The real estate industry is forever changing with new challenges unfolding nearly every day. Over the past year, COVID-19 has been the leading cause of concern, undoubtedly. From the initial crisis came the issues of remote work, office space, demand, new regulations and more. Honestly, we could write an entire article on the challenges of the pandemic alone, but that would be just one piece of the puzzle. COVID hit at a point in time that was already challenging for the industry — real estate is very slow to change and adopt new technologies leaving it vulnerable to inefficiencies and more. So, where do we stand right now?
Believe us when we say several current challenges are directly related to COVID’s impact, but some are unrelated and brokerages need to address them as well. Keep reading as our team explains the current challenges in the real estate industry.
Agents are dealing with massive burnout
COVID-19 wreaked real havoc on employees in all industries. And on top of that, we know that real estate isn’t a total piece of cake. It involves frequent failures, public visibility and high pressure. In fact, the industry is actually classified as “high-risk” and finds that 65% of agents suffer from poor mental health. And now, agents are facing that same pressure with increasing housing prices, low inventory and a lag in sales causing agent burnout across the board.
Agents of all backgrounds, rookies to experienced, are naturally frustrated with the record low inventory, record high prices and scarcity of listings. Even if the agent puts in funds, marketing collateral and time, it could be a long while before they have an offer accepted and see a paycheck. Add in bidding wars and the fact that 25,000 new real estate agents joined the National Association of Realtors in the first four months of 2021, It’s easy to see why agent burnout is a challenge.
Brokerages need to have their agents’ best interest at heart, and that includes creating strategies to decrease burnout and improve success. Streamline workloads, seek out tech that improves efficiency and more. Some companies of all industries have turned to unusual perks including stock ownership or a remote work destination.
In an era where the number of brokerage models are numerous, some brokerages don’t fully understand their value and brand
With that nod to the industry’s trend of slow adoption, brokerage models are popping up all over the place. The traditional real estate brokerage model is no longer the only way things are done — today’s world sees virtual, team and even discount brokerages. Not to mention the newest models and tech that completely cut agents out of the picture. These services can connect you directly with an offer, or a listing, cutting out the real estate agent and brokerage altogether. And this is where many brokerages are struggling: they don’t understand their own value.
With all this competition and new rollouts, it’s easy for a brokerage to lose sense of its benefit to its agents and clients. In order to be successful, brokerages have to focus on key areas.
- Hone in on what stands your brokerage apart. Attempting to be a discount, community-oriented virtual brokerage will spread your brand and brokerage far too thin.
- Brokerages who view new technology as a threat, or a replacement of their job, cannot keep up with industry changes or improvements successfully.
- Brokerages need to view technology as an enhancement for its business and agents.
When we talk about industry disruptions, this could obviously refer to anything from COVID to virtual listings. However, the biggest challenge in the real estate industry stems from technology. In order to stay relevant, brokerages need to utilize evolving technologies to their full potential. On the flip side, failing to see the value or just being slow to adopt these technologies can put your business at risk.
This leaves professionals with two options: complain about a new disruption or leverage the technology to better serve clients. The first option is where many professionals are finding the current climate to be challenging — by not embracing technology, there’s a chance of being left behind.
Essentially, you want to be the Netflix in the Blockbuster/Netflix equation. Keep in mind that the new generation of tech is not looking to replace professionals, but rather, it’s intended to save time and improve systems. It seems obvious, but it’s not good practice to ignore beneficial tools for your business. Instead of denying the change, try and see the opportunity.
Behavioral changes due to COVID-19
The pandemic has influenced behavior from travel, outings, home purchases and more. One challenge is this continual behavior change and the uncertainty that comes with it. This could cause crucial changes to specific facets of the real estate industry, specifically that of residential and retail real estate. On top of that, the great COVID migration caused an increase in home searches and sales in suburban areas where homeowners could get more bang for their buck. Will this be a trend due to the pandemic, or is this something we’ll see in the long run?
When we say that there’s an affordable housing shortage, the word “shortage” doesn't even do it justice. Here are some key points from the National Low Income Housing Coalition released in March 2021:
- Not one state has an adequate supply of rentals for extremely low-income renters.
- California has the lowest supply of affordable homes at nearly 1 million.
- The COVID-19 pandemic has worsened the circumstances for low-income renters.
- Almost 11 million of the nation’s 44 million renter households have extremely low incomes.
Without enough affordable homes for rent, we’re also facing a shortage of affordable homes for sale. With low inventory and high demand, many buyers are being priced out of the market. Proposed solutions range from tax incentives to subsidy programs, zoning and more, and federal policy is that affordable housing must be included in essential infrastructure in any stimulus and recovery packages.
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