How many agents is too many?

inonada

Well-known member
Sorry, left out link to BLS numbers on median earnings:

 

inonada

Well-known member
Let's compare average income per NAR agent in 2020-ish, per my estimate:

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

Against the same circa 1980-ish (I had to estimate homes sold, which I did according to population change):

($80K/home * 3.33M homes * 3%) / 1.5M brokers = $10.5K/broker​

Comparing to nominal GDP per capita:


The ratios in 1980 vs. 2020 are:
  • 1980: $10.5K/$12.5K = 0.85
  • 2020: $40K/$63.5K = 0.63
Or if we adjust the 1980 numbers by CPI:
  • 1980: $35K (brokers) vs. $41K (GDP per capita)
  • 2020: $40K (brokers) vs. $63.5K (GDP per capita)
So real productivity per capita across the population has increased more (45%) than real estate brokers (15%).

It seems all the advances that would make brokers more efficient have been offset by a rush of new brokers, making the industry as a whole less efficient than it "should" be.
 

inonada

Well-known member
Brokers are hardly the only industry to have not seen any wage growth for the past few decades. Airline pilots are about the same, staying flat in inflation-adjusted 1970-2010:


I think that was driven by the 1978 deregulation. The degrading wages drove to a net pilot shortage over the decades -- who wants to start a career in an industry where you do all the work but don't see prospects of real income growth? And as a result, wages grew over 2010-2020 (35% in real terms, by my estimate):

 

inonada

Well-known member
The dynamics of real estate brokers are very different than airline pilots. Brokers have zero barriers to entry/exit, pilots have huge barriers (hard to be trained, once you have are trained and have the high pay there is little else you can do that would pay similarly). Brokers can exist in an "essentially unemployed" state, pilots cannot.

Will the "race to the bottom" for the broker industry ever end? The full-time employment part, probably. Eventually, minimum wage will catch up with full-time but no-business brokers. And fee pressure may accelerate that. So eventually, they move on.

However, the essentially-unemployed component could make the race to the bottom perpetual. NAR membership only costs 40 cents per day, and there are ~10M adults in the US that are unemployed (but looking for work) and ~100M adults not in the labor force. That's a small price to have or retain a job you once had "on paper".
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff 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.
great data, thx Ionada for compiling and sharing.
 
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