Can You Have Too Many Real Estate Agents?

My guess is that you can have too much of anything.  The question is do you want to inspire people to join the ranks during down times or during fast times.  It is really one of profitability.

For example, in 2001 the booming housing market encouraged many people to join the Realtor ranks.  It was a real estate sales gold rush of sorts.  Between 2001 and the beginning of 2008 the subscriber count to the MLS in Houston swelled from 14,759 to 25,867, a giant 75% increase.  It far outpaced growth, with the increase in home sales at only 52%.

It is true that the value of homes sold rose 85% since 2001, but that growth, as we are finding out, might be part and parcel of the number or real estate agents competing for business.  There are those real estate experts that claim the competition became so heavy that Realtors were listing homes at whatever price the seller requested in order to score the listing.

The truth of the matter is that this type of hyper activity hurts good real estate agents who try to do a good job and to make a good consistent living at the profession.

With the rapid increase in the number of Realtors, income decreases.  For example, the National Association of Realtors found that Realtor average income actually fell to $47,700 in 2006 from $49,300 in 2004, despite spiking sales prices and an increase in transactions.

Now the ranks of licensed real estate professionals is declining. That was not unexpected.  Many of the statewide organizations budget for substantial declines.  More importantly, fewer people are now joining the ranks for now.  For example, in California, in January, 2007 11,000 people took the licensing exam.  In 2008 it was about 1,300.  And, none of this counts the number of agents that have not left the ranks but are simply not practicing any longer.

A more reasonable number of agents will likely lead to a more stable real estate market with reasonable increase in home values eventually and better and longer lasting income for real estate agents.

My guess is that you can have too much of anything.  The question is do you want to inspire people to join the ranks during down times or during fast times.  It is really one of profitability.

For example, in 2001 the booming housing market encouraged many people to join the Realtor ranks.  It was a real estate sales gold rush of sorts.  Between 2001 and the beginning of 2008 the subscriber count to the MLS in Houston swelled from 14,759 to 25,867, a giant 75% increase.  It far outpaced growth, with the increase in home sales at only 52%.

It is true that the value of homes sold rose 85% since 2001, but that growth, as we are finding out, might be part and parcel of the number or real estate agents competing for business.  There are those real estate experts that claim the competition became so heavy that Realtors were listing homes at whatever price the seller requested in order to score the listing.

The truth of the matter is that this type of hyper activity hurts good real estate agents who try to do a good job and to make a good consistent living at the profession.

With the rapid increase in the number of Realtors, income decreases.  For example, the National Association of Realtors found that Realtor average income actually fell to $47,700 in 2006 from $49,300 in 2004, despite spiking sales prices and an increase in transactions.

Now the ranks of licensed real estate professionals is declining. That was not unexpected.  Many of the statewide organizations budget for substantial declines.  More importantly, fewer people are now joining the ranks for now.  For example, in California, in January, 2007 11,000 people took the licensing exam.  In 2008 it was about 1,300.  And, none of this counts the number of agents that have not left the ranks but are simply not practicing any longer.

A more reasonable number of agents will likely lead to a more stable real estate market with reasonable increase in home values eventually and better and longer lasting income for real estate agents.