BAM Key Details:
- Layoffs of real estate professionals are already happening from the industry’s largest companies.
- Agents are also leaving in greater numbers.
- NAR’s historical data shows this is not a new trend.
Real estate agents across the U.S. are feeling the effects of the Federal Reserve’s attempts to get inflation under control. The declines in home sales and buyer traffic has made it harder for agents to attract new clients—and many are leaving the industry.
Meanwhile, others in the industry are being laid off. And for them, it sure feels like winter has already come.
Here’s what you need to know.
Layoffs of real estate professionals are already happening
Seen from a safe distance, the layoffs happening right now aren’t all that surprising. But whether you see it coming for you or not, there isn’t much that can soften the blow of being told you no longer have a place in the company you’ve worked so hard for.
In the real estate industry:— Chris Smith (@Chris_Smth) November 7, 2022
33 companies have laid off at least 50 people
24 companies have laid off at least 100 people
13 companies have laid off at least 250 people
4 companies have laid off at least 1,000 people
Winter isn’t coming. Winter is here.
It shows that the largest companies in the industry are preparing for the downtown. And real estate agents are doing the same.
Agents are also LEAVING the industry
Patrick Bet-David of Valuetainment learned from a recent conversation that the mortgage refi business is down 90%.
He referenced a Yahoo Finance article that quotes an employee at the Greater Las Vegas Association of Realtors. They were averaging about 300 new members every month. This month, though, she estimated 120.
Meanwhile, she’s been processing about 30 agent withdrawals a day, which means, on a daily basis, 30 real estate agents in Las Vegas alone are leaving the industry.
Las Vegas is one of the leading indicators for home price action in the U.S. housing market, just as we saw in 2008 and the recent buying frenzy. And right now, agents in Las Vegas are feeling the pain, with mortgage purchase applications down 38% compared to a year ago.
And, just as in other U.S. metros, agents who went into real estate thinking it was an easy way to make some serious money are now faced with the harsh reality that markets change. It’s what they do. And the market we have now is putting real estate agents everywhere to the test.
Not everyone will stick around to see the next shift.
This is not a new thing for the real estate industry
Whenever we’re faced with a market like today’s, it helps to take a step back to see how the market has behaved in years (and decades) past.
If we look back at the numbers of local associations and members over the years, thanks to NAR’s Historic Report, we notice the following:
- From 1980 to 1981, the number of association members dropped by 66,283; it dropped another 77,587 from ‘81 to ‘82 before it started rising again,
- The decline from 2007 through 2012 brings the number of members down from 1,265,367 to 999,824 – a difference of 265,543 members.
Since then, the numbers have continued to grow. But that could change as difficult market conditions drive out the agents who joined, thinking it was an easy way to get rich.
What we’re seeing now is likely to continue
We’re not even experiencing the full force of the storm hitting the U.S. economy. We’re definitely experiencing rough winds. But we’re not yet seeing the unemployment numbers projected; those will likely hit us in the coming year.
NAR’s chief economist, Lawrence Yun, has suggested mortgage rates could jump to a new threshold of 8.5%. And if we look at the recent history of mortgage rates, the rate for a 30-year fixed mortgage was above 10% for twelve straight years—from 1979 to 1990.
It doesn’t mean we’ll get to 10% mortgage rates this year or next, but knowing the history of mortgage rates does help put today’s rate in perspective.
It also helps to know that the majority of housing experts do not expect a crash. That doesn’t mean it won’t get rough. For many real estate professionals out there, it already is.
The question isn’t so much whether you have what it takes to shine as a real estate agent but what you’ll learn from this market and how you’ll use that to your advantage—and to help the people you serve.