NAR: Realtors Cite Lack of Inventory as Top Impediment to Completing Sales Transactions
Real Estate In-Depth | May 20, 2021
WASHINGTON—Realtors cite a lack of inventory as the leading cause for limiting potential clients from completing a transaction, according to the National Association of Realtors’ 2021 Member Profile, an annual report analyzing members’ business activity and demographics from the prior year.
However, in spite of a global pandemic, its drastic impacts on how business was conducted, and a dwindling housing supply, 2020 saw the highest number of homes sold since 2006 (5.64 million) and NAR’s membership increased from the previous year (1.48 million at the end of 2020, up from 1.4 million at the end of 2019).
“Realtors continued to serve clients’ needs despite the challenges 2020 brought to the real estate market,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “Economic lockdowns and historically-low inventory coupled with surging home buying demand only showed the resilience of our members and industry.”
Business Characteristics of Realtors
The majority of Realtors—68%—hold sales agent licenses, which is up from 65% last year. Twenty percent hold broker licenses and 13% hold broker associate licenses. Seventy-three 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, down from nine years in 2019. Eighteen percent of those surveyed have one year or less experience—nearly identical to 17% last year—while 15% of Realtors have more than 25 years of experience, down from 17% a year ago. Appraisers, broker-owners, and managers had the most experience, while sales agents were typically the newest to the field with five years of experience. Consistent with recent surveys, nearly four out of five members—79%—were certain they’ll remain in the real estate industry for at least two more years.
Business Activity of Realtors
The typical member had a slightly lower sales volume ($2.1 million vs. $2.3 million) and fewer transactions (10 vs. 12) in 2020 compared to 2019.
The typical Realtor earned 15% of their business from previous clients and customers, unchanged from 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 37%), compared to no repeat business for those with two years of experience or less. Overall, Realtors earned a median of 19% of their business from referrals, a slight drop from 20% in 2019. Referrals were also more common among members with more experience, with a median of 27% for those with 16 or more years of experience compared to no referrals for those with two years of experience or less.
Income and Expenses of Realtors
The median gross income for Realtors was $43,330 in 2020, down from $49,700 in 2019. Realtors with 16 years or more experience had a median gross income of $75,000, a decrease from $86,500 last year, as income was typically commensurate with experience. One out of four Realtors earned $100,000 or more. Total median business expenses for members were $5,330 in 2020, a decline from $6,290 in 2019.
Demographic Characteristics of Realtors
Seventy-eight percent of Realtors were White, down slightly from 80% last year. Hispanics/Latinos accounted for 9% of Realtors, followed by Black/African Americans (7%) and Asian/Pacific Islanders (6%). New members tended to be more diverse than experienced members. Among those who had two years or less of experience, 34% were minorities.
Sixty-five percent of Realtors were women, a minor increase from 64% last year. The median age of Realtors was 54, down slightly from 55 last year. A third of members were over 60 years old and 5% were age 30 or younger.
More than nine in 10 members—93%—had some post-secondary education, with a third completing a bachelor’s degree, 6% having some graduate school education and 13% completing a graduate degree.
The marital status of Realtors remained nearly unchanged from 2019. Sixty-nine percent of Realtors were married, 15% were divorced, and 11% were single or never married. The typical Realtor household had two adults and no children.
Two-thirds of members—66%—reported volunteering in their community. Volunteering was most common among members aged 40 to 49 years.
“Realtors come from all walks of life and serve as pillars in their respective communities,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, NJ and the CEO of Prominent Properties Sotheby’s International Realty. “As champions for consumers, Realtors combine hard work, dedication and trusted expertise to help individuals and families achieve the dream of property ownership.”
Technology and Realtors
The coronavirus pandemic has forced businesses of all types to rely heavily on technology for communicating with consumers and remaining competitive in the marketplace. 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 (92%). The smartphone features that members use most frequently on a daily basis are e-mail (95%) and social media apps (57%). Text messaging (93%) is the top method of communication for members with their clients, followed by phone calls (90%) and e-mail (89%). Nearly seven in 10 members—69%—have their own website.
“Realtors used emerging technologies in 2020 to bridge the gap when pandemic precautions were in place,” Lautz said. “Members have now pivoted and embraced these tools to showcase listings and help buyers strategically find and secure the limited number of properties available.”
Office and Firm Affiliation of Realtors
Despite an ever-changing housing market, Realtor office and firm affiliation remained stable compared to a year ago. A slight majority of Realtors—53%—worked with an independent company and 88% were independent contractors at their firms. Forty-two 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, up from a median of four years in 2019. Eight percent of members reported working for a firm that was bought or merged. Errors and omissions insurance is the most common benefit provided by members’ firms.
In March 2021, NAR emailed a 93-question survey to a random sample of 161,155 Realtors. Using this method, a total of 10,643 responses were received. The survey had an adjusted response rate of 6.6%. The confidence interval at a 95% level of confidence is +/- 0.95% based on a population of 1.4 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 2020, while all other data are representative of member characteristics in early 2021.