In the go-go years of the housing boom, real estate was the place to be. The number of real estate licensees reached its zenith at 2.5 million in 2008, surging 56 percent from 1.6 million licensees in 2000, according to the Association of Real Estate License Law Officials.
And membership in the National Association of Realtors flew past the 1 million mark in 2004, peaking at about 1.4 million in late 2006.
But after rising for nine straight years beginning in 1998 — and climbing 77.1 percent from 2000-06 — NAR membership has declined for the past three years and is on pace for another drop this year.
Last year, 645,899 real estate licensees — 26 percent of the total — failed to renew their licenses.
From its October 2006 peak (1.37) million through August 2010 (1.09 million), Realtor membership has fallen 20.5 percent, though the association’s budget projections anticipate fairly steady membership, at about 1.1 million, for the next few years, as the rate of decline has diminished for the past two years (see chart).
At the state level, Realtor membership peaked in most states in 2006 or 2007.
Fallout in Georgia
The rise and fall of Georgia’s Realtor population is among the most striking examples of the wayward economy’s toll on the real estate workforce.
From 2000 to the market’s peak in 2007, membership in the Georgia Association of Realtors grew about 94.1 percent, to 41,813. As of Aug. 31, 2010, membership had plunged 36.9 percent, to 26,372 — the steepest drop among all state associations and the Washington, D.C.-area association from their respective peaks.
Realtor associations in Washington state (-33.6 percent) and Michigan (-31.7 percent) have lost about one-third of their members since their latest cyclical peaks, and Realtor membership has declined more than 15 percent in 39 states since their latest cyclical peaks.
The Georgia Association of Realtors attributes its sharp drop in membership to the state’s post-bust jump in foreclosures and the effect of the market’s decline on the association’s inexperienced members. And a positive sign: the rate of decline in membership has lessened since 2008.
"A couple of years ago we surveyed our members on a variety of issues, and out of 3,000 participants (70 percent) indicated that they had been in the business five years or less," said Brandie Miner, a spokeswoman for the association.
"I believe the boom brought attention to a career in real estate that artificially inflated our numbers for a few years. Hopefully, we will soon fall into the pattern of other states that are closer to leveling off and not posting double-digit membership declines."
New, single-family home sales peaked in 2005, according to government agencies. Existing-home sales also peaked in 2005, at 7 million — a level NAR now calls "unsustainable."
Percent Change in Realtor Membership, 2006 to 2010*
*2010 data as of Aug. 31, 2010.
Source: National Association of Realtors.
The membership lag
When the housing bubble finally began to deflate, as sales slowed and foreclosures began to pile up, it took some time for the total number of licensees and the number of Realtors to drop.
"We don’t see a one-for-one correlation between home sales and (the number of) NAR members because they understand it’s a cyclical business and 97 percent of residential specialists have secondary specialties," said Walter Molony, a NAR spokesman.
NAR membership as a whole fell 1.5 percent in 2007, 10.5 percent in 2008, and another 7.1 percent in 2009. At 1.1 million, Realtors make up 60 percent of the 1.85 million current real estate licensees, Molony said.
The two-year difference in peaks between licensees overall and Realtor members — 2008 for licensees vs. 2006 for Realtors — could have something to do with how frequently real estate professionals renew: Licenses often last between two and four years, while NAR membership dues must be paid yearly.
Realtor membership tends to lag market conditions by about two years, said Leslie Appleton-Young, chief economist for the California Association of Realtors.
"The delay represents the time it takes for members to experience a declining market and take action to leave the industry — as well as the time for the public to recognize and act on market growth," Appleton-Young said.
California’s housing market peaked in 2004 and 2005, she said, while California’s licensee population peaked in November 2007 with 549,244 broker and salesperson licensees.
The state was one of the first to see multiple cities ridden with foreclosures. California’s Realtor membership started dropping in 2007. It fell 10 percent in 2008 and another 2.9 percent in 2009.
