Pent-up demand for homes will support the industry's recovery in the next five years
Los Angeles, CA (PRWEB) August 17, 2012
Like the rest of the real estate sector, the Real Estate Agency Franchises industry suffered greatly from the effects of the subprime mortgage crisis and subsequent recession over the past five years. Between 2007 and 2012, IBISWorld estimates that industry revenue declined at a 7.2% average annual rate. In the residential real estate market, tightened credit conditions, high unemployment and reduced consumer spending led to a decrease in transaction volumes that reduced industry commissions. “In the commercial market, high loan delinquencies and vacancy rates decreased demand for commercial property,” says IBISWorld industry analyst Doug Kelly, “which lead to lower transactions volumes and associated commissions.”
Subsequently, the number of franchises, franchise locations and employment declined between 2007 and 2011 due to industry exits, firms consolidating and associating with large franchisors to source new business and lower costs. The move toward online real estate services and higher external competition also contributed to this contraction. The Real Estate Agency Franchises industry’s largest firms, Realogy Corporation, RE/MAX LLC and Keller Williams Realty, operate across the country and were better able to weather the recession. The industry is expected to benefit from the real estate market entering the very early stages of a recovery in 2012, with revenue estimated to increase 3.1% to about $6.4 billion. Higher commercial real estate demand will be the primary driver of industry growth. “Existing home sales and growth in housing starts will also support the industry's return to growth, although the residential market will not show significant signs of recovery until 2013,” Kelly says.
Over the five years to 2017, IBISWorld expects industry revenue to rebound and grow, though remaining below 2007 levels. The residential market will experience growth from pent-up demand, improved consumer finances, greater access to credit and record-low mortgage rates and low housing prices. Similarly, the commercial market will see renewed demand as vacancy rates fall and the banking sector expands credit, which will finance new construction projects. However, high unemployment levels and tighter lending standards will keep the pace of the industry's recovery subdued. For more information, visit IBISWorld’s Real Estate Agency Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
This industry operates real estate agency franchises. Industry firms (franchisees) receive branding, marketing, administrative support, training and other services for franchise, royalty and renewal fees to the franchisor.
IBISWorld’s Business Franchise reports provide data and analysis on industries made up of business franchises. Report titles are similar to our NAICS collection titles, but the reports in our Business Franchise collection focus solely on the operation of franchised outlets and exclude non-franchise data. Business Franchise reports show the total number of franchise outlets, total franchise revenue, average profit margin earned by franchisees, as well as key threats, opportunities and costs. Our reports highlight the largest franchisors by market share. The reports are vital for existing or potential franchisees looking to stay ahead of key industry trends and franchisors seeking to strengthen sales and marketing intelligence.
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