Top real estate executives’ confidence in the U.S. economy and housing market for 2017 has softened compared with two years ago, and 42 percent have grown less confident in the world economy since January, according to the latest Imprev Thought Leader Real Estate Confidence study.
“Real estate leaders are clearly less bullish about the coming year than they were two years ago,” Imprev CEO Renwick Congdon said. “In fact, confidence for 2017 is lower across nearly all questions related to housing and the economy.”
“When we compare past studies, an interesting trend emerges: Executives and broker-owners are less confident in the global economy and far more confident in their local economies at the end of each year than they were at the beginning. In fact, their confidence grows stronger the closer the economy is to home,” Congdon explains. “This year, while only 4 percent of leaders say their confidence in the world economy has grown this year, 35 percent say their confidence in their own local economy has grown; while 13 percent have gained confidence in the U.S. economy, 26 percent have more confidence in their own state’s economy.”
Respondents included nearly 240 broker-owners and top executives at leading franchises and independent brokerage firms. This group was responsible for more than half of all U.S. residential real estate transactions last year.
Real estate leaders are split in their view of the economic outlook for 2017: 30 percent think it will improve and 23 percent think it will deteriorate. One Midwest broker owner noted he’s most concerned with “keeping agents productive no matter what the economy does.” Looking back at Imprev’s 2014 study responses, this year’s outlook is less hopeful. In 2014, 45 percent of study participants said they thought the economy would improve. One Southwestern broker owner shared his negative view bluntly: “It's the economy, stupid,” he said.
Leaders are less bullish on housing next year compared with their outlook for 2015. Nearly half (47 percent) of study participants thought housing demand would improve in 2015, and now just over one-third (35 percent) think housing demand will improve in 2017.
Overall, the vast majority (74 percent) of real estate executives and broker-owners are “somewhat confident” in the housing market for 2017. That’s down from 79 percent from the Imprev study two years ago. Although 5 percent of leaders are “not at all confident” in the housing market in 2017 – up from 3 percent in 2015 – 21 percent are “very confident” in the housing market for next year, and that’s also up from 18 percent in 2015. A broker owner of a major franchise office pointed to three reasons for his tempered enthusiasm: “Low inventory, slow development and a lack of new home construction.”
Despite the agent population getting younger, the leadership population in real estate is getting older: In the 2014 Imprev study, 88 percent of broker-owners and executives were over 40 years old. In this new study, 92 percent are over 40 years old, while more than 36 percent are over the age of 60 (up from 2014’s 32 percent). A Minneapolis and St. Paul broker owner wrote, “While recruiting younger, less experienced agents has improved for us this year, we've noticed increased difficulty in recruiting the top talent.” The owner of a boutique brokerage in Southern California added her biggest challenge in 2017 is “developing managerial depth.”