People are Going into the Real Estate Business Again

For the past few years, it's been tough to recruit new agents in our market, and around the country as well.  Although there were lots of people who were newly (or not so newly) unemployed, but, since there was so much publicity about the dearth of real estate sales, few investigated real estate as a career.

That has changed in the past few weeks.  Since Labor Day, we've seen a much larger number of prospective agents coming through our doors to interview, both in residential and in commercial.  Even though it is a commission-based business (meaning that you only get paid when you sell or lease property), it has become increasingly attractive in a market that is perceived as having bottomed out and is most likely already on the way up.  If you study past business cycles, those who enter real estate before the boom periods begin are the ones who get up and running in time to take advantage of the best times in the economy.  Also, it is still hard to find other jobs, as companies are very wary about adding to payroll, even as things improve.  Going into real estate is an attractive option therefore, both from a timing point of view and because it has few barriers to entry.  You need to take a course, an exam, and pay for a license, and then you are good to go.

So, if you are in the market for a new career, it's high time that you considered real estate!

Commercial Real Estate Update

It's worth a mention about what's happening in the commercial real estate arena these days. The answer is: nothing. The nation's banking woes, and the resulting credit crunch, have brought most real estate transactions to a screeching halt. Traditionally, there is a lag between the residential market performance and the commercial market performance of about nine to twelve months. I had an interesting discussion yesterday with an economist running buddy as to why this should be so, but it has been consistent over the past recessions as well. One might think that jobs and business profits would decline before housing sales, but it's usually the other way around. Residential sales can be predicted if you know personal income numbers, interest rates, and the consumer confidence index. Commercial real estate has more to do with credit, GNP, tax structure, and general business cycles, yet they do coincide and overlap this way.

Given the current state of the economy, pundits are not forecasting an improvement in commercial real estate this year. New Haven is lucky that so much of our space is occupied by Yale, but even mighty Yale has seen the effects of this market cycle, so we may not be as protected as we might otherwise have been. Our best protection is coming from a lack of new product, meaning that we don't have the see-through office buildings sitting empty, the way we did in the last recession. One of the worst problems is that there has been a fundamental shift in the way people work, causing companies with the same revenues to need less office space. That may not change back when the economy improves. Other new companies will have to spring up to take that space, and Connecticut's cost and tax structures have caused it to be at or near the bottom of new business creation. In our area, biotech has made our regional results somewhat better, but we should all do what we can to attract corporations and jobs to our region.