ARROYO GRANDE, CA—Low inventory remains a challenge in the single-family home market, yet realtors remain optimistic. So says a Realtor Productivity Study of Multiple Listing Service activity, conducted by the WAV Group and sponsored by the National Association of Realtors' wholly owned subsidiary, Realtors Property Resource.
The study, which tapped into about 150 MLS representing nearly 335,000 realtors, found that 29% of respondents considered themselves “very optimistic,” with the remainder counting themselves as “cautiously optimistic.” This despite the fact that 40% of realtors didn't close a single transaction during the first six months of 2014; ergo, 60% of the group did 100% of the business during that time.
?“We thought the numbers would reflect the 80/20 rule,” says WAV founding partner Marilyn Wilson, who oversaw the study for RPR. “In reality, it looks like a new 60% rule is the true standard for real estate.”
In fact, 60% is also about the same percentage of realtors who log into their MLS system on a daily basis, suggesting that a broad swath of this group may shy away from new technologies. ??“If you assume that 100% of your audience is ripe for technology adoption, you may want to think again,” Wilson says. ??“If only 60% of your target audience is actively logging into the MLS system every day, the likelihood they are going to be seeking out and adopting new technologies beyond the MLS is pretty slim, so why should they be counted? You need to base your benchmark on the 60% of your audience that is actually doing business.”
One cause for long-term optimism may be found in the 2015 predictions of Seattle-based Zillow. The firm predicts that as price gains in the residential market taper off, rents will increase at a faster pace than for-sale home prices next year—3.5% for rents compared to 2.5% for sales pricing. “As renters' costs keep going up, I expect the allure of fixed mortgage payments and a more stable housing market will entice many more otherwise content renters into the housing market,” says Stan Humphries, Zillow's chief economist.
Further, Zillow predicts that millennials will overtake Generation X as the largest homebuying pool in '15, a milestone that will coincide with the advent of an uptick in lower-priced new construction. “In recent years, home builders seem to have made a conscious decision to sell fewer, more expensive homes instead of more, cheaper homes,” Humphreys says. That will change next year, “especially as demand moves toward the lower end of the market as millennials begin buying en masse.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
