It seems in real estate, the same handful of economists are always making the news about their annual housing predictions. Then mortgage interest rates jump a full percentage point practically overnight, and all of them scurry to readjust their predictions.
Starting 2012, in the fall, Imprev real estate’s leading marketing automation firm has conducted a survey of top real estate executives: broker-owners and real estate franchise C-level leaders (CEO, COO, CMO, CTO, etc.), to get their perspective on what they think will happen in the economy in 2017. We keep hearing from the Generals, but if you really want to know what is happening, you have to talk to those who have boots on the ground: those who are battling it out in real estate every day.
The Imprev Study this year was remarkable for a few reasons. First, it was conducted just before the election, so it is a snapshot in time before all the post-election political gyrations and wrangling. Second, it secured feedback from 240 respondents, not just the opinions of a handful of economic geeks who never sold a home or originated a mortgage loan in their life. Third, the survey talked to the leaders in the business who collectively are responsible for organizations that provide more than half of all U.S. residential real estate transaction last year: 15% of the respondents represented firms with more than 1,000 agents; 17% represent firms with 501 to 1,000 agents; 42% represent firms with 101 to 500 agents; and 26% represent firms with 100 agents or fewer.
Conventional wisdom says that real estate folks are optimists, and that a survey of their views on subjects like the economy and housing might be skewed towards a positive view. Even if we assume this is true, the magic of the Imprev survey is they’ve been asking the exact same questions of real estate leaders for the last several years. So that could mean that any change in direction of opinion – positive or negative – is significant.
The major headline this year was clear: Real Estate Leaders’ Outlook for Housing, Economy Softens for 2017. So there goes the idea that leaders are always optimistic. As Imprev CEO Renwick Congdon said, “In fact, confidence for 2017 is lower across nearly all questions related to housing and the economy.”
How much has it soften?
- Compared to two years ago, the number of executives who believe the U.S. economy will deteriorate next year more than doubled, moving from 9% in 2014, to 23%.
- The number of those who think housing demand will deteriorate in 2017 has doubled to 13% from 6% for the outlook for housing demand in 2015.
- While the vast majority (74%) of real estate executives and broker-owners are “somewhat confident” in the housing market for 2017, that’s down from 79% from the Imprev study two years ago. While 5% of leaders are “not at all confident” in the housing market in 2017 – up from 3% in 2015 – 21% are “very confident” in the housing market for next year, and that’s also up from 18% in 2015.
- Moreover, 42% have grown less confident in the world economy since January.
Two More Major Findings
There were two other findings released in the Imprev Thought Leader Study measuring real estate industry confidence in housing and the economy: growing pressure brokerages continue to feel regarding profitability and finally, a cautionary trend toward success in recruiting younger agents.
- Two years ago, 43% of real estate leaders said that they were “very confident” that their brokerage business would be more profitable in 2015. But the percentage of those who are very confident in greater profitability has fallen to 39% for their confidence in next year.
- 12% of real estate leaders said they are “not at all confident” that their brokerage business will be more profitable next year, more than double the percentage — 5% — from two years ago.
When it comes to the average age of the real estate agent, there’s good news, and surprisingly perhaps bad news. The good news is, just as the NAR reported the average age of a real estate agent dropped from 57 years old to 53 years old in their latest study, the Imprev survey found that while agents they are recruiting may be getting younger, leadership is not.
- The leadership population in real estate is getting older: In the 2014 Imprev study, 88% of broker-owners and executives were over 40 years old. In this new study, 92% are over 40 years old, while more than 36% are over the age of 60 (up from 2014’s 32%).
Finally, the best part of the Imprev study is they have no dog in that hunt. Renwick’s goal when this study was created five years ago was to “encourage an exchange of ideas and solutions within the real estate community. Rather than provide opinions on what the community thinks, we prefer to share the data and spark discussion within the community.”
I have to think that the boots on the ground can see a lot more of what’s really going on than the Generals.
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Full disclosure: Kevin Hawkins assists Imprev with its twice-annual Thought Leader Surveys.