The Good, The Bad And The Ugly: Why Realtors Are Driving More For Uber Than Ever Before
I have been involved with real estate for over three decades. Yet, this is the first time that I have noticed more and more real estate professionals involved with other gigs besides buying and selling real estate as Realtors. In fact, a number of Realtors that we have known for many years are driving for Uber and Lyft (a) to supplement their income and (b) to find additional clients.
In fact, Uber first approached real estate businesses to have their App so that potentials buyers would simply request an Uber, and an Uber agent would drive their potential clients to the desired properties. Realtors wound up becoming drivers of Uber.
Real Estate Slowdown?
The Uber “partnership” with Realtors has evolved.
The question that everyone is asking me is what has changed in the real estate market that many Realtors who used to solely represent buyers and/or sellers in real estate are now actually driving for Uber? Although I do not profess to know everything, the answer to this question is complex and never based just on one factor.
I have identified a number of factors that all contribute to the slowing down of the velocity of deal flow in terms of people buying and selling real estate.
1. Oh Those Millennials. First and foremost, the number of individuals and families that are purchasing homes has declined compared to historical highs. Many demographers attribute this to the fact that millennials became of age during the housing crisis and have come to believe that purchasing a home is not necessarily their best investment. Many millennials also face student loan debt, and also are waiting longer to start a family, both of which is effecting the housing market. Further, if you look at the increase in values of homes over the past 20 years, arguably, in most communities, one would have been better off just investing in T-bills or certainly the S&P 500.
2. Oh Those Banks. Banks have become exceptionally cautious in lending money and it takes an inordinate amount of time to get a loan approved. I have previously been quoted as saying that going to a proctologist is sometimes a better experience than having to endure going through the application for a mortgage loan.
3. Oh Those New Financial Restrictions on Cash Deals. The new restrictions that the U.S. government has created for cash transactions involving an LLC or a trust from foreign funds for better or worse has nevertheless also decreased the amount of cash transactions that are occurring in the residential real estate arena. While these restrictions have broader benefits to society, they nevertheless have also put a huge damper on deal flow.
4. Trade Wars. The trade war with China is looming heavy on the economy as many people are anticipating that the cost of goods in general will go up as will the cost of purchasing a home and maintaining the home. Obviously, if tariffs are being thrown on imports, that will create stiffer demand for domestic supplies as well as the cost of paying for such tariffs on foreign goods.
5. Political Turmoil. The political and financial turmoil in parts of Central and South America is surely also contributing to the lack of purchasers for real estate particularly, in the Sunbelt due to the fact that these economies have become hyper inflationary and the cash needed to purchase a home or close on a home where a deposit was paid a few years ago are no longer available.
6. Leasing Versus Owning. It is always the proverbial question of what it is better to rent or to own. In many circumstances, one can get a better rental deal from an investor-owned property in areas such as downtown Miami due to the abundance of vacant units. In addition, there is the perception that the stock market will provide quicker and faster returns than tying up vast sums investing in real estate.
7. Impact of the Recent IRS Tax Changes. The recent tax changes brought about by the Trump administration have had a perverse negative impact on home real estate because many deductions that previously were taken for granted are being eliminated or narrowed; thus effectively, removing much of the historical tax subsidy that the real estate industry has enjoyed. By way of example, one can no longer deduct more than $10,000.00 in real estate taxes; thus, making the ownership of some real estate less attractive particularly where real property taxes exceed $10,000 per year.
Real Estate: A Predictor of Economic Change or is Economic Change a Predictor of Real Estate?
Historically, it has always been the real estate industry, and construction, in particular, that has led our economy out of recessions. Yet, that is certainly not the case as we came out of the Great Recession and represents a true anomaly to the economy today. Thus, with the confluence of these various factors placing a negative drag on the real estate economy, it is telling that folks historically involved in the real estate industry have turned towards other parts of the economy that continue to grow.
From the trenches,