House proud: how the real estate industry got respectable

Washington Monthly, July-August, 2005 by Clay Risen

A Nation of Realtors: A Cultural History of the Twentieth Century American Middle Class By Jeffrey M. Hornstein Duke University Press; $22.95

In 1922, Sinclair Lewis published Babbitt, his classic satire of the emerging American mass middle class. Readers remember its title character, George Babbitt, for his comfortable angst, his paradoxical mixture of class pride and implacable spiritual unease, and his sense of accomplishment tossed with a constant concern for status. But many readers may not recall Babbitt's chosen career: He is a realtor. And though some aspects of the book have not worn well--today's reader, well-versed in the ironies of American middle-class life, will likely find its depiction of Babbitt and his socioeconomic environs wooden and unconvincing--Lewis could not have chosen a better career to embody 1920s middle-class anxiety. Realty was just then emerging as a middle-class profession, and, like Babbitt, it was nervously obsessed with positioning itself as a socially respectable pursuit grounded in empirical research, a profession akin to law or medicine. "Makes me tired the way these doctors and profs and preachers put on the lugs about being 'professional men,'" Babbitt says. "A good realtor has to have more knowledge and finesse than any of 'em."

Looking back, we can see that Babbitt and his colleagues needn't have worried--realty rode the American middle class to dominance in the decades before and after World War II, becoming one of the most lucrative sectors of the U.S. economy within a few decades. At the same time, its rise came just as the federal government was taking on new powers and responsibilities between the wars, and it was one of the first industries to realize the importance of maintaining a robust Washington office--a presence that allowed realtors to shape the modern housing market. "Organized real estate brokers structured the rules of the real estate market to create a demand for their services, positioning themselves as the principal purveyors of what came to be the quintessential symbol of middle-class status," writes Jeffrey Hornstein in his survey of realty in the 20th century, A Nation of Realtors[R].

But the parallel history of realty and the middle class does not mean that the interests of the two have always intersected. Indeed, as the industry's status anxieties subsided and its profit motive, a central but previously suppressed driving force, came to the fore after World War II, those interests began to diverge. Realty took a powerful stand against public housing initiatives in favor of suburban tract homes, just as it pressed for tax policies that privileged home ownership over renting, thus promoting the single-family suburban sprawl over dense city living and closing off middle-class ascension to millions of working families. And it has used the immense lobbying power of its trade association to lock in a system of buying and selling homes that centralizes power in the hands of the realtor while hampering the efficiencies inherent in greater consumer choice and technological change. What was once the gateway to greater home ownership has become an obstacle.

It is one of Washington's many ironies that its second-largest lobbying organization--which last election cycle distributed nearly $4 million in campaign funds--got its start as a model of progressive social reorganization. The brokering of property is an age-old career, and until relatively recently, not a well-respected one. In 19th century popular culture, the broker was an archetypal bad guy, an amoral swindler, a "curbstoner." But in 1908, a few dozen representatives from local real estate groups got together in Chicago to form the National Association of Real Estate Exchanges, soon renamed the National Association of Real Estate Boards (NAREB) and the precursor of today's National Association of Realtors (NAR). At the time, the word "realtor" didn't exist; in just one example of its efforts to establish a new, respectable profession, NAREB adopted the neologism in 1916 to distinguish its members from run-of-the-mill brokers: "We ought to insist that folks call us 'realtors' and not 'real-estate men," Babbitt tells a fellow broker. "Sounds more like a reg'lar profession."

In fact, the history of NAREB/NAR is a long list of such efforts to create, almost from scratch, a profession, complete with a scientific discourse, university-level curriculum, and standardized business practices. The goal, according to the editors of the National Real Estate Journal, was to place realty in the same intellectual category as medicine and law, in which the professions members have unique access to a body of knowledge which they then sell, along with their informed judgment, to consumers. "Any man who wants to know anything about medicine must go to a physician," they wrote in 1910. "If he wants to know anything about real estate or land he must go to a real estate man."

In 1918, NAREB ratified a model licensing law to be adopted by state organizations; by 1950, licensing had been accepted nationwide. In 1923, a joint NAR-led committee approved a textbook series and two-year curriculum; by 1925, people were talking about the need for University-level instruction in "realology," a discussion that presupposed an objective body of knowledge and imagined a future for realtors as the arbiters of American land policy. They found a ready ally in Richard Ely, a renowned expert in land economics at the University of Wisconsin, who soon took the lead in creating a national curriculum for real estate education. With the economy booming and a land bubble growing in Florida, the decade between the end of World War I and the Great Crash proved seminal in the transformation of real estate from avocation to profession and of NAREB from "an ineffectual and unfocused men's club into a distinctive, effective modern hybrid of a trade association and professional association."