‘Focus on a career, not a year’: Gary Keller on working through a downturn 

Editor's note: The high-flying residential real estate industry came back to earth in 2022, with losses, layoffs and the quick cooling of an overheated market. We're having 1-1 conversations with the industry's most influential leaders to learn how they are handling this "reset moment."

Gary Keller is a student of history, and right now history is suggesting to him to stay the course.

Keller, co-founder of Keller Williams Realty and executive chairman of kwx, noted that 2022 was not just a tough year in real estate but a shock to the system. He's expecting real estate transactions to drop by 1.3 million in 2022, a level not seen since the Great Recession more than a decade ago.

While the drop in transactions is expected to be similar, housing market conditions in 2022 are otherwise markedly different compared with the 2007-2009 period. With a flood of inventory and a huge drop in demand, the Great Recession was a time when the real estate industry and the economy was "staring into the abyss," said Keller. In today's market, restricted supply and too much demand have upset the balance, so the government is using tools like interest rate hikes to recalibrate.

"That demand is still there; the amount of money sitting in the bank, the amount of equity that people have in their real estate, is at an all-time high," Keller said, while noting that retirement funds and stocks have taken a hit. "It's an interesting time."

Keep doing what works

It will take a while to work through this period of tight inventory and the higher cost of money due to inflation, so Keller is expecting fewer transactions in 2023 as well. He emphasized "staying the course," particularly for agents and brokers, and continuing to do what worked in previous years — while acknowledging that agents may need to double down in a slower market: If lead generation only took an hour a day last year, spend three hours doing it today. 

"Focus on a career, not a year," Keller said, adding that the set of actions done in this industry should not be a reaction to what is happening in the economy. "A shift is an opportunity to set the stage for massive growth coming out of it."

Right now real estate may feel like it's going backward, but he said the agents and brokers who preserve their position and stay proactive will be the ones who come out ahead when the market turns.

"And the market will turn," Keller said; he's seen it happen many times since founding the company in 1983.

Inflation 'a threat to democracy'

While it means some pain now, Keller said the government needed to step in and address inflation, which he considers a threat to democracy.

"Inflation is the big democracy killer," Keller said, adding that inflation does not treat individuals equally, impacting those at lower income levels the most.

Hitting pause in the real estate appreciation boom is the correct step, Keller said. Are the interest rate hikes too harsh? That's probably something we won't know until we look back in the coming years, he said.

If the end result puts a damper on prices and allows everything else to catch up, that's fine, Keller said. It's a better alternative to what might happen without the Fed's intervention, he noted, which is prices collapsing, leading to more foreclosures and bankruptcies.

What's ahead for the industry and agents?

Looking to history as a guide, Keller said we'll know soon enough if the current governmental actions are having the desired effect. "2023 is going to be the year we find out what the answer is," Keller said. "And when you do, then it is just a question of how long you ride that bottom."

The real estate industry has been very resilient in finding ways to help people buy and sell real estate effectively, no matter the market, Keller said.

"So I have no doubt that once the bottom is found… and everybody realizes there are no more 'gotchas' coming, then I think everybody goes to work to help people do effective transactions. And remember we are dealing with massive pent-up demand," Keller said.

Next steps for Keller Williams

Like many real estate companies dealing with the downturn, Keller Williams experienced some layoffs in 2022 after years of bulking up when there was more business. 

"As a corporation, we go through that same cycle that everyone goes through," Keller said.

That doesn't mean the company isn't taking advantage of other opportunities during this slowdown. Known for its training and classes, the company regularly visits with its agents and brokers to ask what works and what doesn't. Then the company builds models around what works and converts them to courses.

The company is also expanding globally, having recently added a franchise in Switzerland, and is now in more than 50 countries. Keller said they expect to continue expanding globally, spreading KW's real estate culture of how to relate, communicate and treat each other.

"Our way of working together is unique. It's highly valued around the world," Keller said.

Get the backstory: View profiles of Gary Keller and Keller Williams.