often serves as a barometer for the industry. If that’s true, and attrition takes a heavy toll in real estate sales offices, brokers will be scrambling to recruit and sign hundreds of thousands of new agents during the next five years … even if property sales decline substantially.

The new blood they attract will, by default, be from younger generations. By 2010 the 51 million children of Generation X, born between 1965 and 1981, will range in age from 29 to 45. Their successors, the first members of 75-million strong Generation Y (also known as Millennials), born beginning in 1982, will be turning 28. Together, these two generations represent fertile ground for real estate career recruiters and, by extension, for schools that provide real estate career instruction.

Both generations espouse individualism. Both embrace technology. Both advocate multi-tasking. The challenge confronting real estate education will be to communicate the profession’s legal, financial and ethical concepts in inventive ways that meet these students’ educational and lifestyle expectations while satisfying the requirements of regulators.

An ironic aside: Chapel Hill NC-based instructor and REEA Journal Editor Deborah Long, DREI, Ed.D., thinks industry retirements and departures pose similar staffing problems for school owners. “I confess to worrying about where the new teaching talent will come from,” Long says. Many real estate instructors are either current or former brokers, office managers or good producers who, by virtue of their people skills, training abilities and veteran experience, have the chops to teach. Their age trend line mirrors that of agents generally. When they exit real estate altogether, including teaching, from where will replacements arise? School owners must begin cultivating a new crop of instructors. Sadly, Long doubts there are enough right now to “pick up the torch.”

Future Students Will Be More Real Estate-Savvy

Home ownership among U.S. residents age 35 and younger has risen from 39.1 percent in 1996 to 43 percent in 2005, according to the Census Bureau. In addition, a 2006 survey of Americans earning $75,000 or more, conducted for Coldwell Banker Real Estate Corp., shows that almost half of its Generation X respondents and more than a third of its Generation Y respondents have already owned between two and five homes. A Coldwell Banker press release claims the home purchasing trends of each generation is outpacing those of its predecessors. If so, real estate classrooms will be filled with more and more veterans of home buying and selling experiences.

The good news, according to some experts, is that real estate consumers-turned-licensees wear a “Been There, Done That” tee shirt. They know what they loved, and what they hated, about the agent-client relationship. In empathy with other consumers, they are more likely to replicate enjoyable experiences and work hard to avoid unhappy ones. The bad news is that their experience may provide them with a false sense of expertise, and not necessarily one founded on legal or ethical principles.

Marie Spodek, DREI, nationally heralded real estate author and instructor, and the creator of REEA’s Course Development Workshop, believes the future of real estate practitioners is irrevocably linked to respecting and meeting consumers’ expectations and needs. Real estate licensees, Spodek says, “must earn consumer business under new dimensions (primarily dealing with compensation issues) which have surfaced in the industry. They must demonstrate that they are the highest quality, lowest cost provider for all real estate transactions.” If they learn those lessons, she adds, they will enjoy the “opportunity to chart their business success for years to come.”

The challenge confronting real estate education will be to encourage and energize future students, to broaden their horizons, and to fill them with the right kind of passion for their business and the clients who drive it.

Future Students Will Be More Techno-Savvy

Generations X and Y have grown up in a world of desktop, laptop, and handheld computers, the Web, video games, cell phones, digital music players, instant messaging and virtual reality. To a greater or lesser extent, they expect to bring that technology-rich experience to bear on their real estate careers. It is a development Spodek applauds: tech-savvy licensees, she notes, “are in an ideal spot to capitalize on advantages the Internet offers” to agents and consumers alike.

There once was a time when the terms “technology” and “real estate” huddled in opposite corners of a very long philosophical room, but no longer. Even the few Luddites in the real estate community accept that technology has forever changed the business.

In 2006 alone, according to REALTOR® Technology Efficiency Surveys, more than half of NAR member agents say they each spent $1,000 or more on technology purchases, and 30 percent spent $2,000 or more. Seventy-one percent of REALTORS® say they operate their own personal business websites, not just a page or two on a broker’s site. More than two-thirds use the Internet to generate leads, and an equal number express interest in using automated transaction management systems to handle the burgeoning volume of legal and financial documentation that accompanies every deal. About half claim they respond within two hours or less to online inquiries regarding some aspect of real estate.

The challenge confronting real estate education IS NOT to show incoming students how technology makes them more productive. They know that already, and they probably can run circles around most field agents who consider themselves technologically adept.

Instead, the challenge IS to show them, and returning students, how technology must be used not only to benefit but to safeguard their clients and customers in all phases of a real estate transaction. Data security, privacy policies, intellectual property rights, and identity theft are concepts that demand, but have not always received, space on the real estate educational agenda. This may reflect, in part, the reluctance of some regulators to allow nuts-and-bolts technology education in the licensing curriculum. In some states it is perceived as business or office operations training, and so is forbidden. The real estate industry will be better able to pronounce itself “secure” when that perception changes.

Besides ensuring their institutions teach technology, school owners have an important stake in implementing technology themselves. Just as the tools for conducting real estate business have changed with the times, so too have the tools for delivering real estate education. Online courses, live broadcast and streaming video courses, audio books, video and audio podcasts, and Web conferencing all now are common in education generally. Generations X and Y became familiar with them as early as the fifth grade. They expect real estate schools to be similarly equipped. Moreover, they will demand technology based educational options that allow them to avoid a classroom and sandwich their real estate learning into already busy schedules. The challenge school owners face is to discover and deploy distance-learning systems that are easy to use, convenient for all, and cost-effective to operate. 

Future Students Will Increasingly Be Multilingual

Hispanics have become the nation’s largest minority group. Between 2004 and 2005 alone, the Hispanic population in America grew by 1.4 million people, accounting for nearly half of the population growth of the entire country during that period. The Census Bureau estimates that, since 2001, three times more Hispanics than whites were added to the national population.

On a broader scale, about 12 percent of United States’ residents – 35.2 million people – are foreign-born, according to USA Today. The proportion of the nation’s immigrants, at a historic low of 4.7 percent in 1970, is now nearing the peaks of between 13 and 15 percent seen in the late 19th and early 20th centuries.

The challenge confronting real estate education, not surprisingly, will be to speak their language(s).

The size of the real estate market represented by consumers who speak English as a second language (ESL) is huge, and undeniably growing. Like any other potential clients, they need and look forward to outstanding levels of real estate service and consumer protection. Fortunately, the Generation X and Y members of ESL communities see their ability to communicate natively with these consumers as a niche of market differentiation. Many future real estate students who can speak more than one language expect to work in more than one language.

Some fine points of finance and real estate law don’t readily translate from English to “something else.” Meanings can get garbled, nuances lost, inferences dropped. If real estate educators hope to teach ESL licensees to effectively represent their clients, overcoming translation hurdles might be among the lessons. Does that mean instructors themselves must speak more than one language? No, but it couldn’t hurt if they did.

It may mean that schools find ways to partner with, or use materials from, outside organizations that share their interests. The National Association of Hispanic Real Estate Professionals, and the Asian Real Estate Association of America, are multilingual and multicultural real estate trade groups that have specific expertise in such areas. So does the NAR, which in recent years beefed up its diversity programs. Fannie Mae and Freddie Mac both have begun studying homeownership issues among immigrant populations; what they learn may also be what we later teach.