The Broker Resource Network’s Leadership Roundtable had their summit yesterday to discuss key business themes impacting our industry. The biggest news is that adjusting to the shock of stagflation is behind them.
During the past six months, many brokers have been laser-focused on cost containment, and some on cost cutting. For those firms who had gotten out over their skis (i.e spent too much) during the pre-recessionary real estate boom, drawing back expenses and rightsizing staff was important. Most Broker Resource Network (BRN) firms reported that they did not need to right-size because they were never wrong-sized. The general outlook is that companies should strike out their financial performance numbers of 2020 and 2021 and compare today’s financials with 2019. When you take that perspective, things are not that bad. Mergers and Acquisitions are expected to outpace recruiting and market share gains in driving growth.
What Happens Next?
The Federal Reserve Bank is in a weird place. If they increase interest rates again (which they are likely to do today), it will further dampen the housing market. Interest rates have doubled since the pandemic, which impacts first time homebuyers and low-income homebuyers the most. There are early signs of struggle by homeowners including higher rates of late mortgage payments and late utility payments.
A significant trend across most American cities has been the activity of investors in the marketplace; therefore making the leap from renting into owning more difficult and driving up housing costs for the lower and middle class. One broker shared that in the middle market of the NFL city where they operate, and a median home price of $250 to $400k, more than 40% of homes are being purchased by real estate investment trusts. The ability by investors to depreciate property acquisitions provided them with a tax adjusted acquisition cost advantage.
The balancing act by the Federal Reserve Bank pits curbing inflation with the creation of other lasting problems. The two biggest problems caused by rapid interest hikes are the recession and the trade deficit caused by the high value of the U.S dollar. The recession is obvious and easily felt by brokers and agents. Consumer spending and broker spending has become very cautious, thus slowing home transactions and price increases.
More consumers are having trouble paying their bills. All U.S companies have put spending into the caution zone. The bigger issue is the incredible strength of the U.S dollar – which has it on par with Europe. The dollar is up about 13.5% this year against a basket of peers, on pace for its strongest year in nearly 40 years, while the euro has been crushed about 12% to below parity, a level untouched in two decades. It creates a great environment for Americans to travel abroad, but sets up a trade problem globally that will hit U.S producers of exports.
We have not seen stagflation (inflation coupled with a recession) since the Nixon administration. This is causing a lot of uncertainty and volitivity in the stock market and in the minds of consumers. It is hard to say which way we will come out of this.
Back to Basics
Brokers offered the refreshing focus on getting back to basics. Call nights are back at some firms and one inspired broker is creating gift baskets for agents to drop off at their customer’s homes. The business is becoming normal again with agents more focused on maintaining customer relationships through use and adoption of their CRM, along with other traditional network marketing tactics. A key focus is on the roll out and adoption of customer for life continuity programs that position real estate professionals as advisors, not just transaction specialists.
Broker Resource Network Leadership Roundtable
The Leadership Roundtable is a volunteer leadership group of the BRN that meets bi-monthly to guide the direction of the BRN in its ‘Broker First’ mission. They set the tone of advocacy and research which benefits brokers. Attendees of this this roundtable included: Helen Hanna Casey – Howard Hanna, Steve Hayes – Latter and Blum, Kevin Levent – BHGRE Metro Brokers, Eb Moore – Wilkinson ERA Real Estate, Gretchen Rosenberg – Kentwood Real Estate, Jim Fite – Century 21 Judge Fite Company, Michael Barbaro – redwith, PJ Louis – Century 21 All Points, and Wendy Forsythe – Fathom Realty.
About the Broker Resource Network
The Broker Resource Network subscription includes exclusive access to private discussions with other brokerage leaders through “Peer Advisor Groups,” which offer the broadest base of information and sharing among brokerage leaders. Participants also receive at least one resource each week that is focused solely on company leaders, such as articles, research, analysis, benchmarking, webinars and newsletters. Subscriptions to the BRN are open to all brokerage owners and executives in the United States and Canada through an annual fee which includes direct access for up to six leaders from a bona fide real estate firm, including recruiting, marketing and technology leaders. Technology partners focused on the brokerage segment to provide foundational support for the organization. Brokerage applications are submitted online through a secure and confidential application found here.