From realtor.org
Real estate firms are confident in the industry’s future growth and their increasing profitability, according to the 2015 National Association of Realtors Profile of Real Estate Firms.
“A majority of firms have a positive view of the future, with 95 percent of all firms expecting their net income to either increase or stay the same in the next year,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark.
The annual survey found commercial firms are the most optimistic, with 75 percent expecting net income to increase, and 22 percent anticipating it to stay the same.
Residential firms are only slightly less optimistic: 69 percent report that they expect to see an increase in their net income next year, 25 percent expect it to stay the same, and 6 percent predict a decrease. Only 3 percent of commercial firms predict a decrease in net income in the next year.
The typical residential firm has been operating for a median of 13 years, and the typical commercial firm has been in business for 20 years. The average firm, 79 percent, has one office and two full-time real estate licensees, while 9 percent of firms are larger with four or more offices and have a median of 125 full-time licensees.
In 2014, a typical residential real estate firm’s brokerage sales volume was $5.6 million, and the typical commercial real estate firm’s brokerage sales volume was $4.4 million.
According to the survey, 82 percent of firms specialize in residential brokerage, making it by far the most popular specialization. Residential property management follows at 7 percent, and commercial brokerage comes in third at 4 percent.
Eighty-three percent of firms are independent, non-franchised companies, while 15 percent of firms are independent, franchised companies. The remaining firms are subsidiaries of national or regional corporations.
When asked to name the biggest challenge facing their firms in the next two years, 51 percent of firms named profitability. The second most common responses, at 46 percent each, were keeping up with technology and maintaining property inventory.
Firms were also asked to predict the effect of the different generations of homebuyers on the industry for the next two years. The most common concern named, at 54 percent, was the millennial generation’s inability to buy a home because of stagnant wage growth, a slow job market and their debt-to-income ratios.