Buying habits are changing for many reasons across numerous generations. However, education is a key component in driving first-time buyers.
This article was originally featured in March 2018 Think Realty Magazine and written by Aaron Norris, VP of The Norris Group.
Would you rather take an investment course from a local university professor with mild success managing a small portfolio or from Warren Buffet?
Your answer is hopefully the latter. Technology has made this very scenario possible for over a decade, but recent developments in tech and education have put the education sector (K-12 and college) on notice, and it could impact real estate in the near future.
In 2003, I worked on Celebrity Cruise Lines as a singer. Knowing I’d have a ton of free time on my hands, I brought with me 22 VHS tapes with the goal of becoming proficient at Photoshop. If I remember correctly, the set cost around $250 for roughly 20 hours. The course was taught by Photoshop guru, Deke McClelland, the author of the Photoshop Bible (yes, that 500+ page monster book in the software aisle).
I learned more in 20 hours with Deke than I had in four semesters of design courses in college. The format allowed me to review material I didn’t understand, sample files enabled me to apply what I was learning, and overall, it was fun.
Today, VHS tapes and DVDs are out, and digital education companies have moved to a subscription model online. Big tech has not only paid attention but has gone all-in. Considering college graduates are exiting with tens of thousands in debt, it feels like education could be ripe for disruption.
In 2015, Lynda.com was purchased by LinkedIn for $1.5 billion. It was LinkedIn’s biggest purchase to date. One of LinkedIn’s goals is mapping the global work force and the skills it takes to obtain and maintain jobs.
It got more interesting in 2016, when Microsoft purchased LinkedIn for $26 billion with one of the best on-brand buyouts of the decade. Now, one of the world’s leading business tech brands owns the world’s leading business social media site which also owns one of the world’s largest online educational platforms.
Why does this matter for real estate?
Call your trusted realtor contact. Ask him or her what three factors families consider when looking to purchase a home. Undoubtedly, “Education” will be in their top three main considerations if not the key factor they look at when looking to relocate their family with children. People don’t just buy a home. They are buying into a community and the education system that will shape their kids.
In November of 2017, I got a popup message on LinkedIn asking if I would be a mentor. Apparently, enough of my network connections had labeled me a real estate expert to qualify me for this position. Honored at the request, I accepted. I’ve received a few emails from people around the country asking advice about how to get in the business.
LinkedIn appears to be mapping not just the job force and skills, but the people the community has identified as thought leaders. I don’t think this is solely a move to identify mentors. This could easily be used to test individuals on their ability to educate, mentor, and connect, which could ultimately lead to a great content creation partnership. The community identifies the expert, then LinkedIn tests them out, approaches the influencer, produces an awesome course together, and scales the content around the world. Competitors include the likes of totaltraining.com, uDemy, Khan Academy, and Youtube to name a few.
Hopefully, you are piecing together the multitude of ways this might affect real estate:
Access to a continually updated, world-class education is now no longer determined by where you live or wealth you have. It’s online for a fraction of the price, whenever, and wherever you want it with a device and an internet connection.
Think about it: A premium, individual subscription at Lynda.com gives you access to over 6,000 courses for around $30 per month. You get unlimited access, downloadable files, it’s mobile friendly, and they add about 35 courses every month. You can learn software development, business strategy, design, and so much more. For comparison: What’s the cost of one college credit in your town?
If access and income are no longer an issue to great education, does that redefine a “good neighborhood” or “great school system?” Could it change buying habits for families? Will they reconsider moving into inner city, suburban or rural areas because a world-class education is a click away and it means a significant cost of living decrease?
What happens to real estate prices in a local economy heavily dependent on the economic impact of a local university via jobs and purchasing power? We’ve witnessed what happened when military bases closed. If colleges lose tuition pricing and power diminishes because of tech disruption, will cities begin to suffer?
It’s too early to tell how this technology will ultimately disrupt the education space because it’s not the sole factor driving change. Buying habits are changing for many reasons across numerous generations. However, education is a key component in driving first-time buyers. As price-conscious Millennials start to create households, we need to pay attention.
Aaron Norris is vice president of The Norris Group, which specializes in California hard money lending, trust deed investments, real estate investments, and real estate investor resources. Learn more at thenorrisgroup.com.