Housing Affordability, Maintaining Sufficient Inventory and Keeping up With Technology Among Biggest Challenges for Real Estate Firms Over the Next Two Years, NAR Report Finds

WASHINGTON (October 4, 2023) – Housing affordability, maintaining sufficient inventory and keeping up with technology were among the biggest challenges cited for firms in the next two years, according to the 2023 Profile of Real Estate Firms by the National Association of REALTORS®.

The report measures characteristics of firms nationwide to determine how they operate and assess what lies ahead. NAR surveyed its broker members of record to better understand firms’ demographics, composition and characteristics from the executive and manager perspective.

“With interest rates rising to more than 20-year highs, it is no surprise that the biggest current concern for real estate firms is housing affordability,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “This surpassed the concern of maintaining sufficient inventory, which we saw in 2021.

Characteristics of Real Estate Firms

In 2022, the overwhelming majority of real estate firms – 81% – operated from a single office and typically had three full-time real estate licensees. Roughly nine out of 10 firms – 86% – were independent and non-franchised.

Nearly a third of brokers of record – 31% – were CEOs, COOs, presidents or owners of a multi-office firm. Almost two-thirds – 65% – were managers or owners of a single-office firm.

Business Activity of Real Estate Firms

Single-office firms had a median brokerage sales volume of $5.3 million and 15 real estate transaction sides last year, up from $4.5 million and down from 19 transaction sides, respectively, in 2020. Firms with four or more offices had a median brokerage sales volume of $154.6 million and 403 transaction sides in 2022, an increase from $146.2 million and a decrease from 571 transaction sides two years ago.

The typical firm generated 48% of its sales volume from repeat business from past clients and 47% from past client referrals.

“Housing affordability has had an impact on real estate firms’ overall sales activity,” explained Lautz. “There are fewer buyers who can purchase a home due to the rise in prices and interest rates, and fewer sellers are motivated to make a move. While sales are down, sales volume has increased as home prices have augmented because of limited inventory.”

Benefits Real Estate Firms Provide to Agents and Staff

Errors and omissions/liability insurance was cited as the most common benefit – 43% – which firms offered to independent contractors, licensees and agents. E-signature, comparative market analysis, electronic contracts/forms and multiple listing were the most common tools provided or encouraged by firms. A quarter (25%) of all firms offered a virtual office space for agents and staff, while 8% offered a virtual assistant.

Future Outlook of Real Estate Firms

Nearly one-third of firms – 30% – expect profitability or net income from all real estate activities to increase this year, down from 58% in 2021.

When asked about generational effects on the real estate industry in the next two years, the top concerns for firms were young adults’ ability to buy a home (63%), young adults’ view of homeownership (38%) and baby boomers retiring from real estate (27%).

“Due to tight inventory, the outlook among real estate firms is more conservative since the pandemic-induced housing boom,” Lautz said. “Only 30% of real estate firms believe there will be an increase in profitability from all real estate activities, compared to 58% two years ago.”

Survey Methodology

In July 2023, NAR invited a random sample of 176,291 REALTORS® who were executives and senior management at real estate firms to fill out an online survey. NAR received 5,889 usable responses for an overall response rate of 3.3%. The confidence interval at a 95% level of confidence was +/-1.27% based on the share of real estate executives at real estate firms. All information in this report was representative of member characteristics, sales and lease transaction values, and other statistics from the calendar year of 2022.

View NAR’s 2023 Profile of Real Estate Firms.

About NAR

The National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.

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