As the decade comes to a close, we’re looking ahead. What new technologies will change the work of brokers and brokerages, and how will politics and the economy exert their forces on the market? Which old theories need to be tossed aside and what new ideas should be considered for a brighter tomorrow? We reached out to a handful of insightful real estate leaders to get their thoughts on what the next ten years might look like, and what industry professionals need to do to get ready.
Getting ready for the next decade
Change is coming. What do agents, brokers, brands and organizations need to do to be ready for the challenges that are on the horizon?
What do you see as the biggest challenges and opportunities for the Chicagoland real estate industry in 2020?
John Matthews, senior vice president of residential sales at Baird & Warner Oak Park/River Forest: The biggest challenge is to avoid getting distracted. Currently, there’s a lot of noise that will increase in 2020 about the political, economic and social climates. Brokers can seize more opportunities by staying focused on their business and consumers.
Rebecca Thomson, regional vice president at Coldwell Banker in Chicago: Buyers are looking for homes that are turnkey. On the listing side, the challenge becomes getting listings ready for market. Without the necessary improvements, even value-priced homes might languish with longer market times and limited buyer interest. On the buy side, buyers are competing for updated homes and often quick to dismiss homes needing some work. But this is also an opportunity. On the listing side, agents can take the bull by the horns and help their listings get the facelift they need to capture the market. On the buy-side, buyers’ agents shouldn’t shy away from showing listings that need a fresh coat of paint. They can help their buyers find great value and connect them with the vendors they trust to help the buyers put their own stamp on their new home. It is a great opportunity for buyers to get exactly what they want, possibly at a better price, just with a little extra work.
Also in this issue
Amy Corr, executive vice president of culture and agent development at @properties: Our market has softened, and we are seeing homes sit on the market longer. As a result, sellers are looking to their broker to really guide them through this process. We are seeing a flight to quality. As the market gets more challenging, clients will be looking for brokers that have a proven track record and deliver the most value.
Peter Angelo, broker at Jameson Sotheby’s International Realty, Chicago: The biggest challenges for 2020 will be the presidential election and the possibility of another tax hike in Cook County.
Mark Pasquesi, president of brokerage for Berkshire Hathaway HomeServices KoenigRubloff Realty Group: Illinois taxes continue to be a challenge to real estate as people are leaving our state in greater numbers. Also, getting sellers to properly price their homes can be a challenge. Finally, in an election year, people are nervous and tend to stay put.
Michelle Mills Clement, CEO of the Chicago Association of Realtors: The city’s budget is definitely a challenge — and homeowners seem like an easy solution to financial strain. We’re doing what we can to creatively partner and make it so raising property taxes or imposing increased transfer taxes aren’t the easy answer. Our biggest opportunity is in our work to connect with members in all our 77 neighborhoods. It’s important for all of us — Realtors and the association — to be aware of what’s going on outside of our offices. We’re serving such diverse members and their clients — we need to do our research and do the work to ensure we understand the differences and how we can best serve them.
Steve Volkodav, CEO of the North Shore-Barrington Association of Realtors: Among the biggest challenges that we are facing are the rapid changes in the multiple listing service landscape from a myriad of impacts, both positive and negative. These include: the influence of the Department of Justice; consolidation of associations; growing opportunities with artificial intelligence; and more. Another big challenge to us as an association is the growing demand for association health plans. We seek ways to keep things in balance with a robust offering of services, all while holding our association fees to levels that are as modest as possible. The biggest potential opportunities for associations over the coming year are to increase overall member engagement, as well as community involvement and outreach.
Brian Kwilosz, managing broker-owner at EXIT Real Estate Partners and president of Mainstreet Organization of Realtors: The challenge for associations in 2020 is that some Realtors aren’t aware of the significant benefits they provide to members and the industry as a whole. Therefore, the biggest opportunity we have in 2020 is to better communicate the value of our organizations. We must find a way to stand above the crowd and combat clients going to different technological outlets, such as an iBuyer. We can do this by educating consumers and ensuring our members are aware of all of the resources they have to brand, market and grow their businesses. If we can demonstrate our value to members, they will succeed in showing their value to clients.
