Ninety-five percent of real estate firms are confident that their net income will increase or stay the same in the next year, according to the NAR Profile of Real Estate Firms.
Commercial firms are the most optimistic, with 75 percent expecting their net income to rise and 22 percent saying it will likely stay the same. Sixty-nine percent of residential real estate firms expect their income to increase next year.
“The improving economy continues to fuel job growth, and while some markets are still recovering, the demand for real property is back, and prospects are looking good for the real estate industry,” says Chris Polychron, NAR’s president.
In 2014, an average residential real estate firm’s brokerage sales volume was $5.6 million, while the average commercial real estate firm’s brokerage sales volume was $4.4 million, according to NAR’s survey.
The size of the firm had a large impact on its sales volume. For example, real estate firms with only one office had a median brokerage sales volume of $4.1 million, while firms with four or more offices had a median brokerage sales volume of $250 million. Firms with one office averaged 18 real estate transaction sides in 2014, while firms with four or more offices had 900 real estate transaction sides.
Firms cited the top challenges facing them in the next two years as being profitable (51 percent), followed by keeping up with technology and maintaining sufficient property inventory (both at 46 percent). Firms also cited concerns over the millennial generation’s inability to purchase a home because of stagnant wage growth and a slow job market, as well as the increasing number of baby boomer agents retiring from the real estate industry.
Nevertheless, a large number of firms say they’re growing. Forty-four percent of firms are actively recruiting new agents, with 88 percent citing business growth as their primary reason for hiring new agents.