Real Estate Firms’ Outlook is Positive Despite Headwinds

Real estate executives remain optimistic about the industry’s profitability and growth despite a decline in profitability expectations from last year, according to data from the National Association of Realtors (NAR) released Tuesday.

NAR’s 2016 Profile of Real Estate Firms, which includes a survey of real estate firm executives that are members of NAR conducted in July, found that 91 percent of respondents expect their firm’s net income to either increase or remain the same over the next year. The survey generated approximately 4,500 usable responses.

Respondents remained optimistic about their profitability for the coming year despite the fact that profitability expectations were down from NAR’s 2015 survey, largely due to the combination of inventory shortages and home price appreciation.

Economic improvements driving consumer demand are responsible for the positive outlook from real estate firms. NAR’s Housing Opportunities and Market Experience (HOME) report released in July 2016 found that 74 percent of consumers surveyed in Q2 believe that now is a good time to buy a home.

“Real estate firms have a positive outlook, even with the housing inventory shortage, as consumer demand remains solid because of strong ongoing job creation,” said NAR President Tom Salomone, broker-owner of Real Estate II, Inc. in Coral Springs, Florida. “As long as housing starts rise, which most economists expect going into 2017, then there will be more opportunity for home sales. Surveyed real estate firms remain optimistic because of these factors and for the second year in a row, have a positive outlook for the future.”

In the 2016 Profile of Real Estate Firms, 64 percent of firms expect net income to increase from all real estate activities in the next year, a decline from 68 percent in last year’s survey. Also, firms that responded had 30 percent of their customer inquiries from past client referrals; 30 percent came from repeat business from past clients; 10 percent came from websites; 7 percent came from social media; and 2 percent came from open houses.

Firms saw as the biggest challenges for the coming year profitability (49 percent of respondents), keeping up with technology (48 percent), maintaining sufficient inventory (48 percent), and recruiting younger agents (36 percent).