Rebecca Jensen, president and CEO of Midwest Real Estate Data LLC: MLSs are at a major crossroads where there’s a clear need for a unification of streamlined data standards and control. In that challenge, there are some incredible opportunities for MLSs that don’t want to get left behind. Consolidation is a great thing, but it’s not the only available solution. MLSs can actually work together and collaborate to make the marketplace better. A great way to do that is through MLS Grid, which offers a consolidated data platform that’s based on [Real Estate Standards Organization] standards and a single license agreement. In terms of opportunity, big data is part of the technology strategy for MLSs and brokers alike. Big data magnifies decision-making power, which leads to greater efficiencies. A new industry initiative is in the works that I like to call IDX 2.0. Like its version one counterpart, IDX 2.0 will leverage the network effect brought to bear by MLSs to create a combined achievement that’s far greater than the sum of its parts.
How can agents prepare to deal with a changing economy?
Angelo, Jameson Sotheby’s: Seasoned agents understand the basis of saving for a rainy day. Always remember to pay yourself and be diligent about saving money.
Thomson, Coldwell Banker: Take the time to outline clear goals and benchmarks for your business. Then dedicate time every month to check in on your progress and adjust your strategy accordingly. Attend office roundtables, coaching groups and training classes. Not hitting your numbers? Start supplementing with hosting open houses and contacting FSBOs, and be prepared to ramp up your prospecting. Don’t get discouraged, and know that if you are focused on the activities that will generate business, it will come.
Matthews, Baird & Warner: Companies and agents need to be strategic and plan. Too often, if there is a perceived shift in the housing climate, agents jump to new unproven strategies that fail. I encourage agents to review the National Association of Realtors’ Profile of Buyers and Sellers to keep a grasp on the habits of today’s consumers so they can serve consumers the way consumers want to be served.
Corr, @properties: We cannot control how many buyers and sellers may be making a move given the economic conditions, but an agent can focus on their value proposition to those who will be active in this market. Brokers should determine a plan for consistent outreach to the people in their network and share important information related to what is happening, real-time, in the market. Knowing the ins and outs of the current market and adding value will be key to being a competitive broker.
Pasquesi, Berkshire Hathaway HomeServices: Real estate is a relationship business. Investing in a CRM helps agents build and maintain relationships.
Clement, Chicago Association of Realtors: In a shifting market, we see a lot more participation — in volunteering and seeking leadership opportunities — and attendance at our events. We must have the resources and opportunities available for those who are looking for connection and education to further their skill sets and grow their business, even when the market may be a little trickier to navigate. We hear a lot about how people are seeking connection. The association can help facilitate idea-sharing. We can improve our marketplace by bringing people together.
Gazing into the crystal ball
The economy, the upcoming elections, and changes in supply and demand will all impact the work of real estate agents in the near future. Here’s what our panel predicts will happen.
Do you expect the economy to help fuel the housing market in 2020? Why or why not?
Corr, @properties: Locally, we are dealing with a number of economic factors affecting Chicago and the surrounding suburban markets. There are growing concerns regarding local real estate taxes, and consumers are cautious in this current political climate. It is really important for us to educate and guide consumers on what is happening in their local markets.
Thomson, Coldwell Banker: When a market is challenging, it’s all the more reason to keep your agent at the center of the transaction to help navigate the conditions. Typically, we see a flight to quality during tough markets.
Angelo, Jameson Sotheby’s: I think the market will be similar to 2019. Since we are in an election year, the current administration will do everything in their power to make sure the economy continues to prosper.
Pasquesi, Berkshire Hathaway HomeServices: The economy is robust with low interest rates, both strong indicators for housing. The stock market has been strong in 2019. In 2020, some analysts predict that people may take their money and invest it in real estate.
