If you have the opportunity to attend the 2019 Realtors Conference and Expo in San Francisco next week (Nov. 8-11), I highly suggest attending because it will never be as influential or significant again.
My first NAR conference was in 2005, and coincidentally, it’s in the same location as this year, The Moscone Center in San Francisco. That show was hailed as “the mother lode for real estate industry professionals, greenhorns and grizzled veterans alike” and featured speakers included Dr. Phil and Guy Kawasaki and a performance by Glenn Frey of The Eagles.
The first time I entered the Moscone Center for NAR, I was astonished at the scale of the event. It was massive — on both sides of the street in two halls with exhibitors jammed everywhere. Over the years, attendance continued to grow and peaked at around 30,000. The opulence and magnitude of the booths was astonishing, the parties epic. This event is in its 101st year and the 13th time in San Francisco, the most popular destination.
Attendance and vendor count is a good way to measure the health of an event, and 2005 was at a near peak for vendor participation with more than 550 booths. Sadly, this year’s expo will have about 30 percent fewer participants than my first year. This year also marks the first time in recent history that the expo will shrink from four days to three.
This decline has not happened overnight, it’s more akin to slow erosion of the beach head over time versus a Category 5 hurricane that change the lay of the land. But the problem here is that the NAR Expo is facing multiple Katrinas.
Although it’s too soon to write an obituary, the writing’s on the wall. This is the sunset of an era, and this is the last great NAR expo.
Six major factors are influencing the situation, that if left unchecked and allowed to run their course, will forever alter the size and scope of the conference and its attendance, resulting in the slow demise of a once great trade show event. From my position, I feel there is little that can be done to slow these market forces.
The growth of iBuying
IBuying is a more efficient real estate process than the traditional method. This efficiency currently represents a small segment of the market, but it’s growing at a significant clip year over year.
IBuying also focuses on middle-of-the-road homes (not extremely large or small), which are the easiest homes to market and sell. This automation will reduce the quantity of inventory in the market (by taking away the low hanging fruit), and the remaining inventory will be fought over by those agents who specialize in the edge cases that can’t be automated. Thus, fewer easy commission dollars available equals fewer agents.
Less people are moving
The population that moves is shrinking, and we are becoming less nomadic, more rooted to our geography. Fewer people move now than at any point in our lives. Actually, it’s the fewest movers since the U.S. Census started tracking in 1948.
At last check, only 11 percent of people move annually — and that includes renters, who make up about 50 percent of annual moves. Many factors can be considered here, but with buyer affordability down, renting has been on the rise.
New opportunities in the mortgage industry
There is a shift or rather, a slide going on in the industry that is beyond the control of agents, teams and brokers as individuals. Brands, however do have a strong say in this fate. Brands are increasingly adopting the “loss leader” approach to running the real estate business. (Loss leader: Selling a service under market value in order to get additional business.) The real estate transaction is the loss leader.
Agents want a larger commission split, and that money comes out of the pockets of brokers and brands. These 100 percent models also now have other benefits like caps, health care and stock — they are flourishing currently. It’s frequently the right move for an individual who knows the business.
But how does a brand stay in business when they make pennies on the dollar for each transaction? They make money on the mortgage, title and ancillary services that surround the transaction.
Advertisers, exhibitors, vendors know this, and we are seeing an increased interest in the other side of the coin as well. Our team has found fantastic opportunities at mortgage events.
Legal threats to the gig economy
Multiple lawsuits currently threaten the very foundation of the majority of real estate brokerages. But I am not anything close to an attorney. Rob Hahn has deep knowledge in the space and has written extensively on the subject. In brief, 1099 as a method for employing real estate agents is under an intense spotlight at the moment that litigators are eagerly pursuing. Should a suit win, it will likely will set precedent, and the agent as a contractor model would fall like a house of cards.
NAR is sacrificing its own
To help save the industry, NAR has implemented a plan that includes planned obsolescence of its numerous MLSs and associations. NAR is ritually sacrificing its own.
Why does this matter? Roughly 40 percent of NAR expo attendees attend the event with flights, dinners and hotels paid for by their association. NAR is forcing out (and I agree with the move) people, reducing operational overhead and yet shooting itself in the foot, reducing its own attendance.
When the economy turns, there will be a reduction of agents as low earners decide not to pay their subscriptions and MLS dues to keep their licenses valid, instead opting to invest elsewhere less risky. I’m not predicting when it turns, just that it will. And when it does, look out. This phenomenon reduced more than 400,000 (ballpark) agents in the previous downturn, taking with them an unknown reduced number of Realtor dues, super PAC donations, SAAS investments, hardware and software, etc.
Yes, the sun will rise again. The NAR expo is not going away anytime soon. The point here is that the expo runs on vendors’ bank accounts. More vendors equals more revenue for NAR, and optically, more vendors looks better, increasing member attendance. These factors are intertwined.
Revaluate spent a king’s ransom exhibiting last year with our NAR stage, and we were far from the biggest spender. Booth traffic was great, and we had record sales.
However, our booth was not supposed to have been on the edge of the hall, yet it was. In the videos from our stage, you can clearly see acres of concrete that are empty behind our booth — NAR didn’t come close to selling out the booth space. Vendors only spend the money because of the traffic. When traffic drops, the vendors see less value, and fewer vendors will participate, and there is less revenue for NAR.
So pay heed my friends. Enjoy the 2019 NAR expo in San Francisco this year. Talk to vendors, take pictures and video, strike up conversations, ask questions, party your face off and have your mind blown. Don’t worry, there will always be a NAR Expo in some shape and size.
Todd Carpenter and Greg Robertson taught me something long ago that remains true year after year: No matter the market conditions, state of iBuying, 1099 lawsuits, erosion, shrinking commission dollars or the mortgage industry’s increasing power, The Scarf King will continue to thrive at the NAR Expo.