In continuing to examine some of InmanNews’ forecast for the housing industry in its Essential Guide to 2020, 2025, 2030 and Beyond, let’s dial in specifically to Inman’s predictions for 2025.
2025
Agent Ranks to Shrink
Russ Cofano, former president of eXp World Holdings and now team leader with Windermere Real Estate and girl’s basketball coach after both he and his wife battled and came out on top of cancer diagnoses, has spent most of his professional life working in and thinking about the real estate industry.
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Cofano believes that the number of agents currently working in real estate is now at its peak. He also believes that as more disruption and innovation render the real estate landscape more and more diverse, “some agents won’t step up.”
“As big companies are creating this diverse landscape, it will force traditional agents to become more valuable…and I think there will be many who are unwilling or unable to do so. So, we’ll see the number of agents go down.”
Adding to this diverse real estate landscape is the spread of iBuying moving into middle class markets. Cofano told Inman, “If iBuying really takes hold, the issue won’t be that people won’t use brokers, the issue will be more that even with broker involvement, the compensation model will begin to change. It’ll be more difficult for brokers to put together enough transactions to make a living..”
The result? Cofano believes, “Fewer agents doing more transactions each over the next five years.”
Commissions to Drop
Now, the national average gross commission rate for real estate agents is just over 5%.
And now, there are already two sources of pressure to reduce commissions…
- Large companies are using scale and technology to make transactions cheaper.
- Redfin already has a 1.5% listing fee.
- iBuyer models essentially allow consumers to circumvent agents altogether.
- Agents are actively discounting their commission fees in order to compete with other/new models and to boost their volume.
- According to Cofano, “There is no question that the average commission fee, list side to buy side, will absolutely be lower 5 years from now.”
Data To Be Everywhere and All Pervasive
According to Rich Sarkis, co-founder and CEO of a real estate data firm Reonomy, believes that data will be “table stakes” in 2025. “Everyone is going to have access to data.”
Rebecca Jenson, president and CEO of the Chicago MLS, MRED, agrees with Sarkis. “I think that AI and big data are things that every major brokerage is talking about as part of their strategic plan. I don’t think agents need to be data engineers. But, the MLSs need to be.”
Venture Capital To Reign Supreme in 2025
Despite the implosion of WeWork, venture capital funding in real estate is not going anywhere. According to Jim Kim, founder and general partner with the investment company Builders VC, venture capital financing will continue its growth into newer real estate business models.
Kim is particularly high on Opendoor. “They will be a significant player in the next five years. They’re going to be formidable.”
Also read: Cutting Edge Luxury Amenities for 2020, Is NYC’s Lux Market Getting a Bump from Brexit?, Podcast: Don’t Decrease the Goal – More Success Stories!(
