The flood of residential real estate agents that entered the business as the housing market surged back to life after the Great Recession is receding.
Drawn to the industry by booming home prices, the prospect of large commissions, and a low barrier to entry, the number of active agent and broker licenses in Los Angeles spiked in 2015 but dropped significantly last year. That drop was the first major decline in five years, as many agents and brokers were likely pushed out by intense competition for limited inventory.
“A lot of agents are sort of attacking the same markets like hyenas,” said Eric Sussman, a lecturer at UCLA’s Ziman Center for Real Estate and a managing member of Clear Capital, a real estate private equity firm. “There are only so many mouths you can feed with so many transactions. The supply of residential properties in a market like Los Angeles is relatively fixed. You don’t see a gazillion new homes or condos being built. And you have people here already to sell that supply. It’s a zero-sum game.”
There were 27,420 active broker licenses in Los Angeles County last year, a 15.4 percent decline from a year earlier. That compares with a 15 percent increase in 2015 to about 32,400 licenses, according to data from the California Bureau of Real Estate. The number of active agent licenses dropped by 11.5 percent last year to 75,720. That followed an 18 percent year-over-year rise in 2015.
Aspiring agents have been called to the promise of big bucks due to the astronomic growth in home values over the last half-decade. The median home price in the county has risen by 86 percent since 2012 to $540,000 this year, according to Redfin data.
Tami Pardee, chief executive of Venice-based brokerage Halton Pardee + Partners, has noticed the pullback in new agents. Pardee said she has been receiving fewer calls from rookie agents looking to show buyers homes her brokerage has listed.
“They call you with the weirdest questions because they don’t know what they’re supposed to be asking. It’s exhausting,” she said.
Pardee said a spike followed by a decrease in the number of agents in town is typical.
“In ’06 and ’05, oh, my God. There were a zillion people coming in,” she said. “Everyone I met got their real estate license.”
The decline in the number of agents has accompanied a dip in demand for high-end homes in the county in the last couple of years, with the growth in sales volume year to year for homes selling for more than $3 million slowing. Last year saw just a 3 percent sales-volume increase in that category compared with a 38 percent jump in 2015, according to the California Association of Realtors.
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