One Bubble Leads to Anotherby Tim Manni
Before and during the housing bubble Realtors were the industry’s top dogs. Business was booming; large, expensive homes were being sold by the truckload. Times were very good and there was a lot of money to be made if your job was to help people buy or sell homes.
Times have certainly changed and there is a new profession that has taken over the real estate industry — repossession or “repo”:
As the U.S. foreclosure crisis grinds on, the detailed work of processing, repairing and selling thousands of homes repossessed by banks is real estate’s new gold. In the past year, repo-related business has rapidly grown to national scale, fueling job growth in Colorado, Texas, Ohio and elsewhere to service the meltdown in markets like Sacramento and the Central Valley along with Phoenix, Las Vegas and Florida.
The nation’s housing collapse also has upended the pecking order of local real estate agents. Former top earners are on the sidelines, unable to move expensive homes. The new royalty is making good money in a real estate economy where things fall apart, where trackers can count almost a half-million repos on the U.S. market.
The crisis that decimated one portion of the housing industry is creating jobs in another. Firms like the Austin-based Field Asset Services — which remodel, maintain, repair, and clean repossessed homes — have tripled their number of employees in the last year and one half. Companies across the country have stepped up hiring to deal with the extraordinary amount of real-estate owned (REO) properties in California alone.
This seems to be a confusing cycle, one where there’s always someone to feel bad for and always someone that’s benefiting. But the bottom line is the markets where Realtors are affected the most and where the repo businesses are thriving, are the places where the bubble burst the hardest. The shift has been far less pronounced in markets that have been able to maintain certain levels of consistency — areas where foreclosures aren’t as rampant, home prices haven’t fallen as much, and where local economies are more stable.
Finding a niche market with a lot of need is one the fundamental keys to building a success business. For the time being it’s really working out well for the repo companies. But how long will it last?