2018 State of the Industry – California Real Estate Industry, The REALTOR® Business & Outlook

E.M.B.R.A.C.E – 2018 State of the Industry by CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

1. The REALTOR® Business
With 12 percent of the nation’s population (39.5m out of 325.7m), 10 percent of the nation’s housing stock (14m units out of 136.6m) and, if it were an independent country, the 5th largest economy in the world, the California real estate market and the industries that sustain it are a force to be reckoned with. Historically, it has led the U.S. in cycles, both up and down, and statewide trends are often a harbinger of what to expect nationwide. In the most recent cycle, it was the first to show signs of fissures in the housing market in 2005-2006 and the first to take off with investor all-cash sales in 2008-2009. It was also the first to experience the chronic lack of inventory that is now a structural impediment to sales throughout the country.

2. The Players: Brokers, Agents & Licensees
First, a look at the size of the state’s real estate brokerage industry. As of 2018, there were 419,279 licensees in the state, and of that total, 132,817 (32%) held brokers licenses and 286,462 (68%) held salesperson licenses. Also, in 2018, there are projected to be 205,600 members of the CALIFORNIA ASSOCIATION OF REALTORS®, slightly less than half (48%) of the total licensee population. The discrepancy between the number of licensees and the number of REALTORS® is attributed to a variety of factors: no longer being active in the business, real estate attorneys, appraisers, home inspectors, mortgage loan officers etc. It is estimated that the vast majority of the licensees who are active in the business are also members of organized real estate.

This information allows us to develop a demographic profile of our membership. The statistically “average” REALTOR® is a Baby Boomer at 56.8 years old and 60% female, has 17.6 years of experience, average production of 5 transactions, and works full-time approximately 36 hours per week. And, like the country, the real estate brokerage industry is undergoing a significant demographic shift as Boomer agents continue to work but eye retirement soon. At 57 years, California REALTORS® are 22 years older than the state’s median age of 35 years. But we also know that this age gap will be closing in the years ahead. Twenty percent of the members said that they did not expect to still be in the business in 2021 with retirement by far the most frequently cited reason for leaving. So over the next few years, the old guard will be scaling back, and a new generation of agents and brokers will be taking the lead. One plus is that real estate continues to be an attractive career for newcomers—in 2018 C.A.R. welcomed 25,600 new members.

In the most recent cycle, membership peaked in 2006 with 211,000 California REALTORS®, only to drop to a cyclical low of 160,000 in 2012 as the housing/financial crisis took its toll on the industry. This is a common pattern. As shown on photo above, membership historically lags the market by two years. For example, the market peaked in 1978 with 491,000 sales and membership peaked two years later in 1980 at 148,000 members. A decade later, the market peaked in 1988 with 454,000 sales and membership peaked two years later at 146,000. Both totals are slightly below their decade earlier levels. More recently, this relationship has been tested. The market contracted to a cyclical low of 383,300 in 2013, but membership bottomed in 2012 and gained momentum in subsequent years despite the general plateauing of the market.

3. Outlook: The Future of the CA Real Estate Brokerage Industry
Several conclusions emerge from this overview of the California brokerage industry. One is that we are dealing with an industry that has always been intensely competitive, and the stakes are even higher today. The industry attracts vigorous new participants, many extremely well-funded, all paying a premium for established superstar agents. Wall Street and venture capitalists alike view the industry as ripe for innovation and investment. One thing is clear—in the years ahead we will see unprecedented change and innovation as newcomers redefine the business, millennials and Gen Z become homebuyers, and Boomers exit the stage.

Full report is also available online.
Please visit www.car.org to view or download

 

 

By |2018-11-27T11:33:14+00:00November 27th, 2018|Real Estate Career|
Keller Williams La Quinta Real Estate School offers both the Pre-Licensing Courses and Prep Course needed for you to obtain your real estate license in California. Complete your required licensing courses with the largest Real Estate Company in the United States and the #1 Real Estate Training Organization in the world as rated by Training Magazine.

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