You may be watching your cash flow during the market slowdown. Use these smart tips to protect your nest egg.

News about economic tumult may be making you feel jittery about your finances. A “housing recession,” as National Association of REALTORS® Chief Economist Lawrence Yun characterizes the current market slowdown, may be daunting for real estate pros whose commission checks can vary greatly with the ebbs and flows of the real estate cycle.

After all, 37% of agents last November said they were struggling to pay rent for their offices, according to a poll(link is external) by Alignable, an online network for small business owners. Real estate professionals, along with other American workers, may not be feeling particularly rich: About six in 10 consumers say they are living paycheck to paycheck—about 45% of whom earn more than $100,000 per year—according to a late November poll from PYMNTS and LendingClub. Further, consider that the median gross income of REALTORS® was $54,330 in 2021, and incomes tend to grow with more years of experience, according to NAR data.

To weather potential business hiccups, financial experts offer 10 money-saving tips:

1. Beef up your reserves. A reserve account consists of savings to cover any unforeseen expenses, which can be crucial during tough financial periods. For the self-employed, a good rule of thumb is to put enough savings to cover six months of expenses into a cash or stable value-type account, advises Brian Wiley, founder of Tree City Advisors(link is external) in Boise, Idaho, and host of “The Real Money Pros” radio show. 
2. Revisit your spending habits. Scrutinize your expenses to find ways to reduce or eliminate excess. “This is a good practice in any economy, but it’s even more important when cashflow is limited,” Wiley says. “You might be surprised how much you can save by eliminating extra television services, daily lattes and memberships.” Pay special attention to items like your car or homeowner’s insurance: Drivers who comparison shop on auto insurance, for example, can save an average of $1,127 a year, according to a study from CarInsurance.com. Michael Soon Lee, CRS, GRI, associate broker at Realty ONE Group Future in Dublin, Calif., advised in a Center for REALTOR® Financial wellness webinar to cut at least $1,000 a month in personal expenses, particularly if you lack three or six months’ worth of savings. Cut back on non-critical spending, such as dining out, gym memberships, coffee shop visits and cable TV, and find more ways to save at sites like AmericaSaves.org(link is external), he suggests. 
3. Re-evaluate where you’re investing money. Assess the value of all your accounts like checking, savings, investments, retirement, etc. “Each of these may become critical resources and should be prepared ahead of a need,” Wiley says. “The best practice is to have any money, which might be needed in the next three years, set aside as a ‘cash-like’ investment, such as a CD, money market or short-term government bond.” On the other hand, stocks are often volatile in an economic slowdown and often require a more long-term growth strategy. So, if you have an important savings goal to fund within a year, choose a more stable investment, like CDs or bonds. “Be sure risk investments are purposeful and are given the amount of time needed to recover before the value is needed,” Wiley notes. 
4. Get smarter about taxes. Work with a qualified tax adviser to ensure you’ve taken advantage of every tax-reducing method available to you and that your business is structured appropriately, Wiley suggests. For example, how much of your income should be designated as W-2 pay (self-employment income)? In some cases, the answer may be all of it, Wiley says. “But in many other cases, the answer is some of it, which leaves the balance to be distributed as a dividend if you are filing as an S-Corporation,” he adds. “This type of strategy could save you lots of tax dollars.” Wiley says the top financial mistake real estate professionals make is not saving enough for taxes and missing out on savings. “If you do not have a good tax plan, then you are likely paying much more in taxes than necessary,” he says. “I have seen many cases where independent contractors pay 50% more in taxes than they should.” 
5. Create a budget. You’ve heard it before, but now is a good time to have a budget. Too often, “many people discount the concept of making a budget until they find themselves living in lean times,” Wiley says. “It is always better to be prepared—and trained—before you need to adhere to a tight budget.” Have a personal and business budget that estimates your earnings and expenses and breaks down a full list, item by item, of regular expenses. Track how you do and modify when needed. Need help creating one? The Center for REALTOR® Financial Wellness(link is external) includes budgeting tips and spreadsheets to help. Sites like Mint.com(link is external) or your bank, credit union or credit card company likely offer budgeting tools as well, Wiley says. 
