Nearly Three Out of Five Realtors Say Limited Inventory Prevented Clients from Buying Homes in 2021
Real Estate In-Depth | July 13, 2022
WASHINGTON—Amid a persistent housing supply crunch, 57% of Realtors cited a lack of inventory as the leading reason limiting potential clients from completing a transaction, according to the National Association of Realtors’ 2022 Member Profile, an annual report analyzing members’ business activity and demographics from the prior year. However, as housing demand surged last year resulting in 6.12 million existing homes sold—the most since 2006—NAR’s membership increased to 1.56 million at the end of 2021, up from 1.48 million at the end of 2020.
“In the last year, Realtors continued to navigate a challenging housing market and cited the biggest factor holding back the housing market was tight inventory,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “As buyers relocated throughout the pandemic, housing affordability and lack of supply became a hurdle that agents and brokers found ways to overcome.”
Business Characteristics of Realtors
Two out of every three Realtors— 67%— hold sales agent licenses, while 21% hold broker licenses and 14% hold broker associate licenses. Seventy-one percent of members specialize in residential brokerage. Relocation, residential property management and commercial brokerage are members’ most common secondary specialty areas.
Members typically have eight years of real estate experience, which is unchanged from a year ago. Eighteen percent of those surveyed have one year or less experience—identical to last year—while 18% of Realtors have more than 25 years of experience, up from 15% in 2020. Appraisers, broker-owners and managers had the most experience, while sales agents were typically the newest in the field with six years of experience. Consistent with recent surveys, nearly four out of five members—79%—were certain they will remain in the real estate industry for at least two more years.
Business Activity of Realtors
The typical NAR member had a higher sales volume ($2.6 million vs. $2.1 million) and more transactions (12 vs. 10) in 2021 compared to 2020.
The typical Realtor earned 16% of their business from previous clients and customers, a slight increase from 15% 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 44% in 2021 vs. a median of 37% in 2020). Members with two years of experience or less reported no repeat business. Overall, Realtors earned a median of 20% of their business from referrals, a slight increase from 19% in 2020. Referrals were also more common among members with more experience, with a median of 31% for those with 16 or more years of experience compared to no referrals for those with two years of experience or less.
Demographic Characteristics of Realtors
Seventy-seven percent of Realtors were White, down slightly from 78% last year. Hispanics/Latinos accounted for 11% of Realtors, followed by Black/African Americans at 8% and Asian/Pacific Islanders at 5%. When compared to more experienced members, new members tended to be more diverse. Among those who had two years or less of experience, 37% were racial minorities, an increase from 34% one year ago.
“The real estate industry attracted new entrants who were increasingly more racially diverse and more likely to be women,” Lautz added. “The dynamic nature of real estate encourages varying business models, firm relationships, and business activity.”
Sixty-six percent of Realtors were women, a minor increase from 65% last year. The median age of Realtors was 56, up from 54% from the previous year. Approximately two out of five members—41%—were over 60 years old and 4% were under the age of 30.
More than nine in 10 members—93—had some post-secondary education, with 31% completing a bachelor’s degree, 6% having some graduate school education, and 14% completing a graduate degree.
Two out of every three members—67%—reported volunteering in their community. Volunteering was most common among members aged 40 to 49 years.
“All across our nation, Realtors are dedicated to building, improving and serving their communities,” said NAR President Leslie Rouda Smith, a Realtor from Plano, TX, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “In competitive and ever-changing market conditions, Realtors demonstrate professionalism, a strong work ethic, and trusted knowledge as they guide consumers through the complex process of achieving property ownership.”
Income and Expenses of Realtors
The median gross income for Realtors was $54,300 in 2021, up from $43,330 in 2020. Realtors with 16 years or more experience had a median gross income of $85,000, an increase from $75,000 the previous year, as income was typically commensurate with experience. Total median business expenses for members were $6,250 in 2021, an increase from $5,330 in 2020.
Technology and Realtors
On a daily basis, the strong majority of Realtors use a smartphone with wireless e-mail and Internet capability (96%) and a laptop or desktop computer (91%). The smartphone features that members use most frequently on a daily basis are e-mail (94%) and social media and GPS apps—both at 53%. Text messaging (94%) is the top method of communication for members with their clients, followed by phone calls (92%) and email (90%). Nearly seven in 10 members—68%—have their own website. Six percent of Realtors use drones themselves as part of their business, while 37% have hired a professional drone operator. Four percent and two percent of members, respectively, use 3D/virtual tour and virtual staging technology on a daily basis.
Office and Firm Affiliation of Realtors
A slight majority of Realtors—54%—worked with an independent company and 87% were independent contractors at their firms, both figures are nearly identical to one year ago. Forty-three percent of members worked at a firm with one office and 26% worked at a firm with two to four offices. The typical Realtor had a median tenure of five years with their current firm, the same as in 2020. Eight percent of members reported working for a firm that was bought or merged in the past two years. Errors and omissions insurance is the most common benefit provided by members’ firms.
In March 2022, NAR emailed a 97-question survey to a random sample of 176,494 Realtors. Using this method, a total of 9,220 responses were received. The survey had an adjusted response rate of 5.2%. The confidence interval at a 95% level of confidence is +/- 1.02% based on a population of 1.5 million members. Survey responses were weighted to be representative of state-level NAR membership. Information about compensation, earnings, sales volume and number of transactions are characteristics of calendar year 2021, while all other data are representative of member characteristics in early 2022.
For more information from NAR’s 2022 Member Profile, visit https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-nar-member-profile.