Mary Pope-Handy, a Realtor for Intero Real Estate Services in California’s Silicon Valley region, watched as droves of jobless techies chased a real estate career after the dot-com bubble hit bottom. In her market, she said, there are five times more agents than for-sale properties.
“People have been flooding into the market because they think it’s easy money, but even in a more normal market about half of the agents desert their new profession within 18 months,” said Pope-Handy, who joined the industry 12 years ago.
While the number of real estate agents has set records over the past several years as the national housing boom has continued to blossom, this population of real estate agents will likely shrink as the real estate market peaks and settles, say real estate industry groups and experts.
Housing cycles, as history shows, roughly correlate to employment cycles for real estate professionals. The National Association of Realtors, which has about 1.19 million members, has seen its membership grow every year for the past nine years. From 1997 to June 2005, the association added 472,750 members, a gain of 66 percent. The real estate industry has prospered during this period, with rapid, unprecedented growth in home prices and residential sales.
Association membership also has reflected dry spells in the housing market. From 1989 to 1997, for example, association membership dropped about 15 percent, from 822,935 members to 716,078 members. And the association lost about 144,000 members, or 23.2 percent of its membership, from 1981-83. The national housing market similarly slumped during those phases.
While the number of Realtors and real estate licensees continues to grow, this latest upward trend is bound to come down, too, say real estate experts.
The California Association of Realtors expects its membership to grow about 14.8 percent this year, reaching 185,180 by yearend, and “membership should peak either next year or in 2007, if history is any guide,” according to Amanda B. Hopkins, an association spokeswoman.
Membership historically has peaked two years after the number of annual sales reaches a peak, she stated. Last year the association announced a record sales year, and this year the association expects to top the 2004 sales total by 1.4 percent. Membership in the state association, as a share of all real estate licensees, hit a record high of 41 percent in 1989. A period of membership decreases followed that year up until 1996, and since 1996 membership has increased every year to date, and association membership as a share of all real estate licensees has reached a current total of 38.4 percent.
Tom Pool, a spokesman for the California Department of Real Estate, said the number of real estate licensees in the state continues to grow. “I haven’t seen any slowing yet,” he said. In May, the total number of real estate licensees in the state reached 443,378, up 26 percent since May 2003 and 14 percent since May 2004. The Association of Real Estate License Law officials, meanwhile, has reported that the total number of U.S. real estate licensees reached 2.5 million in 2004, up from 2.4 million in 2003 and 2.1 million in 2000.
Some Multiple Listing Services are preparing for a shrinkage in subscribers in anticipation of changing market conditions. REInfoLink, an association-owned regional MLS that serves a five-county area in California’s Silicon Valley, is preparing for a drop in subscriptions in 2007 and 2008, for example.
James Harrison, who joined REInfoLink this year as president and CEO, said, “Everyone is trying to predict when the market is going to slow down. We’re still anticipating we’re going to grow by a net of 100 (subscribers) a month next year.”
But real estate brokers have been through economic cycles before, Harrison said, and the MLS has taken a conservative approach to its subscription forecast. “We charted different scenarios and what impact it may have on subscriptions,” he said. “In 2007 potentially we could see a decline in subscribers.”
The MLS now has about 20,000 subscribers, Harrison said, and there are typically from 7,000 to 10,000 active property listings in the MLS database.
Mark Burns, a Realtor for Coldwell Banker Cupertino who works in the Silicon Valley region, said he expects to see fewer Realtors in the local market in 2007. “I’ve seen the numbers (of agents) grow and grow even though it is much more competitive than in years past,” said Burns, a 20-year industry veteran.
Modern agents working in his market seem to have professional backgrounds and a high level of education “and they just won’t quit,” he said. “They have much longer staying power regardless of marginal success or total failure. They suffer as all new agents do but they don’t make the decision to try something else as quickly as others have in the past.”
W. Gene Hunt, a Realtor for The William Jefferies Co. in San Jose, Calif., said he, too, expects fewer agents in 2007. “There has been tremendous growth in the number of agents in both real estate and financing every time the market heats up.”
While the still-hot real estate market has attracted many new agents, Hunt said that could change if the market is flooded with homes from sellers who are trying to cash in before the boom ends. “Most homes (here) are on the market a short time – a week or two at most. Next year I expect the number of homes to increase to normal levels, and after that it’s anyone’s guess.”
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