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NAR releases study on sources of Realtor incomes

(REAL ESTATE NEWS) Many REALTORS® rely on more than home sales for their income. The NAR has just released a study investigating these alternative sources.

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Diversity of Realtor incomes

For many real estate agents, selling homes just isn’t enough income. The NAR® recently released a study based on the 2017 Member Profile report, detailing the alternative sources of REALTORS®. The report looks at the median income for randomly selected NAR® members, as well as the sources of their income.

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The 2017 Member Profile report was based on a random sampling for the NAR’s membership and asked a variety of questions based on demographics, economics, and business practices.

All the questions proposed aim to answer the question “who are REALTORS®?”

The report found that the median income for all agents in 2016 was $42,500 and the net income (after taxes and expenses) was $26,820. For members with less than two years of experience, the median gross income was $8,930 and the net income was $7,690. Conversely, those members with upwards of 16 years experience, their median gross income was $78,850 and their net was $46,790.

Of the specified income for the surveyed agents, income was predominately earned from selling homes. Approximately 46 percent of agents received 100 percent of their income from their real estate specialty, and another 33 percent received between 50 and 99 percent of their income from real estate. Of the members surveyed, approximately 70 percent stated their main specialty was residential brokerage. 70 percent also stated they were sales agents.

Supplemental Realtor incomes

Agents were also asked about their commission sales and 35 percent stated they received a fixed commission split. 26 percent received a graduated commission split (which increases with production), and 14 percent received a capped commission split (which rises to 100% after a predetermined threshold). Numerous agents also detailed where their supplemental income derives.

Approximately 16 percent of the agents surveyed offer home relocation services; 14 percent offer property management services; and 12 percent offer commercial brokerage service to supplement their incomes. In short, of the surveyed members “half obtain their income entirely from their primary real estate specialty, where two-thirds specialize in residential real estate and two-thirds are sales agents,” according to the NAR®.

The customers who contribute to income

The NAR’s® report also detailed the types of customers that contributed to REALTORS’® income. 13 percent of REALTORS® business came from repeat customers; for agents with more than 16 years experience this number more than doubles to 36 percent.

“Typical” REALTORS® also reported that 18 percent of their business was from referrals of past clients; for those with over 16 years experience reporting 25 percent of their business being from previous client referrals.

While some REALTORS® main source of income may be sales, other have turned to other specialties to supplement their income. Since this was random sampling of REALTORS®, it would be interesting to see how (or if) the statistics changed if all REALTORS® were surveyed. What do you think about the report? Do any of the figures in the NAR’s® report surprise you?

#narincomestudy

Senior Staff Writer at The Real Daily, Jennifer Walpole holds a Master of English from the University of Oklahoma. She has long been a dedicated business and technology writer, and she holds real estate close to her heart, as she comes from a family of brokers.

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Real Estate Big Data

With housing demand so high, why are sales stagnant?

(REAL ESTATE NEWS) The housing market is on fire, yet some serious constraints are holding back sales levels – let’s discuss.

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If you have a pulse and are on the internet, you already know that the housing market is white hot, with bidding wars in more cities than ever. So why in the world are home sales stagnating?

Pending home sales rose only 0.4 percent in March, according to the National Association of Realtors’ (NAR’s) Pending Home Sales Index (PHSI), decreasing 3.0 percent on an annualized basis – the third consecutive month of annual dips.

Despite a strong economy, NAR points yet again to “unrelenting inventory constraints” which they recently said would only be relieved by builders stepping up production, more homeowners putting their home on the market, and/or investors releasing inventory.

NAR’s Chief Economist, Dr. Lawrence Yun says contract activity is moving sideways and not breaking higher despite the strong job-creating economy.

“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” said Dr. Yun.

He continued, “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”

Dr. Yun forecasts that existing home sales will hit 5.61 million this year (up slightly from 5.51 million last year), also forecasting the national median home price will rise 4.4 percent.

He notes that affordability and availability are holding back home sales, combined with price appreciation outpacing incomes, and mortgage rates rising, sales will soon peak.

“Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,” said Yun. “That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers – especially first-time buyers – will be left on the sidelines.”

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Real Estate Big Data

Home sales surge in half of the nation, slump in the other half

(REAL ESTATE NEWS) Home sales rose last month, despite challenging inventory and affordability conditions – but not in all markets.

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Talk about mixed signals. We ended last week with alarm bells that affordability is restricting the housing market, yet home sales in March actually surged in the Northeast (up 6.3 percent) and Midwest (up 5.7 percent) compared to just one month prior.

Meanwhile, home sales slipped 0.4 percent in the South, and a whopping 3.1 percent in the West. Sales levels in all four regions are lower than they were at this time last year, reinforcing the supply and demand challenges, putting homeownership out of reach for a growing pool of potential buyers.

NAR Chief Economist, Dr. Lawrence Yun has indicated that the only way to loosen the noose is a combination of more current homeowners opting to sell, builders increasing new home production, and investors releasing inventory.

In the last year, the median existing home price rose 5.8 percent to $250,4000 with March as the 73rd consecutive month of annual gains.

The average number of days on market decreased to 30 days from 37 in February and 34 in March of 2017. Half of all home sold were on the market for less than a month, and in some cities, bidding wars and immediate sales are common.

“Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets – especially those out West,” said Dr. Yun.

That said, there is a silver lining.

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty notes, “First-time buyers continue to make up an underperforming share of the market because there are simply not enough homes for sale in their price range.”

Supply conditions improve in higher up price brackets,” concluded Mendenhall, “which means those trading up should see considerable interest in their home, as well as more listings to choose from during their own search.”

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Real Estate Big Data

Housing prices rise, outpacing wage increases

(REAL ESTATE NEWS) A new joint report from NAR and realtor.com reveal that affordability conditions are eroding and there are very few cures to this problem.

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Good ol’ economics – housing demand continues to outpace supply, and bidding wars are now common in many cities. On a national scale, affordability is increasingly threatening many peoples’ ability to buy, based on their income.

The realtor.com and National Association of Realtors joint report, the Realtors Affordability Distribution Curve and Score, examines affordability conditions compared to income levels for active inventory in local markets. Higher scores suggest a particular market has more affordable homes in proportion to local income levels.

It’s no surprise that in March, the report indicates the least affordable (in proportion to income) is Hawaii, California, Oregon, the District of Columbia, Montana, and Rhode Island. In these states, households at the median income level can only afford 19 to 23 percent of the active housing inventory.

In contrast, the most affordable states are Ohio, Indiana, Kansas, Iowa, and West Virginia, where a a typical household can afford 54 to 62 percent of all active inventory.

The report also indicates that more local markets are seeing worse affordability conditions compared to last year, with L.A., San Diego, San Jose, Ventura, and San Francisco leading the pack. In these markets, the typical household can only afford 3.0 to 11 percent of homes available for sale in their markets.

The typical household can afford nearly 75 percent of homes for sale in Dayton, OH, Toledo, OH, and Scranton, PA.

NAR’s Chief Economist, Dr. Lawrence Yun stated, “The survey confirms that the lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest.”

The report makes even more apparent why first-time buyers “struggle finding affordable properties to buy and are making up less than a third of home sales so far this year,” said Dr. Yun.

Although wages are on the rise, housing prices are outpacing these increases, and Dr. Yun points to the solution being “more homeowners selling, investors releasing their portfolio of single-family homes back onto the market and more single-family housing construction.”

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