Incumbents demonstrate a peculiar relationship with profitability that prevents competitive pricing or operational efficiency. Rather than optimizing for margins, industry participants allow their cost structures to expand with revenue, leaving no room for price competition or efficiency gains. This pattern appears across all industry segments, from individual brokerages to large mortgage entities.

Most real estate brokerages operate without consistent profitability, depending on volume rather than margins to sustain operations. When transaction volumes increase, companies hire aggressively and expand overhead rather than improving per-unit economics. When volumes decline, mass layoffs and office closures create operational disruption that prevents systematic efficiency improvements. This boom-bust cycle makes long-term technology investments or process optimization practically impossible.

Mortgage entities sustain themselves through servicing revenue rather than origination efficiency, but only during refinancing booms that create temporary windfalls. Between these episodic events, companies enter survival mode, cutting investments in technology and process improvement. Industry profitability hinges on these cyclical events where low customer acquisition costs and staff undersupply allow for short-term margin expansion.

The cyclical nature of starvation and overload prevents any sustained capital investment cycle from taking root. Companies cannot justify long-term technology investments when their survival depends on navigating unpredictable boom-bust cycles. This creates a persistent underinvestment in the infrastructure and capabilities that would enable sustainable competitive advantages.