Market and Agent Trends

Two decades ago, across the country, the housing market tanked. Up until this point, housing prices had seen an average and steady increase. Around the turn of the millennium, the market really cranked up and held that way for 5-6 years. Because the market was so good, new agents came in droves.  (See previous post entitled “I Get It”)

Just 11 years ago (1996), there were only 408,000 real estate agents, brokers and appraisers employed full and part time nationwide. Four years later that figure had increased by more than five times to 2.1 Million agents and within a year (2001) there was a further 10% increase in agents to 2.3 Million. In California alone there are nearly half a million agents (that's a mind boggling 1 out of every 52 adults in the state!) Until recently this wasn't an issue because the market was so hot and there was enough business for everyone. We competed for listings, but didn't hold onto them for long because buyers were in abundance.  No more (see previous Market Update post).

In the cyclical way of markets, the up-curve has now swung noticeably down. With more agents competing for a shrinking pie, median income, and their very survival, many will certainly be affected.

A study by the National Association of Realtors said the median income for its members fell to $49,300 in 2004, down 5.6 percent from 2002, blaming the influx of new agents for the decline. In April 2007, the NAR predicted that U.S. home prices will likely drop nationwide by 0.7% from 2006 levels. This is an unprecedented call from a group who has frequently publicized the fact that median home prices haven't declined since the Great Depression. Couple this with the current extreme caution being exercised by lenders which has resulted in a decline in eligible buyers and an increase in foreclosures, both of which are adding to the inventory of houses in an already over-stocked market.

For most agents, then, listings are easy to get, but they're not selling. As a result, the average agent is finding his or her personal listing inventory swelling. This is not a good thing. It means spending more money to sell each listing, which means, in turn, that agent's net income could drop still further.

In average times, 20% of new agents fail within their first year in business, and 80% don't make it to their fifth anniversary. These are becoming below average times, so these statistics will only get worse. The harsh reality is that there is no longer enough business to support all the agents operating in Fredericksburg, TX . Tactics are shifting and many are turning to discounting their commission to find an advantage over the dozens of other agents competing for the same clients.

Agents positioned as desperate, are desperate. The fact of the matter is, however, there is an exclusive subset of agents in Fredericksburg, TX who not only are NOT giving their time, money and pride away, they are charging and GETTING more from both buyers and sellers. Only in the absence of value does price becomes an issue. If you're agent is not showing you value, they should expect to discount their fee.