Does it seem like everyone in the neighborhood is getting licensed to sell real estate again?
If that is how you feel, you might not be imagining things. And if you’re in the business, it’s also not your imagination that you’re seeing more people around the office than you did in recent years.
Could it be a sign of problems ahead? After all, in 2006, the flood of new agents was related to a speculative market bubble. Should we be worried that more people are entering the real estate business?
Probably not. AZCentral recently reported that while rising home prices have caused real estate to become a more popular career than it was just a few years ago, the number of real estate agents in Arizona is still well below its highest 2006 levels. It’s also well below the number of agents in business in 2011, at the bottom of the market crash.
According to the Arizona Department of Real Estate, there are currently about 73,500 agents and brokers licensed in Arizona. That’s significantly lower than the 86,000 licensed real estate agents in business during the peak of the last boom cycle in 2006 and about 8 percent below the 80,000 real estate agents who were licensed in Arizona at the bottom of the crash in 2011.
That the number of real estate agents would be rising along with home prices makes sense: people are once again seeing the industry as a potentially lucrative career field.
But why is the number still so much lower than it was at the bottom of the bust?
Here are three possible reasons:
- The highest number of home sales in Arizona occurred during 2005 at the height of the boom, and again in 2011 at the bottom of the bust. During the boom, speculators bought and sold homes at record-breaking levels, while during the bust, investors snapped up homes that were in foreclosure. Since then, fewer homes have been on the market, leading to fewer transactions – and thus, fewer real estate agents.
- Better employment market. One reason agents who came into the business during the bust years was in response to lack of opportunities in other career fields. When the recession ended in 2012, other career fields opened up, leading some agents to leave the industry.
- Licensing changes. Another reasons could be changes in real estate licensing requirements that went into effect in 2010. At the height of the last real estate boom in 2006, agent licenses lasted for 4 years. In 2010, that rule changed to every two years.
This theory clicks with the data provided in a recent ADRE newsletter, which showed that 2011 and 2012 were the lowest years for new licenses, while 2010 and 2011 were the lowest years for renewals. In 2012, however, renewals quintupled. The increase is partly due to improvements in the real estate business and partly due to the 2010 renewals changes increasing the number of agents in need of renewals. Since 2012, the number of active licenses has risen steadily every year but has not reached 2006, or even 2011 levels.
All of it adds up to more – but not too many – people entering and staying in the business. How about you? Have you noticed an increase in the number of agents lately? Drop us a line – we’d love to hear from you.