Property Grunt

Wednesday, July 20, 2005

Don't be a Grasshopper

Back in the day when the Grunt was in college he knew these two people who dropped out of school. The first one’s exit from college was not by their own will and was due in part to a ton of partying resulting in low grades and the boot from the administration. This person attempted to complete their education part time but was unable to juggle the course load and now works in IT in the financial industry and was lucky enough to avoid several rounds of layoffs but their head is always on the chopping block.

The other person had a year and a half left in college when they decided to leave to help out the family business. Two years later after the business collapsed, the person tried to go back to school fulltime but just couldn’t adjust to the new surroundings of being the oldest student in class and now works in the fashion industry working in operations. It’s a good job but it is frustrating because they have hit the glass ceiling in terms of their employment opportunities and desire to do more. But although it has never been brought up it is obvious that they would have more of a fighting chance if they had completed their college education.

The Grunt brings these people up because of a recent article in the New York Times about how the real estate industry has become of a feast of employment. It gives the Grunt flashbacks to the dotcom boom when everyone was either working for a dotcom or planning to. There were tons of people running in droves to get their Microsoft certifications and people were abuzz with stories of excess including outrageous parties, insane expense accounts and money being given away. It seemed that every household in America was tuned into CNBC and we were all getting carpet bombed by media coverage of people getting rich off of day trading.

It seems like old times as people are gravitating in droves to the real estate industry in the effort to pursue the American dream. The article presents these points of interest.

Encompassing everything from land surveyors to general contractors to loan officers, the sprawling sector has added 700,000 jobs to the nation's payrolls over the last four years, according to an analysis by, a research firm.
Combined, the rest of the economy has lost nearly 400,000 jobs over the same span, which stretches back to the start of the most recent recession, in 2001.

Looks good however there is a catch.

For all its benefits, the newfound power of real estate has also left the country vulnerable to a housing slowdown, which many economists expect over the next few years. Residential housing now makes up 16 percent, or $1.9 trillion, of the gross domestic product and is the economy's largest single sector, slightly bigger than the industries and services that supply health care, according to
Frederick, an old farming area not far from the Antietam, Gettysburg and Harpers Ferry battlefields, is a typical housing-dependent community, where new homes are sprouting from the ground even as the values of existing ones are still soaring. Much of the interior West and less crowded parts of California and Florida have also been adding real estate jobs by the thousands.

Mentioned in the article is Mike Muren who turned down college to jump headfirst into the real estate industry as a broker making $250,000 and now owns a Cadillac. Mr. Muren displays a false and annoying sense of modesty about his income. But Mr. Muren is failing to see is what is ahead of him, which could be a very bleak future. To all the Mike Murens of the world who have ditched their education in favor of the easy money of real estate, I implore you all to please reconsider. This trend will not last forever. Eventually the party is going to be over and someone is going to have to pay the tab. When that happens every one is going to get the hell out of dodge and you will most likely need to find another job, which is going to be pretty hard to do without a college degree. You don’t believe me? Take at look at the NYT series on class, particularly about the consequences of not having a college degree. Then tell me if I am crazy.

Please bear in mind there are a countless people who have never stepped in a college classroom and have been extremely successful including Tony Hawk, Peter Jennings and Troy from the first Apprentice. I know many agents who do not have a degree and have been very successful. For all I know Mike Muren will end up making more money than me and end up being the next Donald Trump. However only time will tell. I do know that by not having a college degree and simply counting on the good times he is limiting his options for the future.

At one point in my undergraduate career I was considering taking off for a year. I wasn’t doing as well as I had wanted to and I figured I needed some time off. But after talking to a family member, I decided to stick it out. I was almost done anyway. Why drag it out. I am glad I finished up in time and do not regret my decision in completing my education.

Real estate is one of those unique industries where an academic pedigree is not a prerequisite and because of the low barrier of entry it presents itself as an industry for the have nots to become the haves through hard work and sheer force of will. It is especially attractive during this period of time. But as I have stated before this trend will not last forever.

When the correction goes down, I know that there will be a loud faction of real estate professionals who will feel betrayed by what they were told. They will seek to blame others from the government to fsbos to immigrants. In some way they were hoodwinked from seeing what was going to happen which prevented them from preparing

The Grunt's response is save your breath. You were warned countless times that something was going down and you should have looked at past history to know that there is a cyclical pattern to life and you had every opportunity to prepare for it. If you want to avoid this start looking at other options including school.