After a dramatic decline, revenue will increase as construction projects resume
Los Angeles, CA (PRWEB) September 24, 2012
Since 2007, the largest real estate decline in US history has decimated the Real Estate Sales and Brokerage industry. Because agents and brokers typically get paid by commission alone, the industry is susceptible to fluctuations in real estate demand and prices. Meanwhile, the frequency and value of real estate transactions are generally sensitive to economic conditions and demographic developments. Commissions are calculated as a percentage of a property's sale price, so participants only get paid when property is sold. As such, revenue moves in line with the economy. In the five years to 2012, revenue is expected to decline an average of 7.2% annually to $93.7 billion, according to IBISWorld industry analyst Doug Kelly. From 2007 to 2011, the subprime mortgage crisis soured the real estate market. Lending activity diminished as banks and other lending institutions suffered from real estate asset write-downs. At the same time, property prices and transaction volume plummeted as the demand for real estate dropped off. Declining demand has largely been attributed to falls in general economic activity, including an increase in the unemployment rate, decreased consumer sentiment and declining gross domestic product.
The Real Estate Sales and Brokerage industry returned to growth in 2011 and will rise an estimated 3.1% in 2012, Kelly says. The return to growth will be driven by improvements in the real estate market and a rise in total commercial transaction volume. Industry growth is expected to gradually increase over the five years to 2017, as fallout from the subprime crisis dissipates and real estate demand and prices rise. Industry revenue is expected to increase over the five years to 2017.
Annual industry growth is expected to continue to rise throughout the next five years due to steady improvements in consumer sentiment, spending and employment. Real estate prices are anticipated to recover as the demand for property increases. Residential and commercial construction is also projected to resume in the latter part of the next five years as the real estate sector tries to meet higher demand. The Real Estate Sales and Brokerage industry's concentration is low. The industry is highly fragmented with thousands of local and regional players. However, many local or regional players are associated with large multinational corporations through franchise agreements. The most notable franchise brands include Keller Williams Realty, Inc. and RE/MAX International. For more information, visit IBISWorld’s Real Estate Sales & Brokerage in the US industry report page.
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IBISWorld industry Report Key Topics
Brokers and agents that act as intermediaries during the sale, purchase or rental of real estate for others comprise this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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