Real Estate Journal
The 'New Economy' Itself is Changing By Rebecca McLean Executive Director, National REIA
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ince the inaugural issue of the Real Estate Journal, we have talked about the “new” economy and the way things have changed since 2008. It seems the first rule of the new economy is everything changes, so it should come as no surprise that in the course of the past few years, the “new economy” itself changed. We cannot seem to settle into a new normal. As things continue to transform, grow, modify and move on it is creating different responses from individuals. Many are just happy to ride the growth train and aren’t bothering to look past tomorrow. Full steam ahead, caution be damned! Others that have been down this road before are starting to get anxious. Can we really continue at this pace for more than a few short years? And if we can’t, what is on the other side of this boom? Another bust? How big will that be? How will it affect real estate investors? I have given a “State of the Industry” update at our annual education conference each year since 2009. Things were quite grim for a while in terms of financing and health of the economy but inventory – due to foreclosures, short sales and the like was great, pricing was good, and rentals became the business to be in. Now foreclosures and short sales have dried up, price appreciation has made some neighborhoods almost out of reach for any ROI, but financing has relaxed a bit and the economy – and therefore demand – has been strong. In the beginning, these updates were very popular – uncertainty abounded.
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Then we all settled in, and more of the same or very little movement became the message and interest trailed off. Now, especially those that have been through a few cycles, pile into the presentations. It is the most well-attended session of the whole conference. I have also been asked to give this same presentation many other places. People desperately want to know, “what will happen next?” On our news site, Real Estate Investing Today (www.RealEstateInvestingToday. com), we capture and present the realities of the new economy every single day. We try to answer the question "What works in the new economy, and what's worrisome?" by tracking the most interesting and relevant news stories in our industry (and a few quirky ones). Our members now say that industry news may be the most valuable membership benefit that we offer. We’re all looking for a crystal ball! And although we can’t quite provide that level of insight, we do our best to provide solid and up to date information on trends, legislation, and movement in the markets. The Real Estate Journal helps with that as well. Our member spotlights introduce you to those who are in the trenches every day working to grow their business. Some of them are reinventing themselves as an oldeconomy-new-economy hybrid. Many embrace the traditional but others think out of the box and are blazing a new trail. Our industry also has its share of dissenters. We are one of the few economy sectors that, although we took quite the fall, have continued with
strong growth since the crash. Housing is responsible for tens of trillions of dollars in the economy (yes, trillion with a T!) and housing and utilities made up $2.4 trillion of the GDP in 2017. This means we are very much in the spotlight. Critics believe that the health of the real estate industry has been gained by overlooking the needs of communities like reducing housing affordability. State and local governments believe that since we seem to have such thriving businesses, they should be able to look to us to fi x their treasury challenges. Some communities are decrying the amount of rental housing that has sprung up in their areas which has added to the notion of Real estate becoming the scapegoat. As frustrating as some of these messages are, I try to keep in mind that taking the promise of the new economy seriously means taking its critics seriously — listening to their arguments, weighing their challenges, and, where warranted, working with them to provide solutions that make our communities better. Brad and I just wrote an article for USA Today about affordable housing. We do have a challenge, and it isn’t going away on its own. But far from being our fault, it is actually hurting us as investors in many ways as well. My article last month focused on the law of supply and demand and how big a problem supply is right now. Part of that supply problem stems from governmental overreach and misguided policies that prevent more housing from being available. We are all in favor of a reasonable, logical dialog
to help ease the affordability problem and other housing-related challenges communities are facing. This is why our legislative program is so important. Our voice as investors must be heard. In March we hosted our annual Capitol Conference where we took our concerns and solutions to Washington, D.C. There we ensured that we aren’t seen as the problem but as the provider of the solutions to our nation’s housing woes. After all, without housing, the U.S. economy would still be struggling to regain strength. We will continue to bring you information about the economy, the industry, and those who are excelling within it. Our goal remains the same: to create communities where people matter, where ideas count, where creativity sparks new opportunities, where each of us can make a difference. As real estate investors, we are uniquely positioned to do all that and still make a great profit! Investors can be “doing well while doing good,” as Benjamin Franklin so wisely advised. With the information we provide, we hope you will look at this new phase of the new economy with fresh insights, fresh energy, and a fresh commitment to reinventing the world of real estate investing and improving the communities where you invest as proud professional housing providers. Rebecca McLean is the Executive Director of the National Real Estate Investors Association.
Real Estate Journal · Spring 2019