NAR's Forthcoming Member Profile Holds Surprises
By Robert Freedman, senior editor, REALTOR® Magazine
Probably nothing is more important from a home sale standpoint than prices shoring up. That's how I interpret data NAR plans to release next week at NAR's 2009 Midyear Meetings & Trade Expo in Washington. NAR researchers are putting the finishing touches on the 2009 Member Profile, an 80-page report that looks at how much REALTORS® are earning, how many transactions they're closing, where their business is coming from, and so on. One set of data that jumped out at me is based on a question that wasn't asked in previous studies: what's the biggest roadblock to getting transactions closed. I expected the answer to be the difficulty households face in getting financing. That is in fact a major reason: 24 percent said that's the biggest problem. But 35 percent said the biggest problem is households' expectations that home prices will fall further, so they're waiting. What's clear, then, is that prices must stabilize and even start heading back up before households stop waiting and get back into the market. Other reasons transactions aren't getting to closing, according to the data, is low consumer confidence and concern about losing one's job.
As you would expect, the study shows that the market was pretty tough in 2008. REALTORS®' median sales volume for the year was only $1.2 million, down 37 percent from 2006, when it was almost $2 million. The drop in volume on a percentage basis was actually steeper for the most experienced practitioners. Those with 16 years or more in the business saw their volume drop 42 percent, to $1.5 million from $2.6 million. That suggests that the market slowdown has had an equal-opportunity dampening effect on sales.
Maybe it's because the market has been a tough ride that the share of REALTORS® who've only been in the business a year or two is dropping. In 2006, just before the downturn hit, 13 percent of practitioners had been in the business a year or less, and 10 percent had been in it two years or less. Compare that to last year: only 7 percent have been in a year or less and only 6 percent have been in two years or less. That suggests fewer people have been entering the profession, and, as a result, among those that have remained, the overall experience level has risen.
Looking ahead, more practitioners say they're not certain they're going to stay in the business. Predictably, the more they made, the more they expect to continue on. Of those who made $10,000 or less last year, 13 percent say they don't know whether they'll continue on. Those who made around $30,000 or less, 12 percent say they don't know. Both of these figures are up from 2007, suggesting an increased pessimism among low earners than before. By contrast, among those who earned $150,000 or more last year, only 2 percent said they weren't sure if they'd stay in the business.
What's clear is that, going forward, online social networking among those who stay in the business is going to become more prominent. We can't compare how things are trending because this is the first year NAR asked the question, but 71 percent of those 29 or younger use social networking sites in their business. These are sites like Facebook, Twitter, and LinkedIn. Only 19 percent of practitioners 60 or up have started using the sites. Overall, 14 percent who aren't using social networking sites said they plan to.
Meanwhile, despite the growth of foreclosures and short sales, those types of transaction remain a relative rarity among the bulk of practitioners. Almost two-thirds said they did no foreclosures last year and 72 percent said they did no short sales. Thirty-two percent said they did 1-5 foreclosures, and 26 percent said they did 1-5 short sales. Only a fraction said they did 11 or more of either type of transaction.
NAR will be releasing findings from the report next week. We'll be reporting on it at our Daily News site, which you can find on the home page of REALTOR® Magazine Online at REALTOR.org/realtormag.
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