Tens of thousands of real estate agents are giving up on the profession, thinning their pandemic-era ranks as the housing market comes back to earth.
Why it matters: Realtors are on the ground floor of the real estate market, making them well positioned to notice when it’s cooling off, thus providing less opportunity to cash in.
By the numbers: More than 60,000 have exited the sector over the last six months, according to data from the National Association of Realtors, analyzed by Reventure Consulting.
- There were about 1.537 million in April, down from the all-time high of 1.6 million in October.
The big picture: Americans embraced home-selling jobs as soon as the pandemic began, powered by soaring prices and sales.
- The number of Realtors went from 1.372 million in March 2020 to 1.463 million in March 2021, and 1.531 million in March 2022.
- “Historically, anytime home prices really go up, Realtors flood into the market,” Reventure Consulting CEO Nick Gerli tells Axios. “Lots of people view it as a way to make money — and often a quick buck — off the housing boom.”
But, but, but: Sales of existing single-family homes fell 42% from their peak of 6.66 million in January 2021 to 3.85 million in April 2023.
- Average annualized Realtor commissions hit a high of $84,355 in January 2021, but fell to $56,632 in April 2023, Reventure estimated.
- Median prices declined by 4.1%, or $17,603, from April 2022 to April 2023, marking the “biggest drop on record in dollar terms and the largest decline since January 2012 in percentage terms,” Redfin reported
- With 30-year fixed-rate mortgage interest rates briefly topping 7% on average in late 2022, and remaining above 6% in 2023, some prospective buyers have been priced out of the market.
- “Realtors can’t make as much money anymore,” Gerli says. “We’re in the initial stages of Realtors quitting.”
The other side: The number of real estate agents is still near its historical high — and the housing market has remained resilient despite falling sales and prices in certain markets.
- The NAR noted in a statement that the number reached “the highest ever recorded” in late 2022, but the organization did not address the decline in recent months.
- NAR added that it does not track Realtor commissions, but said, “Compensation is always negotiable and consumers are encouraged to talk to their broker to understand and agree upon how they expect to be compensated.”
The bottom line: As the housing market booms, so does the real estate profession — and the reverse is also true.