Nationally today the National Association of Realtors NAR issued some new statistics regarding home sales. (keep in mind that these numbers are a national average, and do not apply across the board!) What the numbers do reveal are trends. Nationally of course home sales are off, but they are off 20.7% from this time last year. Seasonally adjusted, sales of re-sale homes are 4.97 million units in October. a big chunk in the drop was condos which accounted for 9.1%! Why? Because they are glutted!
The problem in many markets are that home sales has dropped in the last few months almost 40% in certain price ranges and areas. Some locals have seen even bigger drops. In the Atlanta area this is compounded by a 300% increase in agents for the last few years..they are all pursuing less deals. In the real world it will mean that many cannot pay thier bills.
In recent weeks in the Atlanta area I know of 10 major real estate offices that closed their doors unexpectedly! You can call it what you want, some may have called it a consolidation of offices, elimination of duplicative efforts, but the reality is that there isn't enough money going around to pay the bills and keep the lights on. Sometimes you cannot help but wonder how many agents survive, pay hospitalization, or car payments. The Atlanta area has about 45000 agents, and last month there were 3500 single family home sales, and 676condo/town home sales throughout the entire area of the MLS. A few years ago we had only about 13000 agents, and about the same number of sales. In my own area of North Fulton county where there are about 15000 agents that reside here...last month we saw 79 sales in area 13, and 107 in Area 14.
I guess it is safe to say, that if you are a buyer or a home seller, it is going to make sense to work with someone that can afford to advertise your home to sell it for you. Home buyers will have to find an agent that is not rushing them to buy a home to pay the agents rent or mortgage. Representation is supposed to place our cleints first!
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I have seen many agents becoming part time agents and taking up other jobs.
Jim - so that means 1 out of every 10 agents has had one side of one transaction this year! Fortunately sales aren't doled out: 1 for you and 1 for you etc.
Good points for buyers and sellers to consider when choosing an agent.
Jim
These are a very good reality check on agents next move stay in the business ro look else where for a job. Those who can budget well can make it in the market others need to find jobs. Our office lost 6 agents because of the market. I can imagine many of the other offices are much the same.
Gary J Rocks It is sad but I am seeing a lot of consolidation. Agents are asking me for referrals which I
do not have to give them, and some friends of mine are personally up against it, or getting out of the business. A lot of new agent are kind of clueless to the events! They smile a lot and say things are great! I guess if you are doing 1 deal a year, it can only get better!
Jim,
Great post! I have also seen many huge offices close their doors here in San Diego. Hundreds of agents out on the street looking for a new place to hang their license. Agents need to be ethical in these slower times. If they can't they need to get out of the business!
Mike Lewis
Hello Jim,
Many office here in Orange County California are closing or cutting way back too. It just clears the way for seasoned professionals!
Jim Crawford, I appreciate your comments and respect your opinion. I would like to mention something that affects me dearly and perhaps this will explain why no one complains about the economy when things are going well.
I would like to reference some stats from a website that caught my eye; the title of which is U.S. underestimates jobs lost to outsourcing, labor experts assert. This article make a point that I feel many of us have ignored.
As a victim of job loss in the Midwest (2X), I joined my spouse (a Realtor since 1990) in the real estate business in 2006. It was tough for me getting started since I was determined to chart my own course and not attach myself to her skirt. However, I have about the same number of years experience since I used to accompany her and helped her build her business. What is my point? We are both full time Realtors in the same household and its has been our sole source of income for 18 months now. Imagine that.
What we are experiencing is a mass exodus of wage earners and we have become a society of consumers, driven by debt, and as we become a global economy, our problems have become 'global' problems. The US economy is not much different than many third-world economies right now, in my opinion.
What does the future hold for us? God only knows. But a better way of governing sure would be welcome. Not just in the US, but worldwide.
People need to get back to work; to become independent and self sufficient and regain some measure of confidence.
Thats my story and I'm sticking to it.
E J Howard, e-PRO I agree with your thoughts, however the sales of homes to unqualified buyers that could not afford to repay these sub-prime loans, and alt-A loans is nothing short of criminal! The bad loans were then repackaged and sold as securities around the world! That is a major criminal event! The layoffs in the financial sector are going to be much greater than the outsourcing ones. Citibank alone is estimated to be over 41000 layoffs.
We stand in the wake of the mess with over a half million homes in foreclosure, and we are still only seeing the tip of the iceberg. Banks that are sitting on worthless loans, and deflated assets are going to fail. I will bet money on it. It isn't magic. Foreclosed homes that are currently for sale with 100% financing in many parts of the country are on the books as being worth much more than they were two years ago when they were sold originally. So a bank says the home is worth 600K, the market says it is worth 400K if it is in good shape, it is really only worth 365K. Now times the one deal by a 100 deals.
That is why the Fed is adding liquidity into the banking system in the last few days. The banks are not worth what they say they are worth! If this was the old days where only a bank made the loans for homes this would be called a "run on the bank!" This is exactly the scenario that took place with Countrywide...that lack of credit is also a lack of confidence that a person, or a corporation has an inability to repay!
Jim,
You numbers for the Atlanta market are stark. The average agent is doing 1 deal a year? I would imagine you will be seeing a mass exodus in the coming year and a more sustainable number of agents in the long term. For a long time the market in North Carolina was unaffected by the slowdown but we have been hit this fall. People wanting to move to NC can't do so because they cannot sell their house where they are moving from. Someone smart told me early on to make sure I saved money when deals closed to get me through slow times. I am glad I listened and didn't buy all the gadgets people have tried to sell me - you know, the ones that are guaranteed to increase your business but don't.
I have had a really slow fall but things seem to be picking up a bit the last couple of weeks for me.
I have seen and heard about many agent in our area who are "retiring" their licenses and going into other jobs. Also a trend of agents that formerly were fairly high producers going to or opening "discount" Brokerages. Makes it all the harder for us full service agents. Now is the time that you need an agent even more and the trend to cut commissions and go with Discount Agents hurts us, but I think it also hurts the client in the long run. I believe that many will find out the hard way that a good agaent is still what you need. As for the agents rushing clients etc to get a paycheck, I understand the inclination(I had a rough Sept and Oct) but the best interests of the client is what I am supposed to keep in mind. I recently advised a client who was looking at closing in Dec that it would be wiser with the details of their situation, to wait for now.Yes, I lost a paycheck but I also keep my integrity and future referrals and goodwill. Budgeting has never been my strong suite, but I am learning! Hahahaha. Hang in there!
Hi, Jim
I have to agree with Vanessa. Our services are needed now more than ever. When the market was going through the roof buyers were a dime a dozen. If an insurmountable problem came up with one buyer there were 11 more right outside the door. Now that things have cooled off quite a bit, it's easy to think of cutting the commission off the top to save money but that is a recipe for disaster. Sellers need us to property position their homes in the market so it will sell and buyers need us to help them navigate the myriad of "buy this house, get a free Prius" offers. Professional representation will never go out of style. Jesse
Jim, I recently listed a home (that went under contract today) and one of the interview questions was: Will you still be in business next year? Thought it was my age (LOL) they were talking about, at first. Then realized the agent before me dropped her license and got a REAL JOB.
I've heard we're going to have at least 6 months to a year of this yet. Hope they are wrong.
Jim- Great post! I always wonder why people just go out and get their real estate license without giving it much thought?!?! In my opinion, someone who got into the business in the last 10 years or are thinking about getting into the business- need to think long and hard.
This is a profession that requires significant education beyond the classes for the license, requires dedication, requires commitment, requires someone with excellent computer & technology skills and it requires a person who is honestly going to put their clients interest above their own interest.