John's Blog: October 2008

During the current presidential campaign the tax proposals of the candidates have come in for considerable discussion but I have not heard a strong defense of the danger concentration of wealth at the top poses for our society and the economic well-being of everyone.

Robert Reich, former Secretary of Labor in the Clinton administration and a leading economist, in an op-ed piece in today's New York Times reported on an alarming trend,

The top 1 percent now takes home about 20 percent of total national income. As recently as 1980, it took home 8 percent. Although the economy has grown considerably since 1980, the middle class’s share has shrunk. That’s a problem not just because it strikes so many as being unfair, but also because it’s starting to limit the capacity of most Americans to buy the goods and services we produce without going deep into debt. The last time the top 1 percent took home 20 percent of national income, not incidentally, was 1928.

These are difficult times for real estate professionals. If people don't have stable income and access to down payment funds they are not going to buy the houses we list. But what is true for us as realtors® is also true for virtually every sector of our economy. A healthy economy is impossible without a strong middle class.

For most of us, saving has become extremely difficult as it seems to take everything we earn to pay the bills, the mortgage, our kids college expenses, medical expenses, high gasoline and utility costs, etc., etc. However for those in the top 1 percent who now receive 20 percent of our total national income, this is not the case. Thus if we want business to be good, housing to recover, and our economy to thrive we have to find ways to direct a more reasonable portion of our national income to the other 99 percent, especially to those in the middle. They are the ones who will spend it and contribute the most to recovery.

As realtors® we need more middle class homebuyers with income and wealth sufficient to buy homes and pay their mortgages. That is why it is a matter of enlightened self-interest for those in the more affluent upper income range to do everything they can to see to it that  the middle class to flourishes.

I think it was Tom Peters who first used this phrase. What he was saying was that continuing to do things the way we've always done them is not going to guarantee success in the future. Even though, or especially though, the way we've been doing things has produced success in the past.

Maybe it was also Tom Peters who said that one of the hardest things in the world to do is to stop doing things that were successful in getting us where we are today. But the truth is that where we are today is not where we were yesterday or the day before. And, if you are waiting for things "to get back to normal", I've got news for you: Things are not going to get back to normal, if by normal you mean the way they used to be.

It would be easy to blame the tough times in real estate today on the economic conditions we are all confronting. But it is only coincidental that the worst economic conditions since the Great Depression have developed at the same time that the impact of technology has changed the real estate industry forever. Sure, there are plenty of highly successful agents who have a huge referral network that will continue to work for them and insulate them from the reality that new agents have to deal with every day. New agents without an established referral network will either acquire and use the tools that didn't exist a half dozen years ago or they will have to find another way to make a living.

I know successful agents who refuse to use e-mail much less market their services on the Internet. I also know a lot of agents who are struggling trying to replicate the success of experienced agents. It is not necessary to spend a fortune on technology, be a computer nerd, or hire expensive consultants to succeed in the new world of real estate. It is necessary however to be open to what technology has to offer and develop a plan for using those tools that are suited to your style and, more importantly, to the style of the clients you seek to serve.