A group of broker-owners and executives who were responsible for more than half of all U.S. real estate transactions last year have weighed in on the U.S. economy and housing market — and the results aren’t uplifting.
Automated marketing software company Imprev conducted the Thought Leader Real Estate Confidence Study, asking 240 respondents representing both independent and franchised companies how confident they feel about different topics.
“Top real estate executives’ confidence in the U.S. economy and housing market for 2017 has softened compared to two years ago, and 42 percent have grown less confident in the world economy since January,” noted Imprev in a statement.
Tough times ahead
When it comes to the U.S. economy in 2017, only 30 percent of respondents anticipate an improvement — a 15 percentage point drop from Imprev’s 2014 study. The majority of survey-takers (44 percent) said it will stay the same, while 23 percent forecast a deterioration in the country’s financial health.
The demographic that has the most pessimistic outlook is real estate executives.
In 2014, only 9 percent believed a downturn was looming ahead. This year, that number has jumped 14 percentage points to 23 percent.
The gloomy outlook poured over into respondents’ forecasts about housing demand as well. “Leaders are less bullish on housing next year compared to their outlook for 2015,” noted Imprev in its key findings report.
Thirty-five percent of study participants said housing demand would improve in 2017 — a 12 percentage point drop from the 2014 study. Furthermore, the number of respondents who said housing demand would lessen doubled to 13 percent.
When it comes to brokerage profitability, the number of respondents who were “very confident” dropped from 43 percent to 39 percent. “It’s about expenses versus shrinking profits,” noted a survey taker who leads an office of more than 1,000 agents.
The one, small silver lining comes from respondents’ confidence in the housing market — 74 percent said they were “somewhat confident” for the upcoming year. Moreover, 21 percent were “very confident,” a 3 percentage point jump from 2014.
The difference from those who are “very confident” and “somewhat confident” boils down to three, key components, said a respondent.
“Low inventory, slow development and a lack of new home construction.”
Who will lead the industry going forward?
Lastly, the study revealed that while the average age for real estate agents is getting younger, the average age for leadership is getting older.
This year, the average Realtor was 53 years old, according to National Association of Realtors‘ demographic information. That’s a four-year difference from 2014’s average age of 57.
On the other hand, 92 percent of Imprev respondents who are broker-owners and executives are over 40 years old — a 4 percentage point increase from 2014.
Furthermore, the number of leaders who are over 60 increased 4 percentage points to 36 percent.
“While recruiting younger, less experienced agents has improved for us this year, we’ve noticed increased difficulty in recruiting the top talent,” said a respondent about the issue.
The annual Imprev Thought Leader Real Estate Confidence Survey, which debuted in 2012, was developed by Imprev to provide insight on key business challenges top executives face, encouraging an exchange of ideas and solutions among industry thought leaders.
The study was conducted from October 18 to November 1, 2016.