Adam McCann, Financial Writer
“Location, location, location” might be the catch phrase of the real estate profession, but it applies just as much to realtors as it does to their clients. After all, success in the industry hinges on both an agent’s work ethic and area of operation.
The current real estate market is very healthy. January to February 2019 showed the biggest month-to-month rise in sales since 2015. But even as the market adjusts as a whole, certain cities remain hotspots. In the coming year, real estate agents may want to relocate to places with the highest demand for housing, and that pay the best for their expert guidance.
To determine the best markets for this particular profession, WalletHub compared more than 170 U.S. cities across 19 key indicators of a healthy real estate environment. Our data set ranges from sales per agent to annual median wage for real estate agents to housing market health index.
|Overall Rank (1=Best)||City||Total Score||'Job Opportunity & Competition' Rank||'Real Estate Market Health' Rank|
|3||San Francisco, CA||62.07||4||18|
|5||San Jose, CA||58.08||16||7|
|11||Santa Rosa, CA||55.64||12||35|
|14||Sious Falls, SD||55.19||43||1|
|27||Cape Coral, FL||52.63||19||57|
|30||Los Angeles, CA||52.31||22||64|
|31||Pearl City, HI||52.24||24||52|
|33||New York, NY||52.06||2||151|
|37||San Diego, CA||51.36||34||54|
|43||Fort Worth, TX||50.57||80||34|
|44||Jersey City, NJ||50.53||26||85|
|45||Rancho Cucamonga, CA||50.40||37||61|
|49||Grand Rapids, MI||49.74||82||39|
|54||St. Petersberg, FL||48.93||90||47|
|59||Colorado Springs, CO||48.15||143||21|
|61||Poer St. Lucie, FL||47.99||47||91|
|63||Chula Vista, CA||47.50||118||48|
|75||Huntington Beach, CA||46.93||77||86|
|76||Moreno Valley, CA||46.87||103||67|
|79||Santa Clarita, CA||46.57||145||42|
|80||Las Vegas, NV||46.53||132||58|
|81||Salt Lake City, UT||46.47||95||81|
|82||Grand Prairie, TX||46.32||130||56|
|87||Overland Park, KS||45.93||113||77|
|88||South Burlingon, VT||45.90||21||149|
|90||San Bernardino, CA||45.85||102||84|
|91||Boise City, ID||45.71||137||59|
|92||Pembroke Pines, FL||45.71||131||69|
|94||Virginia Beach, VA||45.65||42||117|
|95||Long Beach, CA||45.59||133||68|
|98||Santa Ana, CA||45.33||125||80|
|99||West Valley City, UT||45.23||127||79|
|100||North Las Vegas, NV||45.11||167||43|
|103||Garden Grove, CA||45.04||116||87|
|108||Fort Wayne, IN||44.57||121||82|
|111||Fort Lauderdale, FL||44.31||92||112|
|113||St. Louis, MO||44.22||106||108|
|117||Des Moines, IA||43.89||170||45|
|118||Kansas City, MO||43.79||124||99|
|121||Newport News, VA||43.43||58||135|
|137||San Antonio, TX||41.39||155||102|
|140||St. Paul, MN||41.14||142||118|
|141||Cedar Rapids, IA||41.13||86||147|
|151||Rapid City, SD||39.07||164||113|
|152||New Orleans, LA||38.92||162||123|
|154||New Haven, CT||38.54||101||163|
|155||Baton Rouge, LA||38.53||135||153|
|157||Little Rock, AR||37.92||163||130|
|166||Oklahoma City, OK||35.18||165||160|
|167||Las Cruces, NM||35.17||152||170|
|172||Fort Smith, AR||32.96||176||154|
|175||Corpus Christi, TX||31.15||173||173|
|177||El Paso, TX||29.62||178||165|
The real estate market is often unpredictable. For advice and insight on the current market and future of the industry, we turned to a panel of experts for their thoughts on the following key questions:
Online tools will automate the simplest services provided to homebuyers. Realtors who rely on providing simple services to clients will feel the biggest impact.
I liken the situation to the days of the full service stock brokerage charging a $100 fee to execute stock trades. The internet made personal trading possible and soon discount brokers emerged charging $8 or less per trade. The brokerages that didn’t adapt to the new technology disappeared. The brokerages that embraced the technology and found new fee based services survived and thrived.
The big difference is that real estate transactions are much more complex than stock trades so this works in the favor of Realtors. How many home buyers will have the confidence to execute a home purchase on their own? The rest will require some assistance so there will always be a need for real estate agents. It will be interesting to see what technologies Realtors adopt to provide a higher level of service than they do today.
Realtors can protect their business from boom-bust cycles by learning new skills that generate revenue in the “bust” times. During busts there is always a need for an appraisal and litigation support for real estate related lawsuits.
Another defensive strategy is to establish a good reputation for top notch service and high integrity. People still need to buy and sell homes during a bust period. Realtors with the best reputation will always be in demand for transactions even in the bad times.
To get ahead in the current marketplace, young Realtors should do the same thing as experienced successful Realtors. Be dedicated to personal education. Learn as much about different property types, marketing and transaction types as possible. Most importantly, act with the highest level of integrity.
A reputation for honesty and fair dealing will open doors to new real estate opportunities. Homebuyers will always want to do business with a Realtor having good integrity.
Here are the four questions I think a Realtor should ask when evaluating the best city to conduct business:
I think there is a low probability that the Fed will hike the policy rate in the coming months. Slowing global economic growth will likely contribute to slower growth in the US.
There are no significant inflationary pressures that would call for a rate hike. The recent decline in long term Treasury yields tells us that bond investors are concerned about future growth prospects. The falling Treasury yields are improving the prospects for Realtors because they are helping to bring down mortgage rates. In the current state of the economy there doesn’t seem to be a catalyst that would motivate the Fed to increase the policy rate.
In the residential real estate brokerage industry, we are nearing a tipping point in how residential sales and leasing services are delivered. A near complete public MLS (Multiple Listing Service) is now in play via third party information providers such as Zillow, Realtor.com, and Redfin. The apps coming to market with these third-party providers are lowering the need for human capital, i.e. real estate agents.
Residential housing is now in some form of a perpetual real estate cycle where ownership is not always preferred to renting depending on where we are in the cycle at any point in time. When at the top of the cycle, renting and reinvesting might be preferred because of an expectation of falling residential prices.
When at the bottom of the cycle, ownership would be preferred thanks to an expected increase in property prices. In this new environment, real estate agents should structure their business portfolio to include both property sales and leasing as this will allow them to thrive regardless of where we are in any real estate cycle.
Real estate brokers need to understand that they are in the information business and not the selling or leasing business. The Zillows of the world understand this. If the real estate brokerage industry does not come to grasp with this fact very soon, they will find themselves being service (open house, showing property, etc.) providers at much lower margins.
These are some of the factors that increase real estate agent productivity.
It is unlikely that we will see a near term increase in interest rates by the Fed. The real questions for real estate agents are:
If rates move to a point that is consistently higher, say 6% for 30-year financing, the housing industry as we know it will suffer a catastrophic shock. Sales volumes will decline significantly as well as prices.