As various news reports come out about the Real Estate Market, changes in the industry, and the overall future picture; I can not help be amazed at the comparisons to other industries used as examples. I just wanted to take a moment to talk about a few.
First, the Travel Industry. This is one of the most common these days when it comes to the role of the internet and the Real Estate industry. The notion here is that buyers and sellers can "cut out" the professional middle-person and just "do-it-yourself". Expedia obviously impacted the travel agent industry several years ago when consumers could now visit and plan a vacation on their own. Can sellers advertise economically and effectively own their own via the internet and attract buyers. . . yes. No doubt about it. Here's where this comparison misses . . . negotiation and the transaction. In the travel industry, the travel agent simplified multiple simple transactions into one. In Real Estate, these are not simple transactions. They are complex, and involve multiple actions to be taken over a longer period of time before completion (aka closing). And during that time a number of things can happen to impact this transaction and must be reacted to in a timely manner else there could be legal implications or simply lose the sales and other opportunities to sell. The internet allows a great avenue for owners to market the property on their own, but that's where the functionality for owners ends. The other issue is that FSBO websites look great, but like any website (and any other advertising media) it's effectiveness relies on others visiting that site. www.Realtor.com still remians the most visited Real Estate website for buyers.
Second, the Stock Market. Investors love this and have even begun to overshadow truer evaluations of the markets by focusing only on the quick turn of profits. The first problem is that not everyone is an investor purchasing Real Estate. The second problem is that Real Estate has never been "quick turn" ("flipping" being the most common practice in Real Estate). Equity has been built over time, and the longer one holds onto (and cares for the property) the more equity would be built up (in most cases). Over the last couple of years, a good piece of the Real Estate boom was from investors. They weren't just buying the run-down house and fixing it up. They were buying brand-new homes and reselling at higher prices. In some cases, this shot pricing upward at "unnatural" rates and left those markets with many issues regarding high inventories and property owners with properties that are now valued at much lower prices. Don't get me wrong, Real Estate is an investment. As I have said before, it is the biggest investment that many of us make in our lifetimes. But it is not an investment that is "day traded" as some are being mislead to believe. One of the newest terminologies with this comparison is the Short Sale (click here to read my notice on this topic). The bottom-line is that like any business, Real Estate uses many financial and economic indicators and will traditionally go up and down like anything other buisness or industry. And we need to understand the relationships of those statistics and how to effectively react (or not in some cases). But the "trading" of property in the majority of cases this is not done through pieces of paper flying around a floor full of individuals yelling at eachother. Although, some bad closings may have resembled this . . . it's not the norm.
There have been many others, but these two are probably the most common. My opinion is that, yes, there are various aspects of the Real Estate industry which we can look to other industries as an example and learn from them. Starbucks - Branding, Automobile Dealers - web design that serves for lead generation and customer support, Travel Industry - ease of online shopping and information gathering, Retail - consumer behavior and how to "listen" to the consumer. And there are many others.
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