Real estate has big area small business footprint
The first week of May is the only time when one of the most important pieces of the U.S. and local economies is formally recognized. Small Business Week’s goal is to honor the entrepreneurs who bring current ideas to the life and growth of our economy.
Real estate firms are an integral part of the fabric of the local small business community. The most current Census count lists 401 real estate, rental, and leasing firms in the region. The total number of employees was about 2,000.
But that’s a small part of the small business picture.
Most local real estate firms (72%) have less than five employees. And many – if not most – REALTORS® are not employees. They’re non-employer businesses.
The IRS describes non-employer businesses as “small firms – like real estate agents and independent contractors.” They account for almost three-quarters of all businesses and contribute about 4% of the economy’s overall sales and receipts data. Non-employer businesses are not included in the counts of businesses from the Economic Census or County Business Patterns.”
Locally real estate professionals account for a little better than 10% of the region’s 34,175 non-employer businesses. But none of the “official” counts that lag real-time conditions by a year to a year and a half include the crush of people entering real estate in 2020 and 2021. That’s the typical pattern. When the housing market gets hot, it attracts people who what to be part of the action.
Area real estate firms with employees in the current Census count had an annual payroll of about $70 million. That’s peanuts compared to the real estate impact on local economies.
Last year there were a little over 10,000 local existing home sales. Those sales had a total dollar volume of $2.3 billion. And that’s just the sales of properties listed on the local Multiple Listing Service and reported by the Northeast Tennessee Association of REALTORS® (NETAR). Sweep in the economic multipliers identified by the National Association of REALTORS® (NAR) economic researchers and the total balloons by another $627.5 million. And that doesn’t include vacant land sales, new home sales, and commercial real estate transactions, which also set a new record.
Overall, real estate accounts for about 16% of the state and local economy, and almost all the heavy lifting is done by firms with fewer than five employees. Maybe that’s why the actual small businesses are overlooked by a culture where most of the public and media attention goes to the firms that have hundreds or thousands of workers.
According to the Business Journal’s 2022 Book of Lists, the region’s three biggest employers (Food City, Ballad, and Eastman) have about 37,000 workers. The two-year-old count of non-employer businesses is almost 35,000.
The region’s economy is seeing some impressive economic gains. Small businesses and real estate are a big part of those gains. NETAR was the first local organization of its kind that recognized, embraced, and employed the economic benefits and efficiencies of regionalism to market real estate and represent its members.
A week is a fitting observance because small businesses are important. They provide opportunities for entrepreneurs and create meaningful jobs with greater job satisfaction than positions with larger, traditional companies. They foster local economies, keeping money close to home and supporting neighborhoods and communities. NETAR and its members are proud to be part of that dynamic.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us