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REAL Trending Episode 89: Forecast for 2021, The Rising Presence of Discount Brokerage, and NAR is New Discrimination and Anti-harassment Policy

From REAL Trends, the trusted source for real estate industry news, this is REAL Trending episode 89. We’re analyzing the most important trends affecting brokerage companies and their agents. I’m Steve Murray, President of REAL Trends. And today we’re discussing our forecast for 2021. The rising presence of discount brokerage and NAR is new discrimination and anti harassment policy.

Scott Wright:

REAL Trends President Steve Murray has been working with and interviewing real estate leaders for more than 30 years. He’s learned a few things along the way about running a successful company, being a solid leader, and more. Find out his lessons learned in his video series, which offers short, insightful messages that shares inspiration and motivation from others in the real estate industry. Don’t miss a video. Go to youtube.com/realtrendsinc to subscribe.

Steve Murray:

Our forecast for 2021. When you read NAR’s forecast, the Mortgage Bankers Association and the Home Builders forecast 2021 is expected to be below the level slightly of 2020, but nobody seems to have much conviction around those numbers. Because the great unknown is how much excess demand did we see active in 2020? And how much might we still see in 2021? Seems clear that record low mortgage rates are going to continue to be present and available, seems that we’re still going to have a scarcity of inventory even though builders are ramping up considerably to build more single family and multifamily housing. And the demographics indicate that household formations continue to charge ahead.

Steve Murray:

On top of all that is the impact of COVID on major urban core areas. How many people will still seek to move because of COVID. Certainly that should calm down as 2021 progresses, but it’s more the impact of employers who have and seem likely to continue to set employees lose to live, where they want to live and do the work from wherever they live. And you have the impact of people not just leaving metro areas, because actually that’s probably not a huge part of the move. It’s a move away from expensive high cost areas, living to lower cost areas that may be an hour, hour and a half away in suburbs or exurbs or even rural areas. The more and more employers make permanent decisions to disperse their workforce, the stronger this housing market’s going to be because more and more people will choose to find lower cost areas where they get more house, more amenities without having to worry about the commute. We call that working where you live as well, as opposed to living where you work.

Steve Murray:

We pointed this out to some great extent in our prior podcasts and articles called The Great Migration of 2020. We are among those believers that this migration is going to continue in 2021, elevating housing demand, not as strong, we think as the last six months, but stronger than it was in the six months leading up to March, 2020. What does that all mean? The NAR said at the end of 2020, we’re likely to be in the 5.5 million to 5.6 million existing home sales for the calendar year when you add it all up. We think it may end up a little stronger than that in 2021. Maybe 5.7 to 5.9 existing home sales. And that assumes that we can find the homes to sell to all these people.

Steve Murray:

The second issue is the rising presence of discount brokerage. I’m reminded of this of a recent announcement in the Denver papers, area I live in of a company out of Utah called Homely, a discount brokerage with a model remarkably similar to that offered over the last 30 and 40 years, by Help-U-Sell and Assist2Sell. A flat fee listing commission, if you find your own buyer, that’s all you pay. If you put it on MLS, you have to pay a normal co-broke, et cetera, et cetera, et cetera. We add them to the list of four or five or six discount brokers in the Denver market. And presumably there are these kinds of firms in every market in the country. The reason for bringing it up as there seem to be more and more of them, and they’re all venture funded, tech based with some new twist on an age old tale.

Steve Murray:

The reason we want to bring it up is not because they will gain any more significant traction than all of the prior discount brokers. I mean, collectively 2% market share. Maybe. Maybe it’s a little more, maybe a little less. But to remind our listeners and our friends and the men and women who are the leaders of brokerage businesses and top teams and agents, this is the wrong time to be dismissive, to be distracted or to be arrogant because there continues to be money pouring in to new startups in our industry, attacking various core constituencies, whether that is buyers and sellers who are looking for a deal on the cost of buying or selling, or agents who are looking for a lower cost out of a brokerage company. We’re seeing just a continuing ebb tide of these new models. This is not the time to be dismissive, arrogant or distracted.

Steve Murray:

Rather, let’s see what they’re offering. Let’s see what their marketing, let’s see what their messaging is, what is that that makes them unique or different than everything else we’ve seen in the past. And perhaps what we do is we sharpen up our own messaging, our own value proposition, our own why using a full service brokerage company is actually a better path for the great majority of buyers and sellers, who as all of our research has pointed out consumers don’t just look at the cost of the commission. They look at the fact that they want a trusted, knowledgeable, experienced advisor in the transaction that gets more and more complicated all the time. But this is kind of a heads up. Don’t just go, oh, it’s just another discount broker. They’ll never make it. Let’s examine it. Let’s not get caught as so many in the past have by just ignoring this and thinking it will go away.

Steve Murray:

We recently received a memorandum from the National Association of Realtors about their expansion of the code of ethics to include discriminatory conduct and hate speech. Now let me read the policy and then I’d like to share the definition of hate speech. The policy says they’re going to extend the application of Article 10 of the code of ethics to discriminatory speech and conduct outside of members real estate practices. Now, I suppose that means if you’re a realtor, that means any comment anywhere, any time, any method they’re now going to extend the code of ethics to your behavior, no matter where you are or what you happen to be doing if you’re a realtor.

Steve Murray:

They go on to say they prohibit from discriminating on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation or gender identity in our professional services and employment practices. The board approved a new standard of practice under the article that also States realtors must not use harassing speech, hate speech, epithets, or slurs against members of those protected status.

Steve Murray:

Before I go on, let me read a common definition that we found published. It says there is no legal definition of hate speech under US law just as there is no legal definition of evil ideas, rudeness, unpatriotic speech, or any other kind of speech that people might condemn. Generally, however, hate speech is any form of expression through its speakers intend to vilify, humiliate or incite hatred against a group or a class of persons on the basis of race, religion, skin, color, sexual identity, gender identity, ethnicity, disability, or national origin.

Steve Murray:

Lastly, it states in the United States, hate speech is protected by the First Amendment. My only comment is this. While I certainly agree with NAR in attempting to remind realtors that they’re not to be rude or harassing or attacking of other people, at the end of the day, there is the First Amendment. At the end of the day, the great majority of Americans, and I would guess most people worldwide, are taught from a young age that hurling vile insults or vile language towards others is about the worst thing a person can do. Or at the very least, it’s totally unacceptable. But to have a policy that says to realtors that we’re now going to police your behavior and your communications outside of your professional conduct and your professional activities, seems to this editor, a bridge too far.

Steve Murray:

Learn more about industry trends and success tactics for brokerage firms, agents, and teams, as well as listen to past REAL Trending on Apple Podcast, Spotify, Google Play and others. Visit www.realtrends.com/channels/. This has been Steve Murray wishing you a most happy Thanksgiving in these difficult times and a happy holiday season.

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