Real estate is a major component of the total U.S. Gross Domestic Product (GDP), with residential real estate alone making up 15.6 percent in Q3 2017 according to the National Association of Homebuilders. That activity spans from building and remodeling to marketing – which includes real estate agents.
What markets are best for residential real estate agents? As usual, I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market. Nor are all residential real estate markets the same. The potential for agents is a function of a large array of factors spanning from revenues, number of sales and costs per transaction. Price is naturally a function of potential revenues since most real estate commissions are still based on a percentage of sales price both for the listing and selling agents. Competition is a major factor given transaction volumes. Costs need to enter the equation also, but are much more difficult to obtain.
To estimate the best (and most challenging) markets for residential real estate agents, WalletHub broke their analysis down into two major components: Job Opportunity & Competition and Real Estate Market Health. Weightings, metrics and factors for each follow.
Job Opportunity and Health 60 Points – or 6 Points for Each Metric
- Sales Per Agent
- Median Home Price
- Monthly Average Starting Salary for Real Estate Agents — and I was not aware this even existed TJ
- Annual Median Wage for Real Estate Agents
- Real Estate Employment Attractiveness – number of agents per 10,000 working age population & number of real estate agent job openings per 100 resumes
- Real Estate Employment Growth 2014-2016
- Annual Median Wage Growth for Real Estate Jobs 2014-2016
- Unemployment Rate
- Projected Real Estate Agent Jobs Needed by 2024 per capita
- Google Search Index for Real Estate Agents
Real Estate Markets Health 40 Points or 5 Points for Each Metric
- Home Turnover Rate
- Housing Market Health Index – homes sold gain, sales previously foreclosed, foreclosure ratio, Zillow Home Value Index – year-over-year change, REO stocks, mortgage holders in negative equity – delinquent under water homeowners
- Zillow Home Value Index 1-year Forecast
- Days on Market
- Average Ratio of Home Sales Price to Listing Price
- Residential Building Permit Activity – number of permits per capita
- Share of Home Flips – arms-length transactions reselling within 12 months
- Fastest Growing Cities – WalletHub rankings
Data sources included U.S. Census Bureau, Bureau of Labor Statistics, Zillow, Indeed, Projection Central – State Occupational Projections, ATTOM Data Solutions (RealtyTrac) and WalletHub Research.
Using these data, WalletHub looked at 179 U.S. cities (including the 150 with the largest population) plus at least two cities in each state. Each metric was graded on a 100 point scale, with a 100 rating assigned to most favorable conditions for real estate agents. The metrics were then weighted by the points assigned.
What are the best markets for real estate agents based on WalletHub’s methodology? The top-10 are included in the following table. In addition to the WalletHub data, also included is the job growth rate for the associated Metropolitan Statistical Area (MSA) for the latest 12-months. No doubt median price had a material impact on these markets, as did their overall job-growth rate. All but one of the top ranking cities had better overall MSA job growth rates than the U.S. – the lone outlier being New York at 1.48 percent.
As always, for every winner there is a loser, with the bottom-10 performing cities (based on the selected metrics and methodology) detailed in the following table. Once again, when it comes to job growth there is one outlier – Jackson, Mississippi. Jackson’s job growth rate exceeded that of the U.S. for the same period. All of the others trailed, with six-of-the-bottom 10 posting net job losses in the prior 12-months.
To read the entire report from WalletHub and examine the full rankings of the 179 included cities click https://wallethub.com/edu/best-worst-cities-to-be-a-real-estate-agent/18713/
Do note that these data (some covering the period from 2014-2016) are dated and have likely changed some in the 16 month period since then. Still this is an interesting and unique study relating to most attractive and not-so-attractive markets for real estate agents.