For millions of young Americans, the face that they see when they think of commercial real estate is a mustachioed man in a bowtie and tophat. Rich Uncle Pennybags, known to many as Mr. Monopoly, the mascot of the beloved board game, has left an enduring impression on generations of Americans. Modeled after JP Morgan, his morning suit and monocle have come to represent all the ways the public is left out of prosperity in the traditional world of commercial real estate. But a new generation of talent is coming to the industry, changing that perception as well as bringing ownership and wealth generation to a young and diverse group looking to better their neighborhoods as well as build a rewarding career.
“Most kids think real estate is not for them. They think real estate, then they think gentrification,” Cedric Bobo, Co-founder of Project Destined, said. Bobo spent over 20 years as an investment banker, now he dedicates his time to fostering the next generation of talent in commercial real estate. “I stop them from using that term. Kids see progress that is happening that they are not exposed to. You see your neighborhood changing and you’re not a participant. So how do you become a participant? It’s about access.”
Gentrification, the gradual process of changing the character of a neighborhood through an influx of wealthier residents, impacts every major American metro. There are a lot of upsides, at least as long as you own real estate. The downside is displacement, whether directly or by exclusion, where long-time residents are pushed out of the place they call home, most commonly affecting communities of color. Houston’s historically black Third Ward, where George Floyd spent most of his life, is a prime example. The neighborhood, just a few miles south of Houston’s downtown area, has seen wave after wave of development. Now nearly two thirds of the area’s longtime residents said they were extremely worried about a local loss of African American culture, and nearly one-third said they were worried about being forced to relocate within the next year.
Netflix’s hit Gentefied, about an old-school taco shop in a rapidly gentrifying area of Los Angeles has a new take on the age old problem. Gentefied is a Spanglish term that combines gentrification and ‘gente,’ Spanish for ‘people.’ Gentefication: gentrification by the people. Locals improving their own neighborhood. With access and ownership, residents can become the biggest stakeholders in their area, revitalizing and improving the community equitably. Creating access to the world of real estate is one of the biggest hurdles.
Fighting gentrification means becoming a stakeholder in your own backyard. Data from the National Association of Hispanic Real Estate Professionals shows the Hispanic population is responsible for 51.6 percent of all homeownership growth over the past decade. Hispanic households are 25 percent more likely to have an investment property outside their primary household than white households, even though the white-Latino wealth gap stands at 16 percent. Despite robust interest in real estate and a rapidly growing population across the country, the Hispanic community only accounts for roughly 8 percent of real estate professionals, according to the Census Bureau.
The Black community faces similar problems. Black Americans represent less than 6 percent of all real estate professionals in the U.S., according to the Census Bureau. Consequently, homeownership rates for Black Americans dipped to 44.1 percent in the fourth quarter of 2020, despite overall rising home ownership rates. White American property ownership rates outpace people of color by nearly 20-30 percent and White Americans make up roughly 75 percent of all real estate professionals. Inequitable access to the world of real estate is directly contributing to the widening wealth gap between white Americans and people of color that is fueling gentrification.
Getting the type of young, diverse talent into the world of commercial real estate to enable them to be stakeholders in their community is not easy. Decades of abuse and exploitation in the form of formal and informal discrimnation against communities of color has calcified mistrust and jaded the view of real estate and development in vulnerable neighborhoods. Law enforcement faced similar issues for similar reasons. Departments across the country have made concerted efforts to recruit, train and promote officers from the communities they serve to foster better relationships, leading to better policing. Inclusion efforts in real estate take a similar tack. The input and direction of locals within the industry leads to better development.
Mentors hold the door
“Perception is a big thing, there’s a lack of access to resources,” Gary Chimwa, CEO at Mentorship Hub, said. Chimwa is using his experience in the PropTech world to build out a mentorship platform aimed at connecting mentors and mentees, offering mentorship to those who don’t have formal opportunities. “It’s quite discouraging when you’re young. When you want to embark on a new thing and it’s hard to find people who can help you. It’s a big barrier.”
The best way to overcome barriers is to follow leaders who know the way. Having a good mentor can make all the difference. For young people looking to get into real estate, simply having someone to answer basic questions with expertise is a powerful tool. Keeping your home in a gentrifying neighborhood often means knowing a real estate professional who can navigate land use and tax policies. We can learn a lot from textbooks and courses, but we learn best from another person. While often informal, many firms are establishing their own formal mentorship programs. Those mentorships help people thrive within the industry but don’t do anything for young talent looking to get into the industry. Once you’re through the door, finding mentors is easier, but the problem with a lack of access is most young talent will never make it through the door to begin with. Effective inclusion mentorship means holding the door open for those behind you, ushering them into the industry. Getting in the door is just the first step.
