Bold prediction, huh?
My Background
Realizing the vast majority of people that may read this blog have no clue who I am or what my background is, this part is relevant.
My undergrad degrees are in experimental psychology, social history (studying how people behaved in the past and how those behaviors change over time), and social studies (covers economics, geography, sociology, along with overlap with psych and history), and my Master's degree is in educational technology. That's the study of how to implement technology in classrooms so students receive the greatest benefit possible. Technology is expensive, so the degree basically teaches how to do an elaborate cost/benefit analysis do make a decision on any given piece of technology. Part of that process is evaluating what is known as the "diffusion of technology."
Diffusion of technology studies how emerging technologies are going to affect groups and individuals. As it turns out, the introduction of technology and it's effects are really, really predictable. But it always results in a prediction that is ignored because of what I like to call the "Luddite Effect." More on that later.
Anyhow, I was also a high school psychology and history teacher for twelve years. I decided to leave the profession due to burn-out. However, I also saw the writing on the wall. Teaching as I knew it was a dying profession due to... you guessed it... technology.
Teachers had long assumed the skills they brought to the table (namely personalizing what they teach to each individual student in a caring, supportive way) could never be replaced by technology.
Guess what?
They were wrong.
It takes a teacher about four or five years of hands-on experience in the trenches (the classroom) to develop the skills to learn how to reach different kids effectively, thus becoming a "great teacher." That on-the-job training costs school districts about $225,000 per teacher. That one teacher can teach about 30 students at one time with good results, and up to 40 if we accept mediocre results. In a school of 1,00 students, we'd need 33 teachers if we want good results and 25 teachers if we want shitty results.
The cost?
If we want good results, it'll set a school district back $7.425 MILLION. Even if we go the cheap route, it'll set a district back $5.625 million. That's a lot of tax payer money, huh?
We have web-based programs today that can teach every student in that school more efficiently with better results for, according to the research I did years ago, about $500 per year. That's a total of $500,000.
As they say, it's a numbers game.
Not to spend too much time on this issue, but I bet a lot of you are asking why this isn't happening now. Why are your school districts pissing away so much money? The answer? Human nature. This is where the Luddite Effect comes into play.
Quick and dirty history lesson: The Luddites were textile workers in 18th century England. They made clothes. New technology was introduced (looms, spinning frames, and other technologies that came about during the Industrial Revolution) that threatened their livelihood. Instead of adapting, they resisted. Eventually it led to rioting as the Luddites tried destroying all the new technology. The military was called in and the rebellion was put down. Violently.
Since that time, the term "Luddites" is used to describe any population that refuses to adapt to new, disruptive technologies that affect their livelihood. This happens all the time in all fields. When the technology is disruptive enough, the people that can't or won't adapt lose money. Luddites start by ignoring the new technology. Then they make fun of it. Then they organize a collective resistance. But that resistance is ALWAYS futile. Again, it's a numbers game. Eventually, they lose so much money to the new technology they can no longer feed their kids. Yet they just keep doing the same thing they've always done until they end up dirt-poor with no options.
You don't want to be a Luddite.
So anyway, teaching is a profession that's on the cusp of collapse. The only thing preventing it is that collective resistance which, in this case, takes the form of labor unions. How can you tell this is happening? Look at the disruptive technology and see where they're spending their cash. Not surprisingly, the folks that are developing and selling this adaptive educational technology spend a huge sum of money on lobbyists to support political candidates that are trying to weaken the teacher unions. The tech companies know exactly how to overcome the Luddite resistance.
