Real estate companies like to boast about their agent count. This number helps them grab market share and when the market is good the number of agents always rises. Offices grow with new agents and then either expand or start new offices in hopes of continued growth.
The last time we had this rise was the 2003-2008 time period. During this time the number of agents in the United States hit approximately 1.33 million at its peak according to National Association of Realtors statistics. Then, the market officially crashed in August 2008 and the number of Realtors began to dwindle. In 2012, the number of agents was just under 1 million. Now with the market improved over the last few years that number increased again to 1.23 million in 2016 and expected to be higher at the end of 2017.
We are starting to see a market shift again and where it will end we don’t know yet. There are major differences in this shift and what happened in 2008 though. This time there are no subprime lenders with shady loans so the foreclosure and short sale market is no factor. Actually, there is no major factor that has caused the slowdown except just the peak factor of prices. Mortgage programs are growing and rates are excellent.
In 2008 there were few ways for Realtors to stay in the business if they didn’t have a base built of referral clients. Real estate companies were still basically brick and mortar offices and the concept of virtual offices was just that…a concept. There were a few companies that offered the stay-at-home program but most was still required basic office functions with no true paperless functions and thus costs were passed down to the agent. Now with our current shift in the market, transactions will slow and companies that rely on agent count will begin to decline. Virtual and cloud-based companies have now obtained the technology for agents to do their business effectively. Realtors who believe this is the “wave of the future” and those that just want to keep their license active now have multiple options. I believe agents will move from the big box offices to a more virtual less expensive atmosphere to stay in the business if they are not established. This means the overall agent count will not decline as rapidly as we did in 2008 and 2009 just shift companies.
Teams will also grow rapidly in the next few years. Realtors who have solid businesses can take on those agents that have struggled because of the abundance of the lead sources. Realtor.com and agent sites use to be the main source of internet leads. Now those leads have been spread across many different platforms like Zillow, Trulia, and other lead referral sites.
So, what does this mean to real estate agents overall? Realtors will be able to stay in the business with the shift but transactions per agent will decline. Teams will grow as long as they have the lead sources but also be more part-time roles. This will also lead to a decline in the professionalism of the agent due to lack of broker oversight. How this will change our business in the next five years will be interesting to see.
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