6. Open specialized savings accounts. To help stay on budget, financial experts recommend opening multiple, individual savings accounts. For example, pool funds into multiple accounts labeled for emergency/reserves, taxes, retirement and business expenses. Ryan Serhant, CEO of Serhant and equity holder in RLTY Capital, offers tips to independent contractors on financial health. Since the beginning of his real estate career, he has allocated commission checks to separate banking accounts, particularly for taxes, to avoid spending commission money he doesn’t really have. His general rule of thumb: Save one-third of each paycheck for taxes and one-third for living expenses; the rest can go to savings. 
7. Keep on investing. No matter the market, it’s always smart to continue investing, Wiley says. He recommends a dollar-cost averaging strategy—the practice of investing a fixed dollar amount on a regular basis. In a sluggish market, the lower prices on investments can serve as an advantage in that they likely will increase over time. Also, investing even a little amount could make a significant difference over the long haul. For example, the Acorns(link is external) app automatically rounds up the price on everyday purchases to the nearest dollar and then places the excess into an investment portfolio. So, if you buy a donut for $2.30, Acorns rounds that to $3 and invests the 70-cent difference on your behalf. Daily spare change like that could amount to $900 per year in investments. 
8. Consider a side hustle. If you’re especially tight on money, consider a side hustle to supplement your income and leverage your skillsets in other ways. Lee suggests generating extra funds by serving as a notary (which could offer $75 to $200 per appointment), home stager, appraiser or property manager. However, understand that you also likely will need to get extra training or licenses to do many of these jobs. To find opportunities, Lee cites websites like SideHustleNation.com(link is external) or Upwork.com(link is external), which connect professionals to businesses who are seeking specialized services. 
9. Bank on the future. Retirement savings are often one of the first expenses people nix when finances get lean. Wiley, who hosted a webinar for the Center for REALTOR® Financial Wellness in January called “How Inflation and Market Volatility May Impact Your Plans for Retirement,” says there are many strategies for independent contractors to save for their post-career future. He suggests setting aside at least 10% of gross income for retirement. If you haven’t been doing that, you can still catch up. Most real estate professionals have their biggest earning years in the latter third of their career, he says. This still “presents a great opportunity to save more of their income for retirement and to use the many tax advantages offered to ‘late savers,’ such as catch-up contribution limits in 401(k)s, IRAs and ROTH IRAs,” he adds. “Saving more in these types of retirement plans will not only help the professional have a larger nest egg but will likely also reduce taxes along the way. Consider it more of a ‘snowball’ effect.” Wiley also says ROTH conversions during lower income years could serve as another retirement savings tool. 
10. Find extra guidance. Financial advisers and tax planners can help you identify ways to meet your savings goals and expand your financial safety nets. Also, sites like financialwellness.realtor(link is external), an educational resource for real estate professionals provided by NAR, offers personalized financial planning goals, budgeting tips, tax and retirement planning, and ongoing webinars on various topics. “Get help from an investment professional if you need guidance, and always be sure to only hire an adviser who will work in your best fiduciary interests,” Wiley says.

©National Association of REALTORS®
Reprinted with permission

Taking notice of the increased appetite for U.S. real estate, investors are building up their portfolios of properties looking to cash in on the higher housing and rental prices. Investors purchased a record $64 billion of homes in the third quarter.

Single-family homes comprised nearly three-quarters of investor purchases in the quarter, an all-time high, Redfin reports.

In October alone, investors made up 17% of buyers, up from 14% a year earlier, the National Association of REALTORS® reported in its latest existing-home sales report. All-cash buyers, the category that investors tend to land in, accounted for 24% of home sale purchases last month.

Overall, investors purchased a record high of 90,215 homes in the third quarter, up from 80.2% a year earlier. That is the second-largest year-over-year gain on record, Redfin reports.

“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” says Sheharyar Bokhari, Redfin’s senior economist. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents.”

