Brokerage leaders are feeling better about 2024
A survey of leaders found greater optimism compared to a year ago, but many are concerned about recruiting, profits and commission lawsuits in the year ahead.
- The Delta Real Estate Leadership survey found that a majority of brokerage leaders believe the industry and economy will improve this year.
- Looking ahead, their top concerns include technology adoption and reduced profit margins.
- But they also reported some wins in the past year, particularly around cost-cutting and bolstering services for agents.
Real estate brokerage leaders are expecting a better year in 2024, but they're still worried about agent recruitment — and turning a profit.
The annual Delta Real Estate Leadership Survey found that two out of three brokerage leaders expect housing demand to improve this year, compared to only one-third at the beginning of 2023.
And a majority of those surveyed (53%) believe the economy will improve or improve significantly in the coming year — a big turnaround from last year, when none of the respondents expected significant improvements, and 51% expected the economy to worsen.
The survey includes insights from 130 brokerage leaders representing firms that accounted for 65% of residential real estate transactions in 2023.
Agent recruitment remains a top concern
While more optimistic about the housing market and the economy, brokerage leaders see other hurdles ahead.
Similar to last year, the biggest business challenge expected in 2024, mentioned by nearly two-thirds of the respondents, is recruiting new agents. That was followed by concerns about reduced profit margins (60%, up from 48% in 2023), agent adoption of technology (55%, up from 39%) and the impact of commissions lawsuits (52%).
Recruiting tends to be a top concern for business leaders across industries, regardless of the state of the economy — but the fact that brokerages are focused on recruiting during a slow market is actually a positive sign, said Michael Minard, CEO and owner of Delta Media Group, because it can put them in a better position to weather the storm.
"Without a doubt, real estate firms learned from The Great Recession the need to quickly focus on the right things and to make the right changes so they come out of these business cycles stronger," Minard said.
Concerns about commissions lawsuits shot up the survey's list following the Sitzer/Burnett verdict. But that, too, may be a good thing in the long run.
"We have seen a drastic uptick of real estate firms wanting to give more emphasis on disclosure of commissions directly on their public-facing websites than we did one year ago," Minard said. "It is a big issue that the industry needs to continue to navigate moving forward."
What's working well for brokerages: cutting costs, investing in tech
Brokerage leaders will have to find ways to tackle the challenges, but they also identified several wins for their businesses. When asked to name the best thing their brokerage did last year, the top responses fell into three categories: cost-cutting and streamlining operations; investing in technology and digital marketing; and supporting agents through training, coaching and other services.
One aspect of the survey that surprised Minard was the number of brokerage leaders concerned about agent adoption of brokerage-provided technology. Minard thought fewer leaders would be focused on technology during the slowdown, possibly cutting back on tech to save money.
Instead, it appears that brokerages are taking a greater interest in new technology because it has the potential to give them a competitive advantage, Minard said.
"It is almost like there is a resurgence of focus on technology and the adoption of that technology within the industry at all levels. Artificial Intelligence and automations are certainly big drivers of this change," he said.
Real estate is local — and that's where the optimism is
As was the case last year, brokerage leaders were more confident about the local economy compared to what's happening on a state, national or global level.
"Leaders have little confidence in the global economy," Minard said. "Only 3% were more confident of the global economy today versus a year ago, with 57% being less confident."
The overall expectation of an improving real estate market appears to be in line with other industry forecasts, which generally predict that home sales will increase and mortgage interest rates will go down in 2024.