Lack of inventory tops list of realtor concerns
Due to a significant shortage of housing supply in 2022, 32% of realtors named a lack of inventory as the most important factor limiting potential clients from making a purchase, according to the National Association of Realtors (NAR).
The NAR’s 2023 Member Profile is an annual report that analyzes members’ business activity and demographics from the prior year.
Housing inventory fell to the lowest level recorded since 1999 as home buyers entered the market at a frenzied pace to lock in historically low-interest rates.
“The report’s findings clearly show that the lack of housing inventory is impacting Realtors®’ ability to find buyers a home,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “Housing inventory and affordability continue to be the top obstacles that hold back potential clients in the housing market.”
Nearly two out of three realtors, or 64%, jold sales agent licenses, while 20% hold broker licenses and 18% hold broker associate licenses. Seventy percent of members specialize in residential brokerage. Like in 2021, relocation, residential property management and commercial brokerage are members’ most common secondary specialty areas.
The typical NAR member had a higher sales volume ($3.4 million vs. $2.6 million) and the same number of transactions (12) in 2022 compared to 2021.
Good news is on the way, however.
"Low inflation means low mortgage rates,” said Lawrence Yun, chief economist of the NAR. “Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”
The consumer price index rose by 3% from one year ago, which is much lower than the 8-9% hikes of last summer and is the slowest gain in over 2 years.
Falling gasoline prices and healthcare service costs were helpful. But rents are still climbing at a brisk pace, rising by 8.3%, but have turned the corner for sure. Rents were rising at 8.8% in the early part of the year, so this is the slowest gain in 7 months.
The one-month rent gain of 0.5% (or a 5.8% annualized gain) is suggesting further calming in rents in upcoming months. Moreover, with so many empty apartment units under construction, rents could plateau by this time next year.
The Federal Reserve’s mandate is to contain inflation and help the economy, the Nar said while noting tha the reserve misjudged the early strength of inflation, which got out of control. Now it could misjudge on the economic front.
“Monetary policy works with a long lag time. The Fed appears too focused on the lagging economic indicator of jobs rather than early indicators like future inflation and commercial leasing activity; they should look ahead and stop raising interest rates,” Yun said.
Repeat business
According to the 2023 Member Profile, the typical realtor earned 27% of their business from previous clients and customers, an increase from 16% last year. The most experienced members – those with 16 or more years of experience – reported a greater share of repeat business from clients or referrals (a median of 43% in 2022 vs. a median of 44% in 2021).
Similar to 2021, members with two years of experience or less reported no repeat business in 2022. Overall, realtores earned a median of 24% of their business from referrals, an increase from 20% in 2021. Referrals were also more common among members with more experience, with a median of 30% for those with 16 or more years of experience (vs. 31% in 2021) compared to 4% for those with two years or less of experience (vs. 0% in 2021).
The median gross income for realtors increased to $56,400 in 2022, up from $54,300 in 2021. Realtors with 16 years or more experience had a median gross income of $80,700, down from $85,000 in 2021. Realtors with two years or less experience had a median gross income of $9,600, an increase from $8,800 in 2021.
Higher inflation impacted Realtors last year as total expenses increased to $8,210 in 2022 from $6,250 in 2021.
“Despite the changing market conditions that Realtors faced throughout 2022, members rose to the challenge by embracing new technology to help buyers find their homes and sellers to market their properties,” Lautz said.
In March 2023, the NAR e-mailed a 98-question survey to a random sample of 146,624 Realtors. Using this method, NAR received 6,902 total responses. The survey had an adjusted response rate of 4.7%. The confidence interval at a 95% level of confidence is +/- 1.18% based on a population of 1.5 million members.
The association weighted survey responses to be representative of state-level NAR membership. Information about compensation, earnings, sales volume and number of transactions are characteristics of calendar year 2022, while all other data are representative of member characteristics in early 2023.
