Thousands of New Agents Could Signal Housing Top
It has been 150 years since the last California gold rush, unless you count the tens of thousands of people rushing to get their real estate license.
The crush of new real estate agents may themselves be a signal of a true market top in housing. Thousands of people, hoping the market has not peaked, are trying to hitch a ride on the latest gravy train.
22,000 Californians, many of whom are self proclaimed start-up and tech junkies, took the real estate exam just last month. And, while top producers can make $1 million or more, 75% of agents do one or fewer transactions per year. The state now has 437,000 real estate agents competing for its 680,000 listings.
The number of people jumping on the real estate, career bandwagon isn’t limited to California, either. The National Association of Realtors has seen a 50% jump in its membership since 2002. It now has 1.4 million members.
Is an agent boom a signal of a housing top? As a contrarian by nature, it doesn’t bode well. In boom bust cycles, too many people chasing too few goods is an indicator of trouble. The increased volume of sales and an unsustaintable, rapid run- up in pricing is another indicator that it is late in the game. Given the continued strength in the housing market, record-setting sales prices, coupled with the large number of people rushing into real estate, it seems the industry’s success may be its undoing.