We've witnessed this exact same diffusion of technology pattern in all kinds of fields throughout history. Here's a short list:
- Automobiles killed the horse and buggy industry
- The cotton gin killed the slave industry in the Antebellum South (this was a good thing)
- John Deere invented the steel plow, which killed the farm hand industry
- The telegraph killed the Pony Express
- Thomas Edison invented the light bulb which killed the oil lamp industry
- The commercial aircraft killed the passenger train and passenger ship industry
- The transistor killed the vacuum tube industry
- The home PC killed the computer mainframe industry
- The cell phone is killing the landline phone industry
- Email and social media is killing the postal service
- The Home Depot and Lowe's are killing the handyman industry
- Online travel booking websites killed the travel agent industry
- Uber and Lyft are killing the taxi industry
Aside from the last three items on that list, here are a few other modern careers that will die due to technology:
- Electronics repair
- Wallpaper hangers
- The entire IT field
- Anything related to the publishing industry (did I mention I'm also a professional writer?)
- Anything related to manufacturing, especially high-tech stuff like semiconductors.
All of these fields are well on their way to dying. Hell, I just saw an ad for an iPhone app
So Real Estate is Different, Right?
The most difficult part of prognosticating the death of an industry is talking to people that are part of that industry. We all desperately want to believe we can keep doing what we're doing today that leads to success and get the exact same results forever. We usually acknowledge we'll have to make some adjustments along the way as our field evolves. Unfortunately, few people understand that some evolution will brutally wipe out all but the most adaptable.
When we wake up in the morning, pour our cup of coffee in our "World's Best Agent" coffee mug, and look our our back window, we don't see a triceratops.
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| Yeah, dinosaur erotica is a thing |
Why?
Most of the dinosaurs couldn't overcome the radical change that that led to their extinction. Simply put, they didn't have the means of staying warm. BAM! They're all dead. Except, of course, for the handful of reptiles that DID have a means of staying warm.
And that's the key - understand what's happening and identifying exactly what is needed to survive. But that requires A LOT of change. And people don't like change.
When I was a teacher, I realized the people that would thrive were the people that were making and selling the software that could replace teachers. I had no simple way of capitalizing on that without spending a huge amount of time and money learning an entirely new field. Instead, I opted to leave the profession.
So back to real estate.
Having had discussions with a lot of people that were oblivious to the death of their profession, I can predict exactly how current agents (and brokers) will react to this... to the point where the reaction can be quantified:
- 2.5% of you figured this out months or even years ago, have already made alternative plans, and are already profiting handsomely.
- 13.5% of you realized this, but don't quite know what is needed to survive. Coincidentally, this is the group that erroneously believes there will be some "Jerry Maguire" moment where all you'll have to do is get back to the roots of the industry and you'll be fine.
- 34% of you see the writing on the wall, but aren't quite sure how or why the industry is dead. This group is also susceptible to the Jerry Maguire fallacy.
- Another 34% of you are ignoring the writing on the wall and blindly focusing on the properties you currently have in escrow, how many leads you're getting from the big portals like Zillow and Boomtown without realizing Zillow is using them to learn how to make them obsolete.
- Finally, 16% of you are completely fucking clueless. You will be the first to die.
When I first got involved in the field, I didn't quite understand the landscape. I knew some people made a lot of money, so I assumed the industry was relatively healthy. Being the research dork I am, I immediately started looking for ways to hack the system. Lots of agents seems to follow the exact same path. Some succeeded, most did not. I wanted to find a way to avoid playing that game. Turns out the answer is amusingly simple if you understand the nuances of human behavior AND you're not emotionally or financially invested in the current model of real estate.
Along the way, however, I encountered A LOT of disturbing indicators that the real estate industry is well past the point of no return (I'll share those in the next post.) The industry as it has existed for years and years is precariously close to death. Like the teacher unions keeping the teaching profession on life support, the real estate industry is being kept alive by... can you guess?
The answer is simpler than you probably think.
In the next post, I'll share what's keeping the industry on life support. But make no mistake, the industry is already brain-dead. It's merely a matter of time until the pain of keeping it alive is greater than the pain of it dying.
For funsies, let's see if any of my readers can guess what's keeping the current industry afloat. If you have a good guess, leave a comment!
Honestly, I really want to identify others that see the writing on the wall. Your situational awareness could be invaluable in the future. Specifically, that second "13.5%" group I mentioned earlier.
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