The "Hangover"
•· We are in a declining housing market and "corrections" will occur
•· Do we have too many real estate agents? NAR stats:
2000 = 766,610 Realtors
2006 = 1,364,196 Realtors
2000 = 6,470,000 sales - average of 8.44 units per Realtor
2006 = 5,110,000 sales - average of 3.75 units per Realtor
Sales grew at 38% over this time frame and Realtor grew at 65%. Will there be a Realtor correction in 2007? Predictions are for a 500,000 Realtor decline over the next year.
•· Profitability of Real Estate Brokers - there is tremendous pressure in this environment. Three trends = 1) commission is now down to an average of 4.9%, 2) commission splits with agents are too high, and 3) overhead costs continue to increase
2005 - profitable firms based on expense ratios =
73% commission split
8.4% employment
5.7% occupancy
5% administration
This leaves little room for reducing commission rates
Average profit per closing:
2000 = $400
2005 = $219
Brokers who use mortgage, title, insurance - bundling of services - helps offset this pressure and insures profitability
•· Rising number of foreclosures continues
•· Increase in mortgage fraud continues
Triad Impact of #10:
Market stats - any corrections in our triad market?
•· Interestingly enough, closed days on the market continues to decrease
•· Closed price remains about the same (see price appreciation factors below)
•· Active units are up across the board - lot's of inventory for our buyers
•· Inventory supply has decreased across the board - May & June were good sales months; however, sales in Winston are down around 6% compared to last year at this time.
•· Our competition's sales are down across the board
Winston Salem Quarterly handout (see attached)
•· Sales have decreased across the last 3 quarters
•· 2nd quarter, 07 is first quarter to surpass the last quarter, but still less than 06 2nd quarter
•· Active inventory is up - highest quarter in last 4 quarters overall
•· Challenging market for all of us - spring market was good - summer??
Economic news (May, 2007)
•· Unemployment - 4.7% in Triad - same as last 2 months. USA - 4.5%
•· Initial claims for unemployment have risen for the past 7 months straight
•· Employment growth - 1.4% annual growth - 2% for NC
Greensboro/High Point = 1.1%
Winston-Salem = 1.6%
Burlington = 1.7%
Charlotte = 2.5%
Raleigh = 2.5%
Durham = 3.5%
Wilmington = 3.8%
Jacksonville = 5.3%
Greenville = 5%
NC = 2%
•· Residential building permits - 4/06 to 4/07 = 22% down - 8 straight monthly declines. From 1/1/07-4/07 = 23% down
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