Average monthly rents climbed 10.7% annually in September. Median home prices increased 13.1% in October year over year to $353,900, according to NAR.

Where Investors Are Targeting

Atlanta had the highest share of homes sold in the third quarter that were purchased by investors, the highest share of the 40 U.S. metro areas that Redfin tracked. Rounding out the top five are Phoenix (31.7%); Charlotte, N.C. (31.5%); Jacksonville, Fla. (28.3%); and Miami (28.1%).

©National Association of REALTORS®
Reprinted with permission

Glass is joining the list of building materials in short supply. A range of industries, including shower door manufacturers and window installers, are reporting glass shortages.

Nearly two-thirds of home builders said that windows are their biggest material shortage, according to a recent survey from John Burns Real Estate Consulting. Rounding out the top four in additional shortages are umber, engineered wood products, and concrete, according to the survey.

Window delays could range from four to 15 weeks, though some are stretching even up to 45 weeks, according to John Burns Real Estate Consulting.

An international logistics backlog is leading to shortages of glass and other materials, experts say. Many glass manufacturers have moved operations overseas. China, Mexico, and India have traditionally exported the most glass and stone to the U.S. The glass shortage has especially affected the supply of glass jars and bottles, driving up the price of some grocery products lately.

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Reprinted with permission

More brick-and-mortar retail is needed. Store openings are outnumbering closings for the first time in four years, according to an analysis of more than 900 chains by the IHL Group, a research firm.

The largest amount of growth is coming from mass merchants, food, drugs and pharmacy, and convenience chains, The Wall Street Journal reports.

E-commerce is also driving a lot of the increase in the physical footprints of stores as a greater number of online and store experiences become more closely linked. Digital businesses are relying on physical stores for easier shipping or for customer pickup or returns.

E-commerce had been blamed for physical stores closing. The nation’s largest chains closed 6,573 more stores than they opened last year.

Property owners have been offering incentives to win more tenants back. Companies took notice. For example, company officials with the clothing company Levi Strauss & Co. told The Wall Street Journal that their company is securing space for prices 15% less than pre-pandemic levels. They plan to open 100 U.S. stores over the next five years.

“The majority of consumers like to engage with us in our stores,” Harmit Singh, Levi’s finance chief, told The Wall Street Journal.

Dick’s Sporting Goods is opening more than 800 stores under its House of Sport, Public Lands, and Golf Galaxy brands that include more experience activities within them, such as batting cages, rock climbing walls, and putting greens.

Also, digital-first companies want more of a physical footprint. Amazon is planning to open its own department stores.

Overall, retailers are opening 4,361 more brick-and-mortar stores in 2021 than they closed.

©National Association of REALTORS®
Reprinted with permission

T3 Sixty releases its annual Swanepoel Power 200 list, revealing the movers and shakers in the industry.

Real estate leaders and brokerage executives are demonstrating a powerful influence on the housing market, as their impact extends to all corners of the country.

T3 Sixty, a real estate consulting firm, annually releases its Swanepoel Power 200, known as the SP 200, which ranks the residential real estate brokerage industry’s executives and leaders for their influence on the profession.

For 2023, Gino Blefari, president and CEO of HomeServices of America, was named the most powerful and influential person of the year. Blefari was credited for his “steadfast leadership” of HomeServices of America since 2019 and for keeping the “most profitable national real estate brokerage on a consistently profitable track.”

Gary Keller, the founder and executive chairman of Kwx, ranked number 2 on the SP 200 for 2023. Keller Williams Realty is the largest franchise brand by sales volume, transaction sides and agent count as well as the nation’s largest privately owned real estate company, T3 Sixty says.

The SP 200 ranks professionals by their achievements over the past 18 months, the size and reach of the companies they lead and their overall influence on the industry.

“These exceptional leaders have a few things in common: a keen eye for hiring talent and a diligent focus on sustainable growth,” says Stefan Swanepoel, executive chairman of T3 Sixty.

