Good news: the vast majority of real estate firms have an optimistic outlook for the future of the industry’s profitability and growth, according to the National Association of Realtors® (NAR) 2016 Profile of Real Estate Firms. Profitability expectations have declined from the 2015 survey, mainly due to inventory shortages and home-price growth, but real estate firms remain confident about their overall future profitability.
Despite industry challenges, real estate firms are seeing marked growth in terms of new agent recruitment fueled by a rise in competition. A comparison of equivalent 2015 and 2016 surveys performed by the NAR is clear evidence of this, further revealing that “47 percent of firms reported they are actively recruiting sales agents in 2016, up from 44 percent in 2015.” This optimistic outlook speaks volumes to the overall long-term fitness of the industry along with its strength in advancement despite a current real estate market afflicted by low inventory levels and a surge in home prices. “For a second year in a row, a majority of real estate firms have a positive outlook on profitability, with 91 percent of all firms expecting their net income to increase or remain the same over the next year,” said NAR President Tom Salomone. The results of the 2016 survey suggest that, despite declining profitability expectations, the morale of firms remains high.
The NAR survey results are timely if history repeats itself and the rate at which financial institutions lend money to each other, otherwise known as the Fed Funds Rate, increases. This anticipated boost initiated by the Fed is expected to directly impact residential mortage rates with the typical homebuyer feeling the pinch of an increased monthly mortgage payment. Ironically though, this increase is not expected to hinder housing sales, “especially if median household income continues to rise and job growth remains steady or expands. Jobs are everything to an economy and ultimately housing markets,” as chief economist Ted Jones suggests. With implications of a much needed air of confidence in the realtor community, prospective homebuyers can rest assured they are in good hands for the long haul despite the constant flux of trade conditions.
If you are a prospective homebuyer looking to obtain a loan, you’ll be in good hands with me, too! Please feel free to reach out to me so we can discuss your options together.