6 leaders weigh in on this 'reset moment' in real estate
This fall, amid rising rates and layoffs, we talked with top leaders from KW, Zillow and more to get their take on this moment — and the future of real estate.
After the heady days of ultra-low interest rates and pandemic relocation fever, the real estate industry faced a harsh reality check midway through 2022. Rising mortgage rates and skittish buyers brought the era of bidding wars and sellers markets to an abrupt end. It was a watershed moment for real estate and a time for the industry to adapt to a new normal. Real Estate News interviewed some of the industry's top leaders to get their takes on forging a new path in this Reset Moment.
Gary Keller: A look at recent history puts this downturn into perspective
Despite a "breathtaking" drop in transactions in 2022, Keller Williams co-founder and kwx Executive Chairman Gary Keller says "the sky is not falling" — and it's not going to. But the pain isn't over, and succeeding in real estate is going to take more effort than it has in recent years.
"2023 is going to be the year we find out what the answer is," Keller said. "And when you do, then it is just a question of how long you ride that bottom." Taking a long view makes it clear that mortgage rates dipped almost absurdly low and they don't need to return to that level for real estate to rebound. "The economy works really well, believe it or not, at 7%, 7 1/2% mortgages."
Ryan Schneider: Tighten belts, simplify transactions and invest in tech to thrive
Layoffs this year at Anywhere Real Estate are a sign of strength, not trouble, Ryan Schneider, director, CEO and president of Anywhere told Real Estate News. "Always becoming a more efficient company is the way I think we should be living in good and bad times. And what that means is when a more challenging market shows up, we will rightsize the company. We typically do everything we can to support and protect our employees. But for some of our functions, if there's not the business coming in, we don't need as much staffing," he said.
But cost-cutting measures that have kept the company profitable don't include pulling back on technology and innovations to simplify the process of buying and selling for consumers. "Even though this is a market downturn at the moment, it's the time to push ahead even faster," Schneider said. "We need to create that simpler consumer experience over time."
Susan Daimler: Zillow investing in tech, mortgages to grease the wheels of transactions
A year after abruptly shuttering its iBuyer program, a move that resulted in laying off 25% of its staff, Zillow is shifting resources to their tech projects, including improvements to ShowingTime+ and creating a real estate "super app," President Susan Daimler told Real Estate News.
"We just view this as a time to really dig in and just double down on the things that we believe in [and] that will matter for next year and all the years that follow," she said. "Regardless of what is happening in the housing market."
Gino Blefari: Wishful thinking won't improve your bottom line, so trim costs when revenues fall
"Over the last several years, a lot of companies have entered the market with unsustainable models focused primarily on driving top-line revenue with the goal of going public and receiving a multiple of revenue from the market," Blefari told Real Estate News. "But, in today's market, that strategy no longer works. Investors expect companies to show a profit, and controlling expenses is critical to delivering profitable performance."
David Doctorow: Rough seas for real estate, but younger buyers will come to the rescue
Move, Inc. and Realtor.com CEO David Doctorow told Real Estate News that demographics favor the residential real estate market, despite a difficult year ahead. "There are tailwinds in place supporting ongoing demand for housing, such as a large number of younger households who will be looking for somewhere to live and the right housing situation for themselves or their family," Doctorow said.
Realtor.com will continue investing in mission-critical resources while riding out the storm. "We see there are challenges ahead for real estate agents and anyone in the market to rent, buy or sell a home in the coming year," Doctorow said, "but we remain optimistic about the industry over time."
Nick Bailey: Veteran agents will lead the way in the new normal
While many agents today have never experienced interest rates over 4% or listings that don't net multiple offers in days, those who survived the housing collapse of 2008 have the hard-earned wisdom and experience to succeed in the current environment, Nick Bailey, president and CEO of RE/MAX, told Real Estate News.
"The question is, who will be the people that help the buyers and sellers with transactions in the coming year? And it's going to be, in my opinion, the most productive agents, the most experienced agents, and those who've gone through these changes before," he said.