Much has been learned from COVID-19 about how consumers value their homes, but there’s more. Here’s an analysis of the importance of real estate.
The year 2020 won’t easily be forgotten. In the broader sense, as a people we faced an unprecedented—in modern times—pandemic. Many Americans still have to reckon with personal financial stress from lost jobs and income. In the midst of this, one of the most contentious presidential elections ever was held.
Meanwhile, after a sharp decline in housing sales from mid-March until roughly the end of May, housing sales rose to heights not seen since the record years of 2005-2006. Tens of thousands of families moved to the suburbs and flooded second-home regions across the country. The reasons were varied. In fact, how big this wave is and how long it may continue are still being debated.
Record housing sales, strong home-price gains and roaring equity markets were all indications of parts of the economy that brushed off the decline in the general economy. At the same time, unemployment remained well above where it was before the pandemic caused an economic shutdown. And major parts of the economy, such as tourism-related businesses, dining out, sports, education, and many state and local governments all suffered, and continue to suffer.
Even with all that, the country muddled through. Families and communities supported each other in ways seldom seen before. Despite civil unrest in some urban core areas, people did the best they could to stay safe. Importantly, we learned that maybe we are stronger as a nation than we thought. The middle held. From our view, here is what we learned in our business.
- Homes Are No. 1. Americans value their home as more than just an investment but as a place to ride out storms and feel safe. The great migration from April 2020 continues to this day and strongly supports this. As more Americans have the option to work from home from any location, they will choose different kinds of housing that fit these entirely new lifestyles. Want further evidence? Look at the jump in homeownership this year.
- Virtual Transactions Are Vital. We learned that, in fact, having an integrated transaction platform and sale-to-close system is vital to the conduct of brokerage.
- The Successful Get More Successful. We learned that in challenging markets, the best people don’t just survive—they thrive. Top agents and brokerage firms gained share, which we have confirmed in a number of markets and will confirm even more with our 2021 REAL Trends brokerage and agent rankings.
- Wasted Money. We learned that even the best brokerage firms were wasting hundreds of thousands of dollars in expenses that were unnecessary.
- Communication Rules. We learned that, in some cases, remote communication works better than in-person. Many brokers shared with us that the agent participation levels for both company communications and education were measurably higher online than in person—and less expensive.
- Value of the Realtor® Association. We learned the true value of the Realtor association, particularly at the state and national levels. Without their efforts to keep brokerages, essential service workers and independent contractors eligible for federal assistance, the carnage in our industry would have been much worse.
- Core Services Make Brokerages More Competitive. We learned that those brokerage firms with core services, such as mortgage, title insurance and escrow are much better positioned to compete than those without them. Earnings from these core services in the aggregate may exceed earnings from brokerage in the aggregate for the 100 largest brokerage firms in the country.
We have much to be thankful for despite the ordeal of 2020. Readers have their own top things they learned this year. We invite you to share them with us. Send your lessons learned to Tracey Velt, managing editor, at firstname.lastname@example.org.
Steve Murray is a partner in REAL Trends Consulting, a brokerage consulting, M&A and valuation service. He is also a senior adviser for HWMedia, the owner of REAL Trends content, rankings and more.