The top 10 on 2023’s SP 200 list are:

1. Gino Blefari, president and CEO, HomeServices of America
2. Gary Keller, founder and executive chairman, Kwx
3. Glenn Sanford, founder and CEO, eXp World Holdings
4. Ryan Schneider, CEO and president, Anywhere Real Estate
5. Richard Barton, cofounder and CEO, Zillow Group
6. Susan Yannaccone, president and CEO, Anywhere Brands
7. Hoddy, Helen and Hoby Hanna, company leaders, Hanna Holdings
8. Robert Reffkin, co-founder and CEO, Compass
9. Andy Florance, founder and CEO, CoStar Group
10. Phil Soper, president and CEO, Bridgemarq Real Estate Services

Several NAR Leaders Make the List

National Association of REALTORS® executives and leaders also scored several spots on the SP 200 for 2023, including:

• Bob Goldberg, NAR’s CEO (number 13)
• Katherine “Katie” Johnson, NAR’s general counsel and chief member experience officer (number 35)
• Kenny Parcell, NAR’s president (number 51)
• Shannon McGahn, NAR’s chief advocacy officer (number 55)
• Lawrence Yun, NAR’s chief economist (number 96)
• Mark Birschbach, NAR’s senior vice president for strategic business innovation and technology (number 116)
• Dave Garland, managing partner of Second Century Ventures (number 196)

©National Association of REALTORS®
Reprinted with permission

As the pandemic wanes, companies are weighing alternative setups to their corporate office structures, including “hub and spoke” and “hubquarters” models. That may prompt many changes in commercial needs moving forward and what companies may be looking for.

The hub and spoke model is based on the use of a central office and smaller satellite offices, while hubquarters involve a network of smaller locations. This setup, which tends to be used for collaborative and independent work, may include a distributed cluster of small offices, co-working spaces, and remote locations, the Commercial Observer reports.

Amazon has already set the stage for more hubquarters locations, opening offices in 17 cities in North America and planning to open six more. Google has also announced it is weighing adding smaller hub offices to offer its employees greater flexibility, the Commercial Observer reports.

Hubquarters may help companies cut costs. They take up less space to operate than a single large headquarters, and maintenance and utility costs are lower, too.

Companies are considering options as they look to bring more of their workforce back to the office as measures to manage the pandemic continue. While a majority of the workforce continues to work remotely, workers are showing some eagerness to return, looking to more easily collaborate with coworkers. The Commercial Observer cites a recent survey that found that satisfied employees in the U.S. are twice as likely as unsatisfied employees to say that collaboration makes them feel more productive. More than half say they collaborate with five or more people on any given day.

©National Association of REALTORS®
Reprinted with permission

Flood risks are increasingly posing a risk to commercial real estate, and a new report cautions the sector to be prepared.

About 730,000 retail, office, and multiunit residential properties face potential risk annually of flood damage, according to a new report from the First Street Foundation, a nonprofit research group. Damage from flooding could cause $13.5 billion in damages in 2022 and increase to $16.9 billion by 2052, according to the report, which focused on sea-level rises and flash flooding events. First Street partnered with Arup to evaluate flood risks on commercial properties in the U.S.

“It absolutely will have an impact on the value of these structures because you’re increasing the risk and the known risks to these buildings, which then has a negative impact on the value of them today,” Matthew Eby, founder and executive director of First Street Foundation, told CNBC. “We have companies like Nuveen or Morningstar or these large institutional investors that are looking at our data to understand what’s at risk today and over that period of ownership. How do you plan against these things or ensure that you’re buying into the right commercial real estate assets?”

Eby says that once businesses understand the risks they can take steps to try to mitigate those risks to their properties and potential costs involved.

Last year, realtor.com® added a flood score for residential houses in the U.S. to both for-sale and off-market properties listed at its site. The flood risk data is from both Federal Emergency Management Agency flood zone maps and Flood Factor. The score can be used to help homeowners determine what properties may need flood insurance, even if their lender doesn’t require it. Read more: Realtor.com® Adds New Flood Risk Tool to Listings.

©National Association of REALTORS®
Reprinted with permission