The National Auctioneers Association’s Web site can be found at www.auctioneers.org.
The auction industry’s revenue grew 7.1 percent last year, translating into $257.2 billion fueled by commercial and residential real estate sales, according to a new study.
“Buyers are more comfortable with auctions, given the popularity of Web sites like eBay,” said Chris Longly, a spokesman for the National Auctioneers Association (NAA). “Now we’re seeing that comfort level filter out to live real estate auctions nationwide. People are buying and want to have fun doing so and auctions are a way to do that.”
While real estate auctions in New England signal a distressed or foreclosure sale, that image appears to be changing as buyers view it as simply another way to buy property, say auctioneers. In other regions of the country, auctions are a standard way to buy property, they insist.
The fastest-growing auction sectors are in real estate, the survey said. From 2003 to 2006, residential real estate grew 39.2 percent during this period, from $11.5 billion in 2003 to $16 billion in 2006. Land and agricultural real estate swelled 33 percent during that same period, while commercial real estate enjoyed growth totaling 27.4 percent.
The survey highlighted a dramatic upsurge in the real estate sector, with 36 percent of respondents reporting increases in residential real estate sales receipts and a 23 percent increase in commercial real estate. Charity auctions also were reported to be on the rise; since 2003, total growth of that auction segment has increased 16.3 percent.
Automotive, with 2006 gross-sales revenues of $87.3 billion, represents the largest sector, accounting for more than a third of industry-wide sales. Its modest growth of only 10.5 percent from 2003 to 2006 indicates that online competition might be challenging live-auction market share, researchers wrote.
Despite a slowdown in traditional sales of residential homes in 2006, revenue from residential and commercial real estate auctions increased over 2005. Researchers say part of the reason real estate is such a consistent growth leader is greater acceptance of the auction method of marketing. Younger consumers are receptive to auctions because of their purchases on Web-based auctions.
Researchers also found that more money invested in marketing, and a greater enthusiasm by consumers to use live auctions to both sell and purchase goods, is a strong contributor to the increase in live auctions in 2006. The number of auctions increased 7.8 percent from 2005.
As the sale of real estate through live auction has increased, real estate brokers have discovered the advantage of a quick turnaround of the property, the study said. Increased consumer acceptance, combined with a greater focus on marketing strategy, are favorable indicators for residential real estate to continue as the fastest-growing sector of the auction industry, researchers said.
Significant Growth
For the fourth consecutive year, the auction industry showed significant growth, according to NAA. The report found that growth overall and by sector. Additionally, the report only measures live auctions and does not include online auction sales. In recent years, eBay has added real estate to its millions of goods and services that it offers shoppers worldwide.
The NAA survey comes on the heels of a 2004 study by Harris Interactive, which found that 97 percent of attendees feel auctions are fun; 92 percent have a favorable impression of auctioneers; 83 percent believe auctions are a way to get good values on items; 75 percent of attendees bring the whole family when they attend an auction; consumers will travel an average of 1.3 hours to attend a live auction; and online auctions attract buyers to live auctions, not the reverse.
In 2003, NAA initiated the first extensive data collection about auction-industry gross sales. On behalf of the auction trade group, Morpace International, a full-service market research and consulting company, conducted more than 1,300 interviews with auctioneers. That national sample of the industry included large companies that accounted for significant market share in various auction specialty areas.
Last year, Morpace conducted 1,424 online interviews with NAA members. Members estimated changes in their annual gross-sales receipts from 2005 and by auction specialty area. Data also was collected on marketing and advertising spending, as well as the number of total auctions conducted in 2006.
The outlook for auctions continues to be strong, NAA said. In July, the group unveiled industry robust projections for 2007. An industry survey projected the industry will grow $7.6 billion in 2007. If the trend continues, analysts expect industry revenues to reach $264.8 billion by the end of the year. This is the fourth consecutive year that the live-auction industry has witnessed growth. In 2006, the total value of goods and services sold at auction totaled $257.2 billion, an increase of 7.1 percent from 2005.
The Morpace quarterly survey compiles data from NAA members, as well as nonmembers. Forty-one percent of respondents reported an increase in gross-sales receipts through the first half of 2007, with 29 percent reporting “no change” and 30 percent reporting a decline. Thirty-four percent of NAA members say they have conducted more auctions in the first half of the year compared to last year with 42 percent reporting “no change” and 24 percent reporting decreases.
The Overland Park, Kan.-based NAA represents the interests of 6,000 auctioneers in the U.S. and elsewhere. Founded in 1949, the mission of the NAA is to promote the auction method of marketing and enhancing the professionalism of its members through education and technology. The organization can be found online at www.auctioneers.org.
