Victor Lund, founding partner of the WAV Group, and I recently returned from the National Association of Real Estate Editors Conference in Hot Vegas. 107 degrees hot. One of the hottest topics was the iBuyer, and Victor headed up a panel that took that topic head-on. Let’s say it was one of the livelier sessions of the conference. The one thing I was sure of, Victor made a great impression among reporters based on the feedback he gave me.
If I were to unveil my own Top 10 list of issues affecting real estate in 2018-19, iBuyer indeed would be at or near the top of my list. Just in the last few months along with the news has been jarring. After Redfin jumps in as the first brokerage to put its toe in the water, we have a flurry of activity in this space for the first half of 2018.
Opendoor gets hundreds of millions of dollars in new funding. Knock announces a “trade-in” program for homes. Offerpad taps into another $150 of debt and equity financing. And then the biggest player of them all – the mighty Z – crashes the party and says it’s going to invest up to a quarter of a billion dollars just this year alone!
Holy hot-house Batman!
CRE’s Top 10 List
At NAREE, the Counselors of Real Estate broke with tradition a bit and instead of announcing their list at the end of the year, they announced it mid-year. This time, they also broke their list into two categories: short-term or current issues and longer-term issues that impact real property. Joseph Nahas Jr., CRE and 2018 chair of the CRE gave the presentation. For his day job, he is SVP, Investor Relations, Equus Capital Partners, Philadelphia.
He broke it down into two lists: Current Issues Top 5 List includes things that will impact your decisions about property today and Longer-Term Issues Top 5 List are things that influence your decisions about property over the next ten years. So really, CRE didn’t issue an actual “Top 10 List,” they instead issued two “Top 5” lists, and here they are:
Current Issues – Top 5
- Interest Rates & The Economy
- Politics & Political Uncertainty
- Housing Affordability
- Generational Change/Demographics
- E-commerce & Logistics
Longer-Term Issues – Top 5
- Disruptive Technology
- Natural Disasters & Climate Change
- Energy & Water
At first glance, you probably can see the obvious: these are very broad categories. So wide-ranging, in fact, the list is nearly impossible to be wrong. Now that’s my kind of list! I think twenty years from now unless the world ends, you will be able to look back on these two Top lists and be pretty sure that the folks at CRE nailed it. But that’s just a guess.
What’s fascinating to me is that Disruptive Technology is on the “Longer Term” list. I know that will sadden a lot of startups and their VC funders. Based on what I read in Inman News, shouldn’t it be on the “Current Issues” side? But then again, I wrote about the fully digital transaction in the first Real Estate Connect news release for Brad in 1997, and I am still waiting for that to be an everyday occurrence.
If the expected speed of how tech will change real estate and the actual rate it does historically are any predictors, then the CRE will have placed Disruptive Technology on the correct list.
As for the rest of the lists, were there any real surprises? Interest rates and the economy will impact real estate the most in the short term: Duh. As will politics and political uncertainty –that’s a certainty. The only thing I am uncertain about is why this wasn’t number one!
CRE could have combined housing affordability and generational changes and demographics into one: our housing inventory crisis. We’ve been housing short for a couple of decades, and you can make the argument because of so many things – including the fact that Boomers are living a LOT longer, that our inventory woes are perpetual.
I think they missed a big one though. I believe non-disruptive technology will have a more significant impact on real estate than Disruptive Technology. So much is being done right now to improve the home buying and selling experience on the traditional side of real estate that is mostly being missed. By and large, technology is helping people, not replacing them in real estate yet everyone seems to be focused on tech that replaces people or how things are done now versus tech that enhances the experience to make what is done now better. Interesting.
Over the next decade, infrastructure, immigration policies, natural disasters/climate change and especially energy and water. The last one should probably be two separate items. Water alone would end up giving infrastructure a run for its money to sit at number one on my Top 5 list for long-term issues. I think that’s true for most people who live in the West, all 76 million of us.
Overall, it’s a great exercise in thinking about all the things that do impact real estate, like almost everything. Here’s a link to CRE’s in-depth analysis of their work.
What’s your Top 10 list?