"There was a weaning out of people unable to make the shift to another type of market," Appleton-Young said.
The time lag is also true in reverse — once the economy begins to improve, membership will follow a couple of years later, she said.
The downturn did not hit every state equally or at the same time. In a sampling of four states — Georgia, Michigan, California and Texas, membership began to fall by 2007 (the decline in Michigan began in 2006).
Membership declines accelerated in 2008 in that group of states: -20 percent in Georgia, -14 percent in Michigan, -10 percent in California, and -12 percent in Texas.
By the end of 2009, membership for those states was still dropping, but at a slower rate — only Georgia showed a double-digit decrease (-14 percent).
Year-to-date in 2010, Georgia and California register 8.1 percent and 3.6 percent declines in membership, respectively, while Michigan’s membership bumped up 0.7 percent and Texas’ increased by 1.8 percent (Texas had recorded a peak of 153,161 real estate licensees at the end of its 2007 fiscal year on Aug. 31, 2007).
North Dakota has had the largest jump in Realtor membership this year among all states, up 5.4 percent.
Nationally, Realtor membership had fallen 4.1 percent this year through Aug. 31, according to NAR.
The foreclosure factor
States with the steepest drops in Realtor membership so far this year include Georgia, Utah, Nevada and Idaho.
These four states had among the highest foreclosure rates in the nation in July, according to foreclosure data site RealtyTrac. July is the latest month for which foreclosure data is currently available.
RealtyTrac calculates foreclosure activity by the number of properties receiving one of three types of foreclosure filings: default notices, scheduled auctions, and bank repossessions.
Georgia ranked ninth in the nation in July, with 1 in 320 housing units in that state receiving a foreclosure filing. Utah was seventh in the nation, with 1 in 242 units receiving a foreclosure filing in July.
Idaho had the fifth-highest foreclosure rate, with 1 in 240 units receiving a filing. And Nevada had the highest rate nationwide: 1 in 82 units received a foreclosure filing in July.
By contrast, Florida and California, which had the third- and fourth-highest foreclosure rates in July, were a couple of the steadiest markets for Realtor membership between August 2009 and August 2009: each lost fewer than 2 percent of its members.
In Florida, 1 in 171 housing units received a foreclosure filing in July, while 1 in 200 units received a filing in California. Though still high, California and Florida both saw their foreclosure rates drop between July 2009 and July 2010, however: by 8.7 percent and 38.7 percent, respectively.
By comparison, Georgia, Utah, and Idaho each saw their rates rise in July: 12.9 percent, 5.5 percent and 7.5 percent, respectively.
Nevada, which saw a 29.7 percent year-over-year drop in its foreclosure rate in July, still had the highest rate in the nation. Meanwhile, Realtor membership in Nevada fell 8.1 percent in August compared to the same month in 2009.
Peaks and valleys
Georgia saw the sharpest drop in Realtor membership in the past year among all states: a 12.9 percent decline.
In 2007, when overall NAR membership numbers began to fall from peak, the Georgia Association of Realtors saw a 4.4 percent increase. But that was followed by double-digit percentage declines in membership.
As of Aug. 31, 2010, Realtor membership in all states but North Dakota had hit the lowest yearly membership levels since reaching their latest cyclical peaks.
After Georgia, Washington and Michigan, other states with the steepest membership drops from their respective cyclical peaks include: Maryland (27.7 percent), Florida (27.5 percent), South Carolina (27.4 percent), Nevada (26.5 percent), Utah (25.6 percent), Minnesota (25.5 percent), and Idaho (24.7 percent).
Unemployment rate hammers South Carolina
When comparing year-over-year figures for August, South Carolina saw the third-highest drop in membership year-to-date in 2010, at -8.4 percent.
"South Carolina was one of the last states to enter the recession, so some of our numbers are trailing. We didn’t really fall into this recession until late ’08, probably September or November of 2008.
