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The 2008 financial crisis cratered the real estate industry and reverberated throughout the market for years.
The current market slowdown isn’t the same, however, a fact that led the conversation between Knock CEO Sean Black and eXp Realty CEO Jason Gesing at Inman Connect Las Vegas on Thursday.
“The big difference fundamentally is that during the mortgage crisis, no one had any equity in their home,” Black told the Connect audience. “It’s the opposite now, people are flush with equity.”
Black said that for the last two years, buyers were open to paying anything for certainty and convenience, “But now, everyone wants certainty and convenience without the cost.”
Gesing said the biggest difference between 2008 and now is the way technology has made home buying easier, which can stimulate transactions better in a rebound. It took years for the market to recover after the 2008 crash.
“Consumers have more avenues, better avenues to view properties, and our end, we’re trying to create for the consumer an immersive environment, so a buyer can see themselves in the space,” he said.
“The other big one for me is remote work, the notion that you can make Bay Area money and live in Utah,” Gesing said.
Homeowners today will likely not experience what those in 2008 did, a point the panelists confirmed.
“The old saying applies, if you owe the bank a million dollars it’s your problem, if you owe them 100 million dollars it’s their problem,” Gesing said. “This time around it’s more of a consumer problem, [than a Wall Street] problem.”
Black said the industry was going through a different era altogether in the late 2000.
“There was no real innovation on the sale side then,” Black said. “Whereas in 2015 or so, when there was a transaction revolution.”
Gesing believes that while homeowners will largely be able to weather a coming recession, agents who entered the market in 2020 or 2021, when leads were easy to come by, will be pushed out.
“Active agents, of which there are maybe half a million in the country, of those, 150,000 have listings, if you’re one of those without a listing, or a buyer agent running around trying to [get a deal done], you’ve likely already left because you can’t get any sense of accomplishment,” he said.
Black said that experienced agents, those already in the industry before 2020, should continue to do well. “But those that came in at the beginning of COVID will have a lot more challenges.”
Brokerages, too, will face some issues, the pair said.
Gesing said that a big difference between now and then, however, is that while revenue will slow and brokers will have to cut costs, the availability of tools and opportunities that help make business more efficient will enable brokers to continue to support agents.
Black thinks that the coming change should create opportunities.
“There’s clearly an opportunity to make the transaction more efficient for everyone, that you could double the number of transactions, half all of the fees and you can automate all the work, and keep the level of professionalism the same,” Black said. “That has to come at sometime, right?”