Property management and real estate go hand in hand, one cannot function without the other. This market has evolved in a myriad different ways over the centuries. Societal changes, legal frameworks, and technological advancements have largely shaped the modern real estate market as we know it today.
From the medieval practices of managing farm lands and houses, it has come a long way before showing up in its current form- modern, mostly urban, housing. There have been several transformations in the role of property owners, perception of property as an investment opportunity, and the role of the state in regulating ownership of real estate.
In this article, we will try to understand the historical underpinnings of property management, and glean valuable insights into current practices and its future trajectory.
Major Milestones and Shifts in Property Management
Ancient Romans, Egyptians and Mesopotamians typically appointed overseers to manage their properties. These overseers collected rent, and took care of maintenance. In the medieval times, nobles and monarchs enjoyed a sort of monopoly over land ownership. There were local landlords who managed separate pieces of land.
These stewards, or property managers, in modern terms, were tasked with overseeing land cultivation, management of livestock, resource allocation, budgeting and expenses, maintenance due to wear and tear, mediating disputes between property owner and tenants, and taking care of the land in the long term.
Transformation in the 19th Century: Urbanization and Rental Housing Growth
With the industrial revolution, property management became more formalized. There was an influx of migrants from foreign countries, and native American population from rural areas, to the port cities for jobs. Tenements were constructed to meet their housing demands.
Initially, since the demand for housing was always high, property managers were not really motivated to improve housing conditions. The Cruikshank Company, founded in 1794, was probably the first real estate company in USA. Soon, property owners began to take up additional responsibilities like advertising properties, inspecting houses after vacancy, sending eviction notices, selecting tenants, and even giving concessions on rent during difficult times!
During the Great Depression, vacancy rates skyrocketed and many homeowners defaulted from their mortgages. The building boom of the 1920s had created an oversupply of apartments, and many foreclosed properties were then in the hands of banks, insurance companies, and other lenders.
Different agencies like the Public Works Administration Housing Division and the National Association of Housing Officials started looking for trained property managers to look after the day to day business of rented apartments.
Soon, with the long term, low down payment loans introduced by the FHA, a considerable portion of the housing debt was paid off, and the economy began to revive. After the 2nd World War, war veterans and migrants bought homes and cars as fast as they were brought to the market. Property managers had their work cut out for them, and it was a lot!
Past and Present Techniques in Property Management
Economic, Social, Demographic, and Political Influences
As we have seen earlier, several laws, political developments, and demographic shifts have influenced the property management sector. To recap, at the beginning of the industrial revolution, the property owner, was by default, the property manager, and initially they were not particularly motivated to put professional efforts on this front.
The Great Depression, with a mismatch of demand and supply, left lending agencies with foreclosed houses and properties. Soon after, there were more people wanting to buy houses, and the ones who did, decided that they wanted a professional who would take care of their rented property. At this time, the role of a property manager was that of a caretaker, who spoke to the tenants on behalf of the owner, and simply executed the decisions of the owner.
In the 1960s, the federal government offered subsidies on buying apartments to breathe some life into the economy and the housing market. As a result of these efforts toward affordable housing, these care-taker managers found that utility and maintenance bills piled up, while rents remained low. This is when the property manager stepped into a more structured and professional role.
In the 1980s, an economic downturn led to another decline in rental rates, and this soft rental market helped property owners hone their sales and marketing skills. The tax reforms and housing regulations of the 1990s made property managers turn their attention toward income maximization.
All these historical developments have shaped modern property managers into the multi-talented, multi-tasking professionals that they are today. Modern property managers work with various types of properties like lifestyle housing, affordable housing, homes for senior citizens, student housing, and commercial properties. (Carucci and Campbell, 2008)
Comparisons Between Historical and Modern Practices
When we compare today’s property management practices with those of the past, we notice several changes in the way property managers approach and execute tasks. To begin with, online mediums like websites, client portals, and apps have revolutionized the way we share information with tenants, how we respond to their needs, and how we screen potential applicants.
We are working with an aging population, and our business decisions are catered to this changing demographic. Today, the US housing market has barred entry to many young buyers because of soaring prices.
Existing homeowners are locked in at low rates, and the newer generations are struggling to buy property, especially in the urban areas. Property managers should be sensitive to these newer trends, and turn their attention to newly popular forms of housing like shared living spaces and student dorms.
Moreover, in context of the looming crisis of climate change, property managers have started thinking about the environmental impact, and mostly damage, of their actions. Sustainable housing with measures like green roofing, communal gardens, composting, etc. are being increasingly recognized as must-haves, especially among eco-conscious renters and buyers.
If you are a property manager who wants to upskill and scale their business, looking back on the history of property management will certainly give you some important insights. You can see how centuries of political and economic upheaval have brought this profession to its present day state, and how important it is to recognize the impact of today’s headlines on tomorrow’s profit.