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Keller Williams co-founder Gary Keller just laid out a stark view of the current real estate landscape, comparing it to the Great Recession and saying we’re on track for the second worst year ever — though he added that even in times of crisis there are opportunities.
Keller made the comments during a Tuesday session of Inman Connect moderated by Brad Inman. The conversation plunged quickly into the market’s shifting dynamics — prices are now predicted to fall and loan applications are dropping rapidly — with Keller noting that at the onset of the Great Recession transactions dropped by 1.5 million.
“The second year of the Great Recession we had the largest drop in one year in recorded history,” he said. “One-point-five million transactions were taken off the book.”
Things aren’t likely to get quite that bad this year, Keller said. But thanks to rising rates and increasingly unaffordable homes, among other factors, he did predict a dip of about 1.3 million transactions.
“From a sheer transaction drop,” Keller continued, referring to 2022, “this is at least the second worst in terms of the speed at which it dropped.”
Brad Inman, left, and Gary Keller have a conversation during a Tuesday session of Inman Connect. Credit: Inman
That makes for a challenging situation, and Keller directly compared the present moment to the late 1970s and early 1980s — the time during which he entered the real estate industry — when inflation was similarly high. He also noted that his “journeyman definition” of a recession is two-quarters of negative GDP growth, which has already happened.
But Keller also said the current market has some unique characteristics that offer hope. Unemployment remains low, for instance, and Americans have more cash and equity than they did during the Great Recession. Moreover, days on market for homes remain low, suggesting in Keller’s words that “demand is off the charts.”
Keller went on to acknowledge that the “logic” of the current situation would suggest prices will indeed fall. But he also argued that “no matter how tough times are, there’s always opportunity.”
“The real opportunity of any disaster or shift, if you will, is what happens when you come out of it,” Keller continued. “Right now, the winners will be those who look up and go, ‘okay we’re going to double down on our value proposition, we’re going to double down on lead gen, we’re going to double down on staying connected to our database.’ ”
Taking stock and doubling down are especially important right now, Keller went on to argue, because, during the coronavirus pandemic when sales were brisk, many industry professionals may not have been as fiscally conservative as they could have been.
Now, going into tougher times, some industry members may also be tempted to sit on the sidelines and wait out the hard times.
“If you can overcome those things then you’re going to be the winner,” Keller said. “If you can not overcome those things, you’re not going to be happy with what happens when you come out of this.”
Gary Keller advises newer agents during a Tuesday session of Inman Connect. Credit: Inman
The conversation ended with Inman asking Keller what he’d advise newer agents to do right now. Keller responded that they should “live at the top of the funnel.” He went on to explain that lead generation and excellent service are the key skills agents generally should focus on, but that “in order to have clients to service you have to have clients” in the first place. Ergo, new agents should spend days “building your database.”
“Real estate is a contact sport,” Keller concluded. “Immediately make sure you’re spending half of your day talking to people.”
