Randolph Kinney
Elite Member
- Joined
- Apr 7, 2005
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David Lereah: 'Don't shoot the messenger'
By MarketWatch
Last Update: 4:22 PM ET Nov 10, 2006
David Lereah has had an easy time of it in the last five years. The chief economist for the National Association of Realtors has been the bearer of nothing but good news to the more than one million members of his trade. And when it comes to Realtors, that is pretty much the only position you want to be in because they can be an awfully surly lot when forced to digest bad news: 'Don't shoot the messenger' rarely works with that crowd.
That's why Lereah wasn't kidding Friday when he told an audience at this year's annual convention in New Orleans that his was a tough speech to make. The numbers have not looked good for housing this year and no matter how optimistically you look at them the numbers look about the same for next year.
But the numbers that really count for Realtors may be these: Lereah predicted the housing downturn will shave membership in the NAR be 8% next year. You're talking about 100,000 or so of the NAR's 1.3 million roster that may be pounding the pavement looking for jobs instead of listings in 2007. And that could still be a half million or so light of what the industry might really need to pare.
One of the biggest problems with real estate sales has long been that there are virtually no barriers to entry. In most states, getting a real estate license takes far less study than getting a hairdressing license, never mind that even a fancy salon cut at $100 doesn't put consumers at risk for one-thousandth of what a house does.
And boom times in the industry draw in many fortune seekers who take out that license and hang it with eager brokers who, because most all real estate agents are independent contractors, may have to invest very little in the new hire while awaiting a cut of any commissions the newcomers do bring in.
All of this is not lost on the veteran agents who understand that the structure of the real estate industry can undermine their own livelihoods. In fact, the packed ballroom in which Lereah made his prediction actually responded with applause at the notion of having 8% fewer colleagues trying to horn in on the action in this declining market.
The complaint is that too many agents are not productive and do not add to the quality of the profession. Especially for the 25,000 or so who spend time and money to travel to this convention seeking to learn something (OK, they will all be down on Bourbon Street partying Saturday night, in matching T-shirts no less), that can be galling.
The fact is that that real estate business is changing in fundamental ways. But the euphoria of the last few years has masked the changes in some ways. The consumer is in control of the real estate transaction these days more than ever, and realtors who have simply been trotting along at the old gait during the good times are going to have to pick up the pace now that the balloon, as Lereah says, has deflated.
You can't really say that is bad news. But if you deliver it, you might want to duck all the same.
Steve Kerch, real estate editor
By MarketWatch
Last Update: 4:22 PM ET Nov 10, 2006
David Lereah has had an easy time of it in the last five years. The chief economist for the National Association of Realtors has been the bearer of nothing but good news to the more than one million members of his trade. And when it comes to Realtors, that is pretty much the only position you want to be in because they can be an awfully surly lot when forced to digest bad news: 'Don't shoot the messenger' rarely works with that crowd.
That's why Lereah wasn't kidding Friday when he told an audience at this year's annual convention in New Orleans that his was a tough speech to make. The numbers have not looked good for housing this year and no matter how optimistically you look at them the numbers look about the same for next year.
But the numbers that really count for Realtors may be these: Lereah predicted the housing downturn will shave membership in the NAR be 8% next year. You're talking about 100,000 or so of the NAR's 1.3 million roster that may be pounding the pavement looking for jobs instead of listings in 2007. And that could still be a half million or so light of what the industry might really need to pare.
One of the biggest problems with real estate sales has long been that there are virtually no barriers to entry. In most states, getting a real estate license takes far less study than getting a hairdressing license, never mind that even a fancy salon cut at $100 doesn't put consumers at risk for one-thousandth of what a house does.
And boom times in the industry draw in many fortune seekers who take out that license and hang it with eager brokers who, because most all real estate agents are independent contractors, may have to invest very little in the new hire while awaiting a cut of any commissions the newcomers do bring in.
All of this is not lost on the veteran agents who understand that the structure of the real estate industry can undermine their own livelihoods. In fact, the packed ballroom in which Lereah made his prediction actually responded with applause at the notion of having 8% fewer colleagues trying to horn in on the action in this declining market.
The complaint is that too many agents are not productive and do not add to the quality of the profession. Especially for the 25,000 or so who spend time and money to travel to this convention seeking to learn something (OK, they will all be down on Bourbon Street partying Saturday night, in matching T-shirts no less), that can be galling.
The fact is that that real estate business is changing in fundamental ways. But the euphoria of the last few years has masked the changes in some ways. The consumer is in control of the real estate transaction these days more than ever, and realtors who have simply been trotting along at the old gait during the good times are going to have to pick up the pace now that the balloon, as Lereah says, has deflated.
You can't really say that is bad news. But if you deliver it, you might want to duck all the same.
Steve Kerch, real estate editor