Matthews, Baird & Warner: Up or down, the real estate market will be good if agents work to make it good. Roughly 125,000 homes will sell in our Chicagoland market in 2020; that’s 250,000 sides. The Illinois economy produces approximately $860 billion dollars in GDP. Compare that to Saudi Arabia, the 18th largest economy in the world outside of the United States, whose GDP is $782 billion in U.S. dollars.
What impact do you think the 2020 elections will have on the economy and/or real estate market?
Pasquesi, Berkshire Hathaway HomeServices: It’s no secret that election years have historically resulted in static or slower real estate markets because the uncertainty of the outcome makes consumers hesitant to act. That said, low interest rates and the robust economy may be enough to positively impact real estate in 2020.
Angelo, Jameson Sotheby’s: During the last couple of election years, the market has been unpredictable. I predict the economy will remain strong in 2020 but the local real estate market will stay flat.
Corr, @properties: People who are not in a rush to buy or sell may sit on the sidelines as the election plays out. In 2016, we had a modest real estate year, but after the results in early November, our winter market picked up and we had a strong first quarter in 2017. We may see a similar pattern in 2020.
Matthews, Baird & Warner: It will add to the noise. It will not distract focused agents.
Thomson, Coldwell Banker: This is definitely one to watch, but the more immediate impacts will be felt for decisions happening at the local and state level. Proposed transfer taxes, property tax hikes, and balancing state and local budgets remain at the forefront of many consumer minds. The best thing we can do is to stay engaged, support our lobbying efforts, and use the information our associations and offices provide to better educate our clients.
Will 2020 be a buyer’s market? Why or why not?
Angelo, Jameson Sotheby’s: We have been in a buyer’s market, and I don’t see that letting up next year. On the high end, there are not enough buyers for what is currently being built, which will force downward pressure on pricing.
Corr, @properties: The market will favor buyers this upcoming year. While market conditions are hyperlocal, generally we are seeing a higher supply of homes than we had seen two and three years ago.
Pasquesi, Berkshire Hathaway HomeServices: Yes, I think 2020 will be a buyer’s market. Home values are very good, interest rates are low and that feeds buyer confidence. With the election year looming and sales expected to slow a bit, this is a good opportunity for buyers.
Matthews, Baird & Warner: There are 279 communities in the Chicago metro area, which includes 77 Chicago neighborhoods. Invariably, some of these will be buyer’s markets and some will be seller’s. The overall needle is swaying closely between both.
Technology: Partner or competitor?
There’s no divorcing technology from the work of brokers and brokerages. But experts don’t always agree on the best path forward.
What new technologies will your company be adopting over the next year?
Thomson, Coldwell Banker: In 2019, we rolled out many new tools, marketing services and platforms. 2020 will be about adoption and helping agents implement these tools where it makes sense for their businesses.
Corr, @properties: We will continue to expand the functionality of [email protected], our proprietary, end-to-end technology and marketing solution. We’re excited to implement new functionality that will allow our brokers to manage additional aspects of their business more seamlessly.
Pasquesi, Berkshire Hathaway HomeServices: We will continue to offer the tools and technology that make the most sense for our agents. That said, in 2020, we are going to focus more on our people than technology.
Angelo, Jameson Sotheby’s: In July, we introduced listing management through our Accelerate platform. This new listing and marketing platform will take productivity to a new level in front of a computer, in a meeting with a tablet, or on the go with a smartphone. Next up, we will be introducing the marketing management portion of this platform in January. We are thrilled to introduce a unique, agent-centric suite of marketing resources that has been curated based on the collaboration between our exceptional agents and marketing experts. Additionally, the introduction of our ProfessionalSuite, which includes a Tech Studio, will allow our agents access to the industry’s most efficient, cutting-edge and necessary tools to elevate their business. Editor’s note: Angelo discussed this question with Caitlyn Terrell, CMO of Jameson Sotheby’s International Realty, to get the companywide perspective.
