How many agents is too many?

David Goldsmith

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When I first got my license in 1986 I was competing with around 1,500 agents in my local area. Now it seems like there are 50,000 agents competing for every listing. As far ask I can tell on average agents in NYC do half a deal each year.

According to this article the number of agents continues to increase. At what point do we need "Broker Season"?

"Number of new agents soars past pre-pandemic levels
912 new agents entered NYC markets in May"
 

inonada

Well-known member
I was wondering what dollar volume was back then, compared to now, and ran across this gem of a quote from Halstead:

Interest rates are low, about 10 3/4, and the dollar has changed relative to other currencies, so we’re seeing a lot of foreign money coming into the apartment market. There’s a tremendous pent-up demand.

Some things never change…

 

inonada

Well-known member
The reference to Trump Tower also made me interested in finding an example of 1983 => present price trajectory. This is one I found. Originally sold for $525K in 1983, then $1150K in 2020. Underperformed CPI by $200K. That’s quite a feat in an environment where interest rates dropped from double-digits to under 3%.


 

inonada

Well-known member
Another on 1986 => 2021: $876K to $1800K. CPI would have been $2134K.



 

inonada

Well-known member
David, what is your estimate of dollar volume in 1986 vs now? I never did track it down as I went down a different rabbit hole…
 

David Goldsmith

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I don't remember total dollar volume being reported anywhere back then. I'm not sure it could have been. Coop sales weren't reported at all, there was no "listing system," the market reports issued by Brokerage houses only covered their own deals, and even sales prices weren't directly recorded (although they could be imputed by looking at the tax stamps on deeds).

What I can say is that when I started at Belmarc Realty in 1986 it was fairly typical for first year agents to do between 6 and 12 deals as opposed to "Most new agents only complete one or two transactions in a year, Gilbukh said, and some don’t make any" quoted in the article from the OP.
 

David Goldsmith

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One change I have definitely noticed:
There used to be quite a number of buildings which had an agent or two who were known for doing the bulk of sales in that building. By and large these agents had fairly encyclopedic knowledge of the buildings (which can be very important in some Coops, and certainly never hurts). Then with the explosion of agents that eroded and many of those agents heard a lot of "I know I should give you the listing but my sister-in-law/best friend's cousin/boss's daughter/etc just started working for (insert name of large brokerage here). I personally experienced showing these listings and being surprised by agents not having some fairly basic information about the building they had taken an exclusive in. Instead they had very nice pictures of themselves living their best lives on well curated social media accounts.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
When I first got my license in 1986 I was competing with around 1,500 agents in my local area. Now it seems like there are 50,000 agents competing for every listing. As far ask I can tell on average agents in NYC do half a deal each year.

According to this article the number of agents continues to increase. At what point do we need "Broker Season"?

"Number of new agents soars past pre-pandemic levels
912 new agents entered NYC markets in May"
I feel like whenever we have a deflationary hit to economy, fed looks to housing to bring it back...and those that cant find immediate work, perhaps become an agent to make things work, dunno. But I expect this # to only rise with time
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
I was wondering what dollar volume was back then, compared to now, and ran across this gem of a quote from Halstead:

Interest rates are low, about 10 3/4, and the dollar has changed relative to other currencies, so we’re seeing a lot of foreign money coming into the apartment market. There’s a tremendous pent-up demand.

Some things never change…

I have this chart for Man Contract Signed $ vol, but only to 2004 -- 1625582726735.png
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member

David Goldsmith

All Powerful Moderator
Staff member
Not now, sounds plausible for 1986 -- Encyclopedia Goldsmith, what do you say?
Yes. Prior to 1986 the market was probably >90% Coops (maybe >95%). Today much closer to 50/50 and if you count New Development shadow inventory availability is probably closer to 75% condo.

BTW when I wrote my response in post #7 I hadn't read the article in post #3 but looking at it now I find interesting similarities between the statements about the market in 1986 and some of what is being said today especially considering what happened in the 5 years following that article.

PS For those who are going to be tempted to do some kind of search for condominiums built before 1986 remember it's the conversion date that counts not the date the building's foundation got poured (both in terms of rental buildings converting to condominium, which was close to zero before the 4 Bing & Bing simultaneous conversions at 59, 299, and 302 West 12th Street plus 45 Christopher, as well as many gut renovations which are essentially new buildings but still usually list their date of construction as when the shell was erected to snatch the "Prewar" moniker).
 

inonada

Well-known member
Thanks, David.

I was surprised / impressed that realtor.com had the 1986 price of the condo transaction recorded. I guess you can reverse it from the tax filing, but perhaps they acquired a record otherwise.
 

David Goldsmith

All Powerful Moderator
Staff member
I feel like whenever we have a deflationary hit to economy, fed looks to housing to bring it back...and those that cant find immediate work, perhaps become an agent to make things work, dunno. But I expect this # to only rise with time
Note that while it's really bad here in NYC it's also a nationwide issue. And in this interview there are claims that it's bad for the market:

"It's big. I mean, we're not talking just like a few agents too many. It's gotten to the point where there are more real estate agents than actual houses for sale in the U.S. At any given day, you're likely to see about half a million homes for sale. And there are 1.5 million members of the National Association for Realtors - three times as many."
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Note that while it's really bad here in NYC it's also a nationwide issue. And in this interview there are claims that it's bad for the market:

"It's big. I mean, we're not talking just like a few agents too many. It's gotten to the point where there are more real estate agents than actual houses for sale in the U.S. At any given day, you're likely to see about half a million homes for sale. And there are 1.5 million members of the National Association for Realtors - three times as many."
hmm, i see a regression to the mean soon. If/when natl housing rolls over, that will change but likely at lag of years.
 

inonada

Well-known member
Interesting to compare the NAR membership (1.5M currently):


Against the BLS (U.S. Bureau of Labor Statistics) numbers for full-time brokers (500K currently):


Average sales price is $400K these days:


On ~5M homes across new & existing sales:


Assuming 3% goes to the brokers, then by NAR we get an average of:

($400K/home * 5M homes * 3%) / 1.5M brokers = $40K/broker​

And by BLS, we get an average of:

($400K/home * 5M homes * 3%) / 1.5M brokers = $120K/broker​

Meanwhile, BLS has median earnings at ~$53K/broker.

I think:
  1. The difference in the number of agents per BLS vs. NAR is coming from full-time vs. part-time / effectively-unemployed. Over time, people have become less content to not have some sort of job "on paper".
  2. The difference between median income of $53K/broker (per BLS) and average income of $120K/broker (per my estimate) is coming from the usual reason: income inequality. The distribution of income is not spread linearly across percentile, but skewed towards the highest-income brokers.
 
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