A booming housing market has realtors in a bind
Making a living as a realtor, which has never been easy, is becoming increasingly difficult. A record numbers of them are scrambling to broker a dwindling number of available properties in a hot market as housing prices continue to rebound from recession-era lows.
Membership in the National Association of Realtors topped 1.3 million in 2017, its highest level since the real estate market bubble burst a decade ago (the association's members are called realtors). At the same time, however, the supply of homes for sale has contracted for more than two years as millennials, now the largest generation, enter their prime home-buying years. According to real estate brokerage firm Redfin, 607,836 homes were for sale in February, down from 754,160 in September 2017.
Not surprisingly, tight supplies are pushing up prices.
Real median home prices surged 29 percent between 2000 and 2016 and remain on a tear. Data from Redfin shows median home prices were $286,000 in February compared with $263,000 in the year-earlier period. As a result, even veteran realtors like Eric Billetta of Coldwell Banker face increased competition to land every sale when multiple offers are commonplace.
"A lot of realtors jumped out when that bubble burst," said Billetta, who works in the Philadelphia suburbs. "You're seeing a lot of younger agents coming in. You're seeing a lot more part-timers coming into the business and take business from you."
One of those new faces is Daniel Goldstein, who transitioned to real estate from the media several years ago. He understands the lengths realtors go through to land a sale because he has experienced it himself: His mother regularly receives unsolicited pitches from realtors interested in selling her house in California.
"She's very happy where she is," said Goldstein of Re/Max Town Center in Potomac, Maryland, outside of Washington, D.C. "She's using equity from her house to convert some of the space into a rental unit. … It's my first real estate development deal."
Nationally, the inventory of homes on the market is at about a three-month supply, less than half the seven months worth in a typical healthy market, according to Boomer Foster, president of Long & Foster, the nation's fourth-largest real estate brokerage. In many hot local markets, houses are on and off the market rapidly. The median number of days nationally is now 29, according to Redfin. In Seattle, that number is nine.
One reason for the boon in realtors is the profession's low barrier to entry, requiring the passage of a state license to become a real estate agent at the minimum age of 18.
Demand for real estate license exams at the for-profit Hondros School of Business more than doubled between 2012 and 2017, forcing the school to add more locations, additional instructors and an online program, according to Marketplace.
The Bureau of Labor Statistics says the median salary for real estate brokers in 2016 was $56,970, and for agents it was $44,090. The top 10 percent earned more than $112,570.
Like everything else, however, the real estate profession isn't as easy as it looks, especially in the current market, and many newcomers wind up quitting, according to Foster of Long and Foster. He figures 80 percent "wash out" in their first 18 months.
"It's pretty much how it's always been," Foster said. "People look at our industry, and say 'I like looking at houses, and I see how much my real estate agent made,' and they think it's easy. For the true real estate professional, it's not easy -- and they earn every penny they make."