What impact do you see iBuyers having on the Chicago real estate market over the next year?
Corr, @properties: An iBuyer is an investor who will only pay a certain price for a given property, and it is likely a low market value. Most sales we see are not right for the iBuyer model. I see iBuyers having an impact on distressed sale situations where it is more important for the seller to move a property quickly.
Matthews, Baird & Warner: As a large metropolitan area, we have had iterations of iBuyers for quite some time. Recently, well-funded companies have moved into the iBuyer space. These companies, which are comprised of brokerages, real estate syndicators and venture capital startups, will provide the consumer with better choices and strengthen the iBuyer model in the marketplace. I wouldn’t be surprised if the Chicago market saw 10,000 to 12,000 homes sold per year through the iBuyer model in the near future.
Angelo, Jameson Sotheby’s: At this point, I don’t see iBuyers having much of an impact in the Chicago market. We have too much variety in the market, which can make it tough for an algorithm to figure things out and ultimately turn a profit.
While much of what will happen is still up in the air, there are some specific actions that brokerages, organizations and politicians can do to make for a brighter tomorrow. Here are a few suggestions from our panel for how to improve the industry’s lot.
What issue would you like to see Mayor Lori Lightfoot and/or Gov. J.B. Pritzker tackle this next year?
Clement, CAR: We’d like to see a sustainable budget solution that doesn’t include another property tax increase. We must be smart — property owners are the bedrock of our communities. We can’t treat them like an open source of income. It will only further Chicago’s affordable housing issues.
Volkodav, NSBAR: We hope that Gov. Pritzker proceeds with much-needed property tax reform. We are also concerned about some of the approaches that are being taken with regard to affordable and “just housing” issues advancing across the state in various municipalities. We certainly respect the spirit of these initiatives, and the serious concerns they are attempting to address, but want to make sure that Realtor and private property owner positions are respectfully considered, especially as some are moving into their implementation phases.
Matthews, Baird & Warner: Mayor Lightfoot and Gov. Pritzker have made good strides toward a positive future in Chicago and Illinois. Personally, I would like them to take on more fiscal responsibility by spending within their means and making an effort to help pay off debt. I understand this won’t happen overnight and they can’t do it alone, yet it can happen with great leadership.
Pasquesi, Berkshire Hathaway HomeServices: First and foremost, the pension crisis needs to be addressed because the debt associated with it affects everything. City and state officials have done their best to address the issue, but these fixes have just been Band-Aids. Until they fix that problem, it will continue to affect everything from taxes to people leaving our state.
Corr, @properties: I would challenge the mayor to develop a positive campaign that articulates the value of our city. The issues impacting the city and state tend to cloud so much of what makes Chicago one of the most desirable and affordable places to live in the country. I moved to Chicago 22 years ago from California and have loved calling it home for so many reasons. It is one of the best cities, hands down, with its phenomenally built grid system and transportation infrastructure, range of industry to fuel our local job market, and access to cultural experiences, dining, and entertainment.
What do you see happening with so-called “coming soon” listings over the next year, considering the recent changes approved by NAR’s board of directors this month?
Jensen, Midwest Real Estate Data LLC: MRED has been at the forefront of this conversation for years now, creating the Private Listing Network within MRED’s MLS system and adopting a similar rule to NAR’s in 2016. I believe NAR’s policy change will spur MLSs across the country to adopt a similar “coming soon” solution that benefits consumers and agents alike.
Kwilosz, EXIT Real Estate Partners & MORe: NAR’s passage of the MLS 8.0 Code of Ethics is an enormous deal for “coming soon” listings and is a necessary protection for consumers. However, I do foresee smaller MLSs having trouble with this new rule because they might not have the resources or bandwidth to implement that quantity of listings so quickly. This presents opportunities for multiple MLSs to combine in order to better handle the requirements.
