This report is available exclusively to subscribers of Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
A majority of brokerage leaders right now believe that both the global and U.S. economies will get worse this year, and that the profitability of their own companies will decrease.
That’s according to a new survey, out this week, from Delta Media Group. The survey was conducted in December and quarried more than 100 leaders at real estate brokerages. And perhaps the most striking finding was that 64 percent of respondents said they thought the global economy would deteriorate in 2023. About 52 percent of respondents thought the U.S. economy would deteriorate as well.
Alternatively, fewer than 5 percent thought the global economy would get better in 2023 and about 9 percent envisioned improvements in the U.S. economy.
This chart shows how survey respondents feel about the economy in 2023. Credit: Delta Media Group
The findings likely reflect a brutal period in 2022 that saw interest and mortgage rates jump at a record pace. That drove down demand for home loans, and thus the homes those loans finance. The rate increases were driven by the Fed, which was trying to combat record jumps in inflation. And by the end of the year, some experts were forecasting a recession in 2023.
The challenging economic landscape has also influenced brokerage leaders’ view of their profits in 2023. According to the survey, about 53 percent believed that profitability will go down this year. Only slightly more than 18 percent thought it would go up.
Additionally 53 percent also believed their transactions sides will go down. Nearly 26 percent think sides will go up.
This chart shows what survey respondents think will happen to their transaction sides in 2023. Credit: Delta Media Group
All told, the results indicate an overall pessimistic mood among real estate leaders about the housing market and economy in 2023.
However, the survey’s respondents were considerably more optimistic about their own individual prospects. For example, only about 24 percent thought that their state and local economies would deteriorate. Nearly a quarter of respondents thought their state economy would actually improve, and more than 27 percent thought their local economy would do the same.
A plurality of respondents, or more than 48 percent, thought their state and local economies would stay the same in 2023 as they were previously.
A third of respondents additionally thought that housing demand in their markets would stay the same in 2023, and another third thought it would deteriorate.
But 28 percent said demand would actually improve. Such findings show a much more even distribution of responses than was the case for survey questions about the global and national economists, hinting that there is potentially more optimism about local demand in some areas.
Michael Minard
Perhaps the most optimistic finding of all, however, was related to market share. Despite the dour economic outlook, 56 percent of surveyed brokerage leaders believed that they will be able to take market share in 2023. Roughly 38 percent thought their market share would remain the same this year, but only 4.55 percent thought they would lose market share.
In a statement on the survey, Delta Media Group CEO Michael Minard said it was “surprising” that so many respondents were upbeat about potential market share gains even as they envision transactions and profitability going down.
“They clearly see,” he added, “opportunity in a chaotic market.”
