Over 70 brokers and leaders enjoyed the Broker Summit recently in Des Moines. Attendees were very pleased with the valuable information presented and thanked IAR for providing this educational event. This is the first of two articles covering the recent Broker Summit. The second article will highlight the Top 4 Legal Risks in Real Estate as presented by NAR Senior Vice President and Legal Counsel, Katie Johnson.
Steve Murray, President of REALTrends started the day off discussing national trends in housing. Steve has almost 40 years experience in the industry and has authored four books. REALTrends is a leader in ranking the performance of residential real estate firms, agents and teams. REALTrends publishes monthly trends, white papers, and LORE magazine and consults with several of large real estate companies and franchises.
View Steve Murray’s full slide presentation
The national homeownership rate is at 63.2% as of Q2 2017. This is the lowest since 1994.
The Housing market will be slowing down mainly due to lack of inventory. This type of slowdown has not happened for a very long time.
Vacancy rates are at an all-time low across the country.
In many parts of the country, homebuilders are not building enough entry level housing. This can be attributed to larger profits made at the mid-high level homes.
There are 3.3 months of inventory as of June 2017 compared to a 5.1 months average since 1988. Vacancy rates for single family homes is 1.9%.
The myth that more people are trying to sell their home on their own is not backed by research. An estimated 85% of all transactions in 2016 were done with the help of a real estate professional. This includes all transactions from the buying and selling side and new and existing homes.
People understand that buying and selling a home is a complex process and it seems to be getting more complex. Murray referenced how closing packages continue to grow in size.
The myth that institutions own a large amount of single family residences is unfounded. Of the approximate 22-24 million residences owned by investors, less than 400,000 are owned by institutions. 14 million properties are owned by investors that only own 1-2 properties.
State Trends
Homeownership rate was 71.5% for Iowa versus 63.4% nationally.
June 2017 was a record for number of homes sold in 1 month in Iowa.
If you are interested in more details in our Local Board Summary Reports or the Statewide data, please visit our new stats webpage. https://www.iowarealtors.com/news/housingstats
Brokerage Trends
While gross margin continues to drop, the net margin average of 500 of the top national firms was the same as ten years ago. Brokers have adapted and will continue to adapt.
Murray discussed one of the key metrics they keep a close eye on. One such metric is how consumers find an agent. While it is still true that most people find their agent based on a referral from a friend or family member, online reviews and ratings are making an impact.
Over 50% of millennials, 33% of Generation X, and 25% of Baby Boomers changed their decision on an agent based on online reviews and ratings.
Steve Murray told those in attendance bluntly, “If you want go out of business, don’t participate in agent ratings and reviews”.
About 70% of brokerage companies have 5 or fewer agents.
Teams are very popular and growing at a fast rate. There is an emerging market of trying to recruit or acquire teams from other firms.
The top 100 teams outperformed top producing individuals by 2.5 times. Teams are scalable and have many specialists within the team.
Acquisitions and mergers are at an all-time high with record numbers throughout the country in 2016-2017.
Whether a firm is 100% commission plan, capped company revenue plan or graduated commission plan, in most cases while gross margins differ greatly, among the best firms the national average net margin is approximately the same among all models of brokerage.
REALTrends' conclusion on what is the difference in performance over time?
The leadership and culture of a brokerage.
Sources: Research by the staff at REALTrends
NAR’s Profile of Home Buyers and Sellers.