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Does the Industry Have Too Many Agents?   Article Date :10 Apr 2007 Article by Stefan Swanepoel commenting on market in USA. The past six years or so comprised one of the hottest real estate markets on record in which the industry enjoyed tremendous growth. During this period the country experienced a buying frenzy fed by low interest rates, a plate full of new mortgages, bullish customer confidence, low unemployment, strong economic growth and excellent price appreciation. Many economic factors were required to be in place to foster the prolonged real estate boom. The consumers' hunger seemed to have no end but it took more than just an appetite for "bigger and better" to fuel such a run in real estate. The media directed new programming at the housing market from home-repair to fix-and-flip to home-make-over shows. This surge in media coverage only compounded the frenzy. Many were looking for a "get-rich scheme" while others just didn't want to be left behind. Real estate became the new "Internet Craze" where anything containing the words "home or real estate" seemed to be as hot as anything with a dotcom during the late 1990s. According to some, the frenzy will have a hangover affect for the next few years as many if not all of the following adjust and correct themselves: * Too many new agents and brokers * A reduction in number of transactions * A decrease in housing prices * Too many new mortgage brokers * A rise in the number of foreclosures * An increase in mortgage fraud Adjustments on various levels would be a good thing for the industry, but at this time they may be slow in coming, as the industry still has to deal with the morning after affect. Consequentially some speculate that with the abundance of agents and their inability to be profitable in a strong market, let alone a down market, that a large portion of these marginal agents may be tempted to commit fraud. Statistically the average REALTOR® (NAR member) sold fewer transaction sides in 2006 than in 2000. Normal supply and demand would result in halting the influx of new agents, but alas commission income was supplemented by the sharp increase in house prices and this did not happen. Furthermore, the increase in NAR membership even outpaced the increase in new households. Now, with house prices declining, there are too many agents with many of them not even earning a living; they simply survived on inflated prices. So an overall reduction in the number of agents and Realtors is inevitable for 2007 and probably even 2008. It's not that the industry hasn't experienced a shifting housing market or any of these challenges before. But for a great many agents that have never experienced anything other than the most recent feeding frenzy, they are going to be learning them first hand. For the rest who have "been there before," it's a time to reflect on the last time through the cycle and learn from the lessons. Just remember that every down cycle or sideways movement is not the same and this time it's the combination of many factors, including the changing consumer and advancing technology that will probably cause additional restructuring in the real estate brokerage industry. There is always a certain percentage of real estate professionals that want to play in a new market with yesterday's mindset and habits … their prospects for success are always limited. Then there are those that are willing to change and become proactive in the process. They are the ones that will end up on top. Which one are you? ACKNOWLEDGEMENT This is an extract from the 159-page 2007 edition of the Swanepoel TRENDS Report that details the Top 10 trends impacting real estate brokers, agents and REALTOR® Associations. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE