Central Mississippi REALTORS
620 N. State Street Suite 100
For Immediate Release:
Tuesday, January 2, 2018
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Year in Review: Brokers Reveal Top Challenges and Expectations for the Year Ahead
Keeping up with technology was one of the top challenges for real estate brokers over the past 12 months according to a recent survey, “2017 Profile of Real Estate Firms,” conducted by the National Association of REALTORS®. Maintaining sufficient inventory, competition from non-traditional participants and profitability were also among the biggest challenges for over 6,000 real estate executives surveyed.
The National Association of Realtors® “Profile of Real Estate Firms” provides insight into the business characteristics and activity of real estate firms, the benefits and education provided to agents and an outlook for the future. The report’s findings are based on a survey of firm executives who are members of NAR, and found that keeping up with technology, maintaining sufficient inventory, competition from nontraditional market participants and profitability are among the biggest challenges for real estate firms.
Anticipated threat from virtual brokerages on the rise
The 2017 “Profile of Real Estate Firms Survey” reports that, 50% of real estate firms expect competition to increase in the next year from non-traditional market participants, up from 43 percent a year ago. Half of firms surveyed expect competition to increase from virtual firms, an increase of 3 percent since 2016, while only 15 percent expect competition will increase from traditional brick-and-mortar firms.
Optimistic outlook for industry growth
For a third year in a row, the vast majority of firms have an optimistic outlook for the future of the industry’s growth. Although expectations have slightly decreased from last year’s survey, firms remain confident and expect profitability from all real estate activities to increase or stay the same over the next year.
“Real estate firms continue to have a very positive outlook on the state of the industry. As the survey found, 90 percent of real estate firms expect net income to increase or remain the same over the next year,” says NAR president William E. Brown, a second-generation Realtor® from Alamo, California and founder of Investment Properties. “But for the second year in a row, low inventory and high prices have led to a slight decrease in real estate firms’ sales volume.”
According to the survey, 60 percent of commercial firms expect profitability from all real estate activities to increase in the next year, compared to 64 percent in 2016. Residential real estate firms are more optimistic compared to commercial firms; 62 percent of firms expect profitability to improve, compared to 65 percent in 2016. The typical residential real estate firm’s brokerage sales volume was $6.2 million in 2016, down from $6.3 in 2015, while the typical commercial real estate firm’s brokerage sales volume was $4.0 million in 2016.
The survey found that the size of the firm has an impact on sales volume. Firms with only one office, typically with two full-time licensed agents, had a median brokerage sales volume of $4.3 million in 2016, compared to $4.5 million in 2015. Large firms, those with four or more offices and typically with 81 full-time licensed agents, had a median brokerage sales volume of $235.0 million in 2016, compared to $203.8 million in 2015.
The report also predicts the effect different generations of homebuyers will have on the industry. Fifty-two percent of firms are concerned with Gen Y/millennials’ ability to buy a home, 34 percent of firms are concerned with millennials’ view of homeownership, and 32 percent of firms are concerned about the recruitment of millennial and Gen X real estate professionals.
The NAR 2017 Profile of Real Estate Firms was based on an online survey sent in July 2017 to a national sample of 165,598 executives at real estate firms. This generated 6,073 useable responses with a response rate of 3.7 percent. View the entire report at https://nar.realtor.