"Our unemployment numbers are some of the highest in the country, which has impacted membership as well," said Nick Kremydas, the South Carolina Association of Realtors’ CEO.
South Carolina had the sixth-highest unemployment rate in the nation in July at 10.8 percent. According to the Bureau of Labor Statistics, while Georgia ranked 13th at 9.9 percent.
The states with the top five highest unemployment rates in July were Nevada: 14.3 percent; Michigan: 13.1 percent; California : 12.3 percent; Rhode Island: 11.9 percent; and Florida: 11.5 percent.
"In this recession, our prices are off, but not like Florida or other states. In the coastal areas that saw the wild fluctuations in pricing, those areas have corrected. I think South Carolina has seen the worst of it," Kremydas added.
"Membership is a trailing indicator of the economy and we hope to see those numbers start improving in the near future."
Gloom for late bloomers
In Washington state, which had the second-highest peak-to-trough drop nationwide, Realtor membership dropped 8.3 percent between August 2009 and August 2010, which the state’s association also attributed to delayed impacts from the housing downturn.
"The decline in the housing market hit Washington later than elsewhere. The data indicate that the Puget Sound area peaked about a year after the national peak in home prices, and that recovery in home prices has been slower in Puget Sound than elsewhere," said Steve Francks, Washington Realtors’ CEO.
And an executive for the Montana Association of Realtors attributed that group’s 7.1 percent drop in membership between August 2009 and August 2010 to market conditions in specific areas of the state.
"Market areas in western and southwestern Montana were heavily influenced by resort and second-home buyers who are not looking to buy property in this economy.
"Well over 50 percent of members (who did not renew) came from that part of the state. That is exacerbated by higher unemployment, particularly in the Northwest," said Peggy Trenk, the association’s CEO.
"Areas such as Billings and Helena, where the economy has remained fairly stable, have seen only a minimal loss of membership. As the economy improves, so will our membership numbers," Trenk said.
She added that the number of real estate licensees in general has dropped in the state. She cited Montana Board of Realty Regulation statistics, which reveal that the total number of new salesperson licensees has dropped from 404 in 2008 to 143 so far this year. New broker licenses have dropped from 146 to 40, she said.
"The licensing year will end in October so that number isn’t anticipated to increase significantly," she said.
Membership dues blues
Not all state associations attributed their loss in membership to market conditions, however. A representative for the Utah Association of Realtors said the group’s statistical 12.7 percent drop relates, in part, to a billing decision by the Salt Lake Board of Realtors, which makes up half of the state’s Realtor population.
That board changed its billing cycle so that instead of paying in December, members paid in July.
"In essence, members had just paid in December and were then being asked to pay again just six months later. Now that they’re past the deadline and members have been dropped, they are seeing members trickle back in.
"I think they’ve recaptured a couple hundred of the approximately 700 who were initially dropped," said Christopher Kyler, the association’s CEO.
Overall NAR membership has dropped 2 percent so far in 2010. In the past month, Realtor membership has fallen in 16 states, though almost all of the rest saw increases of less than 1 percent.
Realtor membership is determined by the number of dues-paying Realtors who are current. Local associations set their own deadlines for yearly dues submissions, so for "apples-to-apples" comparisons NAR usually uses year-end figures as opposed to monthly statistics, said NAR spokesman Walt Molony.
Membership figures for states come from NAR’s membership database, which is updated continuously. Because of timing, some state associations’ membership numbers may not be completely accurate.
The Kansas association, for example, said it had seen a 2.43 percent decrease in membership between August 2009 and August 2010 — not the 1.77 percent decrease noted in NAR’s figures.
Bucking the national trend
Two states saw gains in membership from August 2009 to August 2010: North Dakota (up 1.6 percent) and Massachusetts (up 0.3 percent).
North Dakota has gained notoriety across the country for the health of its economy. The state had the lowest unemployment rate in the nation in July: 3.6 percent.
