Anxiety over the state of the economy has become a dominant business concern for real estate professionals surveyed by Inman — with little sign of abating soon.
In the months since the war in Iran led to the disruption of oil exports from the Middle East, economic angst among agents and brokerage leaders only deepened as fuel prices remained high, inflation persisted and mortgage rates climbed.
Now, results from Inman Intel Index surveys conducted monthly over the past two years reveal the extent to which economic factors are weighing on agents.
- Since the beginning of the conflict in Iran, only 5 percent of real estate agent respondents have indicated they were “pleased” or “very pleased” with the state of the economy.
- That’s down from above 15 percent immediately before the conflict began, and less than half the level of optimism reported at the same time last year.
Unlike last year — when concern over the potential impact of newly announced tariffs proved relatively brief — this year’s geopolitical and economic anxieties have weighed on agents and their business prospects well into the summer, Inman found.
In this week’s report, read how the uncertainty is already affecting agents and brokerage leaders in their respective local markets.
Mired in uncertainty
Pessimism toward the state of the broader economy is not entirely new to agents. But it’s on the rise.
- From June through August last year, 65 percent of agent respondents said they were “concerned” or “very concerned” about the economy — an already high mark.
- Over the same summer period this year, that share jumped to 77 percent.
In fact, economic pessimists outnumbered optimists by nearly 12 to 1 in the surveyed group over the summer months.
A result this lopsided is partly a reflection of how real estate has muddled through a multi-year downturn in home transactions that most other sectors of the economy haven’t experienced.
But it also signals a real shift in how agents see the macroeconomic factors affecting their clients.
For one thing, fuel prices continue to be much higher than they were before the Iran war sparked a series of ongoing shipping disruptions in the Strait of Hormuz and elsewhere.
Gas prices in particular are among the biggest expenses in many household budgets, according to data from the Bureau of Economic Analysis.
But an even bigger consideration? The broader economic environment has driven 30-year mortgage rates back to nearly 7 percent for even some of the most qualified buyers, according to Freddie Mac’s Primary Mortgage Market Survey.
(Rates had just dipped below 6 percent on the eve of the Iran war.)
Despite this souring mood, agents and brokerage decision-makers have found themselves in a holding pattern, recent surveys found.
- The share of agent respondents who said economic uncertainty has affected their actual business decisions only rose by 2 percentage points year-over-year.
- The share of brokerage leaders who said they expected to grow their headcount in the next 12 months dropped by fewer than 6 percentage points year-over-year.
These shifts are notable but not that statistically different from the levels observed last year, especially in a survey population of this size.
Across the board, Inman’s analysis reveals that agents and brokerage leaders shared similar views of the state of the economy — especially after accounting for the type of brokerage they were affiliated with. In other words, brokerage leaders are no more optimistic about the state of things than their agents are.
But plans to hire — a step that largely tracks with expected sales — are still in place, if delayed by this year’s economic developments. And bigger brokerages appear to think they’ll disproportionately benefit from future growth.
- Forty percent of leaders at small independent brokerages expect their headcounts to be higher in 12 months.
- At bigger brokerage networks, that share is notably higher — 60 percent among leaders at franchise brokerages, and 76 percent affiliated with publicly traded non-franchising companies.
Still, real estate professionals and many of their clients are stuck in economic conditions that are relatively challenging right now, as their first-person testimony makes clear.
The view on the ground
In Inman’s survey, economic anxiety also came to the forefront in response to questions that didn’t specifically ask about it.
When the survey asks agents about their top business concern, it offers specific response options ranging from mortgage rates to inventory.
But 1 in 5 agent respondents have selected “other” and written in their top business concern. And this group is dominated by unprompted concerns about the broader economic environment, an Inman analysis of the written responses shows.
“Overall economic uncertainty is creating concern in the housing market in many ways, including several of the ways listed above,” one agent from Pittsburgh wrote.
Multiple agents wrote to say their markets are experiencing the effects of a “K-shaped” economy — one in which already wealthy clients benefit from gains in the stock market, while most potential buyers are struggling to out-earn increases in cost of living.
In parts of the country where voters — and homebuyers — skew more Democratic, agents connected economic issues to political sentiment as well.
One Washington, D.C., agent cited inflation, war in the Middle East and the National Guard’s presence in their market as the factors “making it less desirable” to buyers.
“The state of the union and uncertainty is causing people to sit on the sidelines,” another agent in San Diego wrote.
But more than any partisan sentiment, agents who wrote in blamed bigger-picture economic factors for driving up mortgage rates.
“As an agent it’s the general public’s affordability issues,” wrote one brokerage leader in Orlando, Florida. “Rates are too high,” they added, for the new norm of property values.
Methodology notes: This month’s Inman Intel Index survey ran from Aug. 19-27 and received 420 responses. The entire Inman reader community was invited to participate, and a rotating, randomized selection of community members was prompted to participate by email. Users responded to a series of questions related to their self-identified corner of the real estate industry — including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. Results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. This survey is conducted monthly.
