The continued drop in home prices and a market dominated by foreclosures has cut into the business of some of the largest residential real estate brokerages in Las Vegas. In the annual list of top brokerages that submitted their sales information to VEGAS INC, the numbers showed that, as a group, their sales volume, homes sold and number of agents declined.
The sales volume of the top ten firms as reported to VEGAS INC was $5.5 billion during the 2010 calendar year. That’s down from $5.9 billion among the top 10 in the last list that looked at data, between July 2009 and June 2010. The number of homes sold during the 12-month period fell from 37,540 to 32,909, and the number of agents declined from 4,399 to 3,882. Brokers said the biggest reason for the decline among the larger brokerages is the dependence of the market on foreclosures, which constitute about half of all sales.
Properties owned by the federal government through Fannie Mae, Freddie Mac and the Federal Housing Administration limit each brokerage to one agent to handle their listings. Realtors said that’s an attempt to spread out business among several brokerages. But that limits what each firm can have in government-owned foreclosure listings and has prompted agents to set up their own shops and secure their own listings. It has resulted in reduced sales volume, homes sold and agents in many firms.
“What you’re noticing more is the bigger companies aren’t getting this business and some Realtors are breaking off to get their share,” said Mark Stark, CEO of Prudential Americana Group, the No. 2-ranked firm in Las Vegas in sales volume. “I understand that, and they’ll come back when the market becomes more normal.”
That decline has shown up in the most recent data from California firm Real Data Strategies, which has tracked sales volume through June and will show up on the VEGAS INC list next year.
In the latest VEGAS INC list for 2010, Stark’s Prudential Americana reported $1.47 billion in sales volume on 8,294 homes sold in 2010. That contrasts with 9,241 homes sold for $1.54 billion between July 2009 and June 2010.
The pie has been shrinking steadily since the top 10 brokerages that reported to VEGAS INC had $16 billion in sales volume in the year ending in June 2006. It fell to $6.6 billion in the year ending June 2008.
Several firms have closed down or consolidated since the housing downturn and brokers said they expect that trend to continue.
“It’s tough to pay rent and all of the expenses for companies, and I think we’re going to see further consolidation,” said Linda “Red” Wallin, owner of Century 21 Aadvantage Gold.
Not only have reduced home prices cut into what Realtors earn with their traditional 3 percent commission, but it has been cut further for bank-owned properties to a range of 1.75 to 2.25 percent. That forces Realtors to work even harder to get paid less.
The two biggest firms, however, continue their expansion outside state. This year, Stark acquired Prudential Arizona and suggested his company may be expanding further in Nevada and other locales. This month, Realty One Group, the No. 1-ranked brokerage in Las Vegas, announced it has combined forced with John Hall & Associates in Arizona to further expand its footprint in the state.
CEO Kuba Jewgieniew said his firm was No. 13 in the nation in homes sold at 13,000 and expects that number to reach 16,000 this year and 20,000 in 2012. He said he’s exploring offering franchises to further grow his business. He said Vegas prices could decline another 10 percent after falling more than 60 percent in the market as a whole. Investors remain important to the housing market, but jobs are what’s needed.