"We were one of the few states that kind of had a bubble around it in terms of jobs lost and housing prices. We tend to be more conservative here," said Jill Beck, the North Dakota Association of Realtors’ executive vice president.
Residents weren’t as impacted as much by the "creative financing going on in other areas of the country," she added. "We have small community banks watching out for the communities and members."
North Dakota’s association had 1,425 members as of Aug. 31 — the highest level since membership reached a record-high 1,438 in November 2008. Realtor membership in the state fell 4.9 percent, to 1,352, in 2009, but has rebounded since the beginning of this year.
The Massachusetts Association of Realtors credits its membership stability to a combination of member benefits and state initiatives.
"At the risk of boasting, members continue to join and renew with our association largely on the high level of member service at all … levels of the organization," said Robert Authier, the association’s CEO.
"We anticipated the real estate downturn and initiated a ‘Loss Mitigation Certification’ program before anyone else. We provide many direct services including: free legal hotline, free tech hotline, free online continuing education credits, free e-forms, ‘Webinar Wednesdays’ on key issues affecting members, podcasts, e-groups, as well as strong lobbying, education and media relations.
"Our (state) housing finance agency is quite strong, and has provided excellent financing, (including) some loans with job-loss protection to maintain the lower to middle rungs of the housing ladder. Our state’s unique affordable housing law continues to stimulate construction of affordable homes for our workforce, seniors and young professionals," he added.
Other New England states also maintained relatively steady membership numbers year-over-year in August, including New Hampshire (-0.5 percent) and Vermont (-1.67 percent).
"Overall, the market has not been as bleak in Vermont. (There are) few foreclosures, (and) a shortage of inventory to start with. The second-home market has certainly been hit hard but the lower and mid-range has remained steady," said Robert Hill, the Vermont Association of Realtors’ executive vice president.
Texas holds steady
As in Massachusetts, the Texas Association of Realtors attributes its comparatively small decrease in membership over the past year (-1.4 percent) to services the association provides, many of which are similar to those offered in the New England state. But the market also matters, the association said.
"In Texas, we’re fortunate to have a relatively stable real estate market. Generally, when the market is up, we tend to be up only slightly. When it’s down, we tend to be down only slightly. As a result, the membership of the Texas Association of Realtors follows the same trends.
Currently, market conditions in Texas look much like they did in 2003 and 2004, which were good years in real estate, and our membership numbers reflect that," said Travis Kessler, the association’s CEO.
The unemployment rate in Texas was 8.2 percent in July, compared with 9.5 percent nationally. Massachusetts also had a comparatively lower unemployment rate in July: 9 percent.
The nation’s island territories had significant changes in their Realtor membership in the past year.
Puerto Rico had the largest decline among all territories and states year-over-year in August: -18.9 percent. Meanwhile, the Virgin Islands saw a more modest 6 percent decrease. And Guam had the largest year-over-year increase among all U.S. territories and states: 6.7 percent.
% Change in Realtor Membership From Peak
|State||Peak Year||Peak Membership||Membership (8/31/10)||% Change|
Source: National Association of Realtors.
Top 10 states with largest drop in Realtor membership (August 2009-August 2010):
1. Georgia: -12.85%
2. Utah: -12.67%
3. South Carolina: -8.38%
4. Colorado: -8.33%
5. Washington: -8.3%
6. New Mexico: -8.24%
7. Nevada: -8.11%
8. Montana: -7.1%
9. Idaho: -6.75%
10. Alabama: -6.21%
Top 10 states with Realtor membership increases or slightest declines (August 2009-August 2010):
1. North Dakota: 1.57%
2. Massachusetts: 0.31%
3. New Hampshire: -0.52%
4. District of Columbia: -0.62%
5. Texas: -1.39%
6. Vermont: -1.67%
7. Kansas: -1.77%
8. Florida: -1.89%
9. California: -1.98%
10. South Dakota: -2.06%
Source: National Association of Realtors