Last updated: 16:11 / Monday, 3 October 2016
National Asociation Realtors

Study Finds Real Estate Firms Have Positive Outlook, Despite Sales Volume Decrease

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Study Finds Real Estate Firms Have Positive Outlook, Despite Sales Volume Decrease
  • 91 percent of all firms are expecting their net income to increase or remain the same over the next year
  • “Although there is an overwhelmingly positive outlook, low inventory and high prices have led to an overall decrease in real estate firm’s sales volume since last year’s report"
  • 64 percent of firms expect profitability (net income) from all real estate activities to increase in the next year,
  • Forty-three percent of real estate firms expect competition to increase in the next year from non-traditional firms

The vast majority of real estate firms have an optimistic outlook for the future of the industry’s profitability and growth, according to the National Association of Realtors´ (NAR) 2016 Profile of Real Estate Firms. Profitability expectations have declined from the 2015 survey, mainly due to inventory shortages and home-price growth, but real estate firms remain confident about their overall future profitability.

“For a second year in a row, a majority of real estate firms have a positive outlook on profitability, with 91 percent of all firms expecting their net income to increase or remain the same over the next year,” said NAR President Tom Salomone, broker-owner of Real Estate II, Inc. in Coral Springs, Florida. “Although there is an overwhelmingly positive outlook, low inventory and high prices have led to an overall decrease in real estate firm’s sales volume since last year’s report. High home prices are holding back first-time buyers and low inventory means fewer sales at a time of increased Realtor membership”.

In 2016, 64 percent of firms expect profitability (net income) from all real estate activities to increase in the next year, down from 68 percent in 2015. Sixty-seven percent of commercial real estate firms expect profitability to improve (down from 75 percent in 2015), as well as 70 percent of large firms with four or more offices expect profitability to improve (down from 79 percent in the previous year). Residential firms are a little less optimistic as 65 percent expect to see an increase in their net income.

Forty-three percent of real estate firms expect competition to increase in the next year from non-traditional firms, down from 45 percent in 2015. Forty-six percent of firms see competition from virtual firms increasing (up from 41 percent in 2015), while only 17 percent expect competition increasing from traditional brick-and-mortar firms.

The sense of competition has fueled more recruitment since the 2015 survey. Forty-seven percent of firms reported they are actively recruiting sales agents in 2016, up from 44 percent in 2015. This is more common with residential firms (51 percent) than commercial firms (32 percent) and more common among offices with four offices or more (88 percent) than firms with one office (39 percent).

When asked what they see as the biggest challenges in the next two years, firms cited profitability (49 percent), keeping up with technology (48 percent), maintaining sufficient inventory (48 percent) and recruiting younger agents (36 percent). 

The NAR 2016 Profile of Real Estate Firms was based on an online survey sent in July 2016 to a national sample of 147,835 executives at real estate firms.

 

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