“We start as early as high school,” Bobo said. In partnership with the James and Judith K. Dimon Foundation, the Real Estate Board of New York and other major players in asset management, Bobo’s Project Destined is training 300 students this semester with 150 mentors. “What I sell is wealth creation through real estate. I’m trying to do it so you can produce wealth for yourself. I’m going to both give you the training and a stipend. I’m gonna monetize your time and pay you a stipend to learn it.”
Project Destined’s program teaches everything from an ownership perspective. Bobo equates it to basketball. When you’re young, you don’t learn one position. You learn the basics before you specify. Each student goes through a series of 1-week programs, covering a range of disciplines from underwriting, design, construction and brokerage to understand the full life cycle of property investment and management. Bobo and the Project Destined mentors emphasize to students that the entire world of real estate is theirs to seize. Being born in a certain zip code doesn’t mean you have to focus on affordable housing, he explained. His program gives students the skills to enter any sector, from ultra-luxe office leases to the largest warehouses.
For younger generations, it’s about more than making money. “I think for Millenials and Gen Z, if you look at the research, it’s all about working with a purpose,” Stacy Holden said. She is the Industry Principal and Director at AppFolio, a property management software technology. AppFolio uses technology to help train, manage and grow talent in asset management, creating a way to bring people into the industry that might not have considered it before. “With Boomers it was all about the paycheck. With Millennials, it’s about having an impact on a community. Being able to make something better. You’re dealing with where people live and work, we’re all living in those places a lot more than we used to. Making a personal connection with tenants and saying I made a difference today. What better place to have that impact than where people live and work?”
The National Association of Real Estate Brokers and HomeLight announced the creation of its Black Real Estate Agent initiative. The program will cover up to $5,000 of the onboarding costs for new agents, including pre-licensing classes, agent exams and select marketing and technology needs. Each participant will also be paired with an experienced NAREB real estate professional to serve as a mentor.
“This initiative works to close the income and racial wealth gap in the industry,” Antoine Thompson, NAREB national executive director, said. “Together we’re holding open the door that would otherwise remain closed to Black professionals and consumers.”
A little less talk, and a lot more action
Real estate’s stuffy, white reputation has been a long standing issue. Major publications have written often about the need for more diversity, a message well received by some of the nation’s largest real estate firms, who have made earnest efforts at reform. Still, the problem persists. Solving problems plaguing our country like gentrification, housing affordability and the racial wealth-gaps are directly related to the level of diversity among real estate professionals. Centuries have proven time and again that real estate is the best investment, an investment that has been far too exclusionary for far too long.
“From an industry point of view, I’ve been around this conversation for years, where everyone is saying how un-diverse it is, how things need to change, but I haven’t seen anything,” Chimwa said. “Many other things now exist that should start to make a difference, I hope to see more of that. All companies should be thinking along these lines, about how to improve their own position and working to improve wider running societal issues as a business. I would like to see it turn from a lot of talk to a lot of action.”
Mentorship and real estate expertise empowers communities with agency. Development and commercialization doesn’t have to be a big bad wolf. Getting young, diverse new talent into the world of real estate and giving them tools for success is changing the face of an entire industry. Gentrification becomes gentefication when members from the community are involved in and benefiting from revitalization efforts. Creating more ownership stakes in the community promotes the well being of the neighborhood by giving residents a financial and personal stake in it.
In the years before his tragic murder, Martin Luther King Jr.’s message was increasingly about economic justice. Jobs are harder and costlier to create than voter rolls, King wrote in The Atlantic. Like his fight for racial justice, Rev. King’s fight for economic justice continues to this day. King’s former neighborhood in Atlanta’s Old Fourth Ward has seen an almost 50 percent reduction in the Black population as the average cost of owning a home in the area has more than doubled in the past 10 years.
It’s past time to include everyone in real estate’s success. In a rapidly aging industry, finding and fostering the next generation of diverse talent not only helps to preserve and maintain institutional knowledge of asset management and ownership but also moves us closer towards Rev. King’s dream of economic justice. By including community members in the land use process, real estate mitigates some of the negative impact of gentrification by giving locals the tools and expertise they need to benefit from growth.
Making better, more inclusive, and therefore more stable neighborhoods creates value for everyone. Real estate is seen as a zero-sum game but it doesn’t have to be played that way. Even the famed Monopoly started out as The Landlord’s Game, where all players were rewarded when wealth was created for the neighborhood. It wasn’t until the idea for the game was stolen and then sold to Parker Brothers that the new rules were solidified and the Monopoly man became the face of corporate greed. Maybe it is time for us to rethink how we play the game of property ownership in order to be more like The Landlord’s Game and less like Monopoly.