Volkodav, NSBAR: Although this topic is generating a lot of buzz across the nation after the recent NAR conference — in Chicagoland, MRED took the lead on this issue nearly four years ago. MRED has now been set as an example for other MLSs across the country as the standard for creating an appropriate pathway toward a sustainable private network.
What problems does the industry need to address to move forward toward a positive future?
Clement, CAR: The industry needs to do a better job in terms of ensuring we have a diverse leadership. The more diverse perspectives and experiences, the better we can anticipate what’s ahead and work to heal any past division. Recent reports have highlighted the need for additional Fair Housing education in the real estate community. We’re looking at what we can do to further emphasize the importance of this. And we have to do a better job of asking Realtors to hold their peers accountable to ensuring Fair Housing laws are upheld. We have to be at the forefront of demanding professionalism in our industry. We have a responsibility to ensure our members usher their clients through what’s likely the biggest financial decision of their lives. That’s a huge responsibility, so we need to ensure we are maintaining professionalism — face-to-face interaction is so important, and we can’t avoid returning calls or let our service slip.
Thomson, Coldwell Banker: We shouldn’t fear collaboration but rather find common ground to ensure that we are safeguarding our livelihood and elevating the level of service we offer. Sharing best practices and learning from others further elevates our profession. I choose to be collaborative and to surround myself with others who challenge me to be better and to do more; to not fear competition but rather embrace the challenge it presents. Disruption is the new norm, and rather than be concerned about what everyone else is doing, focus on the future. The heightened competition with different service offerings and business models pushes us all to raise the bar in what we deliver to consumers.
Angelo, Jameson Sotheby’s: The city is in horrible financial shape, and the problem needs to be addressed. The can can’t keep getting kicked down the road. Residents of the state will continue to move to cheaper alternatives.
Matthews, Baird & Warner: Over the last several years, the real estate industry has been flooded with venture capital. This monetarily fueled environment has created instability, is unsustainable and has degraded profitability for many small brokerages. The end result could be the downfall of the industry as we know it, and affect consumer choice in a very negative way. Unfortunately, as an industry, it cannot be addressed at this time because of the unrealistic influx of money. However, the individual brokerages can address it by building a sustainable model with a great culture. The brokerages that do that will weather the storm.
Corr, @properties: There has been a recent discussion surrounding discrimination in our industry. This is something we as an organization take very seriously. We need to ensure we are protecting all consumers who are in the market to buy or sell a home. Brokers also need to be educated on the serious implications of misrepresenting or steering a client during a transaction.
Jensen, Midwest Real Estate Data LLC: As technology platforms become more robust and widely used, system interoperability becomes even more important. Laying the groundwork for technology systems to talk to each other allows the real estate industry to share information across platforms more easily. The ease of systems communicating creates a better user experience, saving time and money. Investing resources and campaigning with platform developers to support interoperability will accelerate success.
Kwilosz, EXIT Real Estate Partners & MORe: The most likely time a fire will extinguish itself is when it’s at its highest and brightest. The real estate industry is in a strong place at the moment — our fire is bright — but we cannot become complacent. We must continue to add value in our engagement with consumers and help association members engage buyers and sellers in an offline way. If we want to move toward a positive future, we’ve got to double down on the relationships.
Pasquesi, Berkshire Hathaway HomeServices: I’d like to see real estate companies co-exist without meritless disputes. We can all play in the same sandbox. Most suits between companies are not for legitimate reasons, spend a lot of money and tie up the courts unnecessarily. We need to continue to work to improve our profession through better training of agents and holding them to a higher standard.
Volkodav, NSBAR: In the digital age, Realtors need to reclaim ground that has been lost over the years — to flashy “new model” web-fueled concepts like Zillow and iBuyers — as consumers’ ultimate resource for real estate-related information. It is critical that associations work with their members to ensure that they are competent, confident and compliant so that they may fully assert themselves as the authentic professional authorities that they are.