Keeping up with technology, facing increased competition from nontraditional market participants, and growing concerns over housing affordability are the top challenges that real estate firms say they’re increasingly alarmed about, according to the National Association of REALTORS®’ newly released 2019 Profile of Real Estate Firms. NAR’s report is based on a survey of more than 6,000 executives and senior management at real estate companies, both commercial and residential.
Forty-four percent of real estate firms said they expect competition from virtual firms to increase over the next year, and 43 percent expect the same from nontraditional market participants.
“It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market,” says NAR CEO Bob Goldberg.
Real estate firms also expressed concerns over young adults’ place in the housing market. Fifty-eight percent of firms said they were concerned with millennials’ ability to purchase a home, while 46 percent said they were concerned about millennials’ view of homeownership.
Despite some perceived challenges, the majority of real estate firms remain confident that sales and profits will increase over the next year.
“Real estate firms continue to look optimistically toward the future, with a majority expecting profits to increase in the next two years,” says NAR President John Smaby. “These trends are positive signs, particularly in our constantly evolving industry.”
Some additional highlights from the survey:
- Finding business: Firms reported that about 30 percent of their sales volume is from past client referrals, and 30 percent are from repeat business with past clients.
- Sales volume: Firms with only one office had a median brokerage sales volume of $4.2 million in 2018, down from $4.3 million in 2016. Firms with four or more offices had a median brokerage sales volume of $100 million in 2018, down from $235 million in 2016.
- Transaction sides: Real estate firms with one office averaged 18 transaction sides in 2018, down from 20 in 2016. Firms with four or more offices averaged 478 transaction sides, down from 550 in 2016.
Source: “2019 Profile of Real Estate Firms,” National Association of REALTORS® (March 6, 2019)