The National Association of REALTORS® (NAR) has released its latest report documenting the different real estate brokerages across America. The report examines the defining characteristics of these brokerages: their current level of business activity and their future outlook, franchise status, leadership, benefits and technology tools offered to their agents, etc. Through cross-referencing, a cumulative picture can be painted about the overall state of brokerages, from their strengths to their ongoing challenges.
“As there are well over 100,000 real estate firms operating in the United States, it is important to understand their unique characteristics and how they operate successfully,” the report says.
The report was compiled via 5,889 “usable” online survey responses from randomly selected executive/senior level REALTORS®, first received in July 2023.
According to the resulting report (titled “2023 Profile of Real Estate Firms”): 81% of firms operate from a single office, while 86% of firms are not part of a franchise.
Single-office firms had a median brokerage sales volume of $5.3 million and 15 real estate transaction sides in 2022. Firms with four or more offices had a median brokerage sales volume of $154.6 million and 403 transaction sides in 2022. Large and small firms saw a simultaneous increase in median sales volume yet a decrease in real estate transaction sides compared to 2021 – this is indicative of climbing prices.
However, the outlook is down considerably compared to 2021, when 58% of firms expected an increase in net income or profitability. Today, only 31% do. Cited concerns about the state of the market included young adults’ inability to afford homes while baby boomers are leaving the market.
Indeed, the typical firm generated 48% of its sales volume from repeat business from past clients and 47% from past client referrals. A shrinking buyer base could well have a domino effect.
The most common agent benefit offered by real estate brokerages included errors and omissions/liability insurance (offered by 43% of firms). Popular tools included e-signature and electronic contracts, comparative market analysis, multiple listing, and virtual assistants or office space.
“With interest rates rising to more than 20-year highs, it is no surprise that the biggest current concern for real estate firms is housing affordability,” said Jessica Lautz, NAR deputy chief economist and vice president of research.
She continued: “Housing affordability has had an impact on real estate firms’ overall sales activity. There are fewer buyers who can purchase a home due to the rise in prices and interest rates, and fewer sellers are motivated to make a move. While sales are down, sales volume has increased as home prices have augmented because of limited inventory … Due to tight inventory, the outlook among real estate firms is more conservative since the pandemic-induced housing boom.”
Read the full report here.