When real estate professionals think about demographics, they’re often focused on the impact that aging baby boomers will have on housing markets as they retire.
The "baby bust" generation coming up behind the boomers — "Generation X," those born from the mid-1960s to early 1980s — is nowhere near as big. Many are counting on Generation Y to fuel demand for homes.
Even as brokers and agents learn new ways to market to Gen Y clients, they must grapple with the same demographic trends within their own ranks.
The National Association of Realtors’ latest member survey shows the median age of a Realtor is now 56, up from 51 in 2007. Just over half of Realtors are between ages 40 and 59, and only 11 percent are under 40.
Realtors’ ranks are also shrinking. During the decade that culminated in the housing bust, NAR membership grew from 700,000 in 1996 to a peak of 1.37 million in October 2006. Membership has been slipping ever since, falling below 1 million in January for the first time since early 2004. The Association of Real Estate License Law Officials (ARELLO) has estimated that there are about 2 million active U.S. real estate licensees.
Given Gen X’s small numbers, brokerages will have to step up recruiting efforts targeted at Gen Y. A 24-page white paper commissioned by franchisor ERA Real Estate examines the challenges and opportunities that brokerages face.
"A lot of people in the industry are thinking about" how to go about recruiting members of Gen Y, said ERA Real Estate President and CEO Charlie Young. ERA, Young said, is "first to the party" in providing "real, tangible guidance to brokers" in its system for boosting the effectiveness of Gen Y recruiting.
The white paper, "Generation Y: Rethinking Recruiting," is based on original research, interviews with Gen Y agents in the ERA network, interviews with ERA brokers.
The report also draws on lessons from similar industries — the insurance industry, for example, mirrors real estate in structure, with commission-based brokers and agents — and offers real-life examples of what works and what doesn’t.
Gen Y — defined in the report as those born between 1978 and 1995 — have already surpassed baby boomers as America’s largest generation. This group, aged 16 to 34, are early adopters who can’t remember "a time without computers, cell phones, ATMs, the Internet or social media," the report notes.
Skeptical of advertising and more receptive to word-of-mouth marketing, Gen Y "does not know a lot about real estate and has not considered a real estate career."
But with NAR surveys showing the average age of first-time homebuyer now 30 years old, Gen Y recruits will be needed to meet the needs of buyers and sellers.
A survey of 1,012 18- to 29-year-olds conducted by Wakefield Research for ERA Real Estate found nearly 90 percent didn’t know much about what’s involved in being a real estate agent. That "offers a huge opportunity for brokers to educate them on real estate as a career," the report concluded.
While half of those surveyed said they wouldn’t seriously consider a career in real estate, they were more receptive if they knew an agent their own age, or had experience working on commission. Seven out of 10 who had experience working on commission were interested in a career in real estate, compared with 35 percent of Gen Y respondents in general. And two-thirds who knew an agent their own age were interested in working in real estate.
ERA sales associates interviewed for the study said they liked the flexible scheduling of a career in real estate, interacting and networking with people, and aspects of the job that allowed them to "be their own boss," such as experimenting with marketing and business practices and being accountable for personal success.
In marketing to prospective agents, brokers should emphasize job stability, flexibility and security, rather than commission splits, leads and "making a lot of money," the report concluded.
"When you start thinking about recruiting, it’s about realigning the message (away from) the traditional recruiting approach of ‘How much are you making, how much do you want to make?’ and (pointing out) the benefits of the job that align with their values," Young said.
The report identified six areas of opportunity for recruiting members of Gen Y into real estate:
- Social recruiting — sites like Facebook, Twitter, LinkedIn, Google Plus and Craigslist are "practical and viable" solutions.
- Career support and collaboration — Gen Y values having a support network behind them to provide training, coaching and mentoring.
- Career versus "work" — members of Gen Y think of a career as something to enjoy and be passionate about.
- Use Gen Y agents to recruit their peers — outreach through social media can drive word-of-mouth traffic.
- Promote a work-life balance — position real estate as a career that leaves room for family and other personal needs.
- Community service and brand value — brokers recruiting Gen Y should communicate about the company’s community involvement and the impact that housing can have in providing jobs and building neighborhoods.
Once brokers have recruited Gen Y agents, they also need to be able to retain them.
Gen Y sales associates interviewed for the report said their biggest challenges included being unprepared for job stress, the cost of marketing materials and real estate licensing, the uncertainty of a commission-based paycheck, and the need to work nights and weekends.
NAR’s member survey showed Realtors who’d been in the business for 16 years or more earned a median gross income of $50,200, while those in the business for two years or less reported a median income of $8,700.
While Gen Y recruits benefit from the career support and mentoring they receive from more experienced agents and brokers, the exchange of knowledge goes both ways, Young said.
"It’s reverse mentoring — they’re bringing social (media) skills to the table that are a great benefit" to older brokers, he said.