What A Difference 8-Weeks Makes
I was in Texas when I got the call that Realogy was sending me home (along with more than sixty of my peers from across the various Realogy brands). Just like you, we have been operating in a new remote world where health and safety is paramount. Now it’s not just a shock to the housing industry, it’s been an external shot to the entire U.S. economic system that has dramatically touched everyone’s lives.
The recent U.S. Broker Survey of more than 2,000 real estate brokers across the U.S. demonstrated that there was a strong sense of optimism with brokers, but not necessarily with agents. (Click to see the survey results – https://bit.ly/2JAlYag) That’s to be expected, after all, we brokers are an optimistic lot; it’s what we do. Most of us have also been through the down times before. By comparison, only 16% of the brokers reported half or more of their agents being in the business during the crash of 10+ years ago. This is new ground for most agents and understandably, it’s a time when agents need the comfort and stability of their brokers.
We are starting to see some markets opening, but what’s ahead?
Transactions are continuing to move forward. Initially, 39% of the brokers reported they had lost 10-24% of their transactions. However, since the initial survey, numerous brokers have reported many of those previously lost transactions were actually only delayed, and buyers are returning to the market. Markets are also seeing a wider diversity in buyer activity throughout all price ranges. A luxury broker in South Florida reported bargain hunters from out of state shopping at lower price points, while in contrast, a Texas broker said many buyers have increased their pricing search criteria looking for deals from motivated sellers. Across the spectrum markets report similar, diverse experiences.
With low inventory levels, most brokers feel optimistic that overall pricing will remain consistent although the historic average price increases won’t see the gains that we have experienced over the recent years. A few other market factors:
- At minimum we missed the spring season which represents a decline of 14% or more of the annual business
- iBuyers have largely pulled out for now
- Some of the large, high-profile (but notoriously unprofitable brokerages) have had dramatic cutbacks in their operations
- Investors have also cut… way back. One broker who represents several large hedge funds reported their clients stated they could not invest other people’s money until they could answer two questions: What were the homes actually worth and what would they realistically rent for? Said the broker, “at the moment, they don’t have the answers.”
- A number of brokers in second home markets funded by stock market growth have experienced dramatic slowdowns in activity for now
- High unemployment will impact buyers seeking mortgages
- Many feel a significant percentage of low-producing brokers and agents will go different directions
There is one overlying statistic that should be on every broker’s mind-pending listings. Many markets are reporting pending listings are down by an average of 40%. The pending listings are so critical to a broker since it determines what the pending sales will be three-to-six months out. Obviously, many of the listings that were pulled from the market will be back as homeowners grow more confident with new processes, but with the projected pending listings in most markets trending down seriously, it will be the next major challenge.
Update the U.S. Broker Survey
What has changed over the last few weeks since the U.S. Broker Survey was completed? Take a moment to participate in the update. The anonymous eight questions will take one-minute and the results will be shared back with you. Click here for the survey:https://bit.ly/MayBrokerSurvey.
How to Own the Upswing
79% of brokers see opportunity ahead in their markets, however, a much smaller percentage reported actually having a strategy for acting upon those opportunities. Here are a few key factors for growth-minded brokerages:
- Scalable – Most companies will need to be larger to be a future player; for many that means regional expansion.
- Growth Capital – Ready access to growth funding to take advantage the opportunities
- Value Proposition – A strong, unique value proposition that attracts and retains agents
- Profit Centers – Additional revenue streams, such as ancillary services, project construction, new residential developments, etc.
- Brand Expertise – Companies poised for growth require specific expertise in developing their brand
Merger & Acquisition Direction – Growth through acquisition is a priority for growth brokerage
Many predict a “hockey stick” shaped recovery. Those brokers who are best prepared and well-funded will be the ones who will “own the upswing” as the market shifts. Let’s confidentially discuss assisting you with your plan for jumping on the growth curve.
Welcome Corcoran Reverie
The Corcoran Group is excited to welcome its newest affiliate, Corcoran Reverie, specializing in premier locations across the Florida panhandle and beyond.
Corcoran Reverie, which is comprised of the two firms formerly known as Hilary & Reverie and 30A Realty, further establishes Corcoran’s foothold in the state of Florida. The firm is led by Hilary Farnum-Fasth, former Hilary & Reverie brokerage founder and owner as well as partner Jacob Watkins, former owner of 30A Realty. The combined brokerage represents more than 80 agents throughout the Northwest Florida region.