It’s been six years since Harold Crye, CEO of Crye-Leike Real Estate, expanded the company’s footprint into Northwest Arkansas. He said the local business has grown sales each year from $76 million in 2007 to $385 million last year. Crye-Leike had a 35% share of total units sales last year, with 2,659 properties.
Crye said the economy tanked just as the company ramped up in Northwest Arkansas, but in the past few years the momentum has returned.
“Our agents in this region had a 15% increase in volume sales from 2012 to 2013. They blew our $370 million goal out of the water and we predict $400 million in total volume for the region this year. That’s about a 5% increase and unless the market really tanks they should reach that goal and more,” Crye said at the company’s 2014 Kick-off breakfast event held in Rogers on Wednesday (Feb. 19).
Crye said higher interest rates are inevitable and will hurt affordability in many markets. He said as home prices declined in recent years in concert with interest rates, affordability hit a five-year low last summer. But Crye warns as prices improve and rates tick upward, affordability could become a stumbling block later this year.
“This should be creating a sense of urgency in prospective buyers now that the region looks to be thawing out from the winter freeze,” Crye said.
Another challenge for the business is a lack of inventory. Vickie Briolet, an agent in Crye-Leike’s Bentonville office, said inventory levels are as low as she has seen in many years.
“We all need listings. There are buyers looking and limited properties to show,” Briolet said.
Crye said fewer new homes being constructed is partially to blame for the lower inventory levels across the country. The National Association of Realtors reports new home inventory hit a 50-year low in 2012 at just under 200,000, after peaking at 500,000 in 2006.
Market watchers say housing starts need to reach the 1.5 million level soon on annual basis or there will likely be a persistent shortage of housing inventory for the long-term. For the past six years the residential construction industry has fallen short of the 1.5 million units needed just to keep pace with the new household formation.
Bankers are keeping a tight rein on building, Crye said, and this is likely to continue as long as job growth remains tepid.
“The biggest reason there are less new homes built is because of the weak job growth President Obama has been able to muster. There are families doubling up and grown kids living in basements because they don’t have the financial stability to start a new household,” Crye said.
He said this has set up favorable dynamics for the rental market and he encouraged his agents to get busy seeking out investor deals. In the larger Memphis market, he said the company is working with an institutional investor who is purchasing 1,000 homes for rental. Crye-Leike is also providing the property management in that deal.
Two goals he has for the local region in 2014 is to expand its property management division as well as establish a commercial real estate division.
Crye-Leike continues to expand its offices westward, adding an office in Grove, Okla., and acquiring the Coldwell Banker office building in Siloam Springs in October. Crye said the company has recruited several agents from other large national firms to work in that Siloam Springs market.
The Arkansas Realtors Association reports there were 8,419 agents working in the state last year. Total agent count is down 46% since 2007. Crye said there are 217 agents working in the Northwest Arkansas market among the company’s eight offices. Crye-Leike added more than 40 new local agents in 2013.
“We continue to recruit and hire new agents, our total number is up in this region and up nationally,” Crye said.
On the national level Crye-Leike operates 106 office with 2,828 agents. The largest market for the company is Memphis where the company has 16 offices and 716 agents with roughly a 40% marketshare, according to Crye. The company has 9 offices in Little Rock, with 351 agents and Crye said he is looking to other growth opportunities.
Crye-Leike posted combined annual sales of $5.2 billion, selling 30,471 units last year. Those results include franchise office sales, Crye said.
The company sales goal for 2014 is $5.5 billion, a 6% increase year-over-year.
“All of our offices are growing and we think this is doable, unless the economy tanks. We have several new offices planned this year, one in eastern Tennessee and two in Georgia.” Crye said.