July 15, 2022
While many industries underwent uncertainty and disruption in response to the COVID-19 pandemic, residential real estate became a magnet for people hoping to change their fortunes over the past few years.
It’s not hard to understand why working as a real estate agent became so appealing. The housing market took off in 2020, buoyed by low interest rates generating intense buyer demand and home scarcity creating a market that promised rising commissions for agents as the median home sale price climbed by double digits.
New data from the National Association of Realtors backs up just how popular real estate became as a career path. The organization’s growth expanded from 43,920 new members in 2019 to 55,533 in 2020, a 26% annual increase in new membership.
But the real leap forward came last year, when the NAR saw its member ranks grow by 100,876 — good for an 82% increase in the number of people entering the field. By the end of 2021, there were 1.56 million NAR members.
One of the reasons real estate attracted so many newcomers is that a large number of U.S. workers were displaced from their jobs in 2020. There are some hurdles to clear to begin practicing as a real estate agent, but the barriers to entry are relatively low and the job offers a level of personal flexibility that few others do.
The field was especially welcoming to women and people of color over the last two years.
“The real estate industry attracted new entrants who were increasingly more racially diverse and more likely to be women,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “The dynamic nature of real estate encourages varying business models, firm relationships, and business activity.”
The state of the housing market in 2022 is no longer what it was earlier in the pandemic. Global economic pressures driving inflation in the U.S. have compelled the Federal Reserve to raise interest rates, which has made a home mortgage unaffordable for a large group of would-be buyers in the U.S.
It may be true that home prices have not yet slowed down in many U.S. markets, but opportunities to capitalize as a new real estate agent may not be as plentiful for the foreseeable future.
The NAR’s data shows that the median gross income of realtors rose to $54,300 by the end of last year, up from $43,300 in 2020. Those with two or fewer years of experience had a gross median income of just $8,800, up only slightly from $8,500.
It’s certainly true that many people moonlight as real estate agents to earn some additional income next to another job. Others who are unable to work full-time may pursue real estate to contribute to a household in a way that satisfies a tight schedule.
But most of the income gains made in the field during this pandemic period came among established professionals. Among those with 16 or more years of experience, the median gross income rose to $85,000 by the end of 2021 from $75,000 in 2020.
Given the scarcity of homes in the U.S. right now, it’s fitting that three out of five realtors surveyed by NAR said that inventory was the main barrier to clients buying homes. Scarcity limits the potential earnings of many realtors — even if home prices have gone up considerably. What’s held things together for realtors is the presence of such high demand.
With mortgage rates now more than double what they were at the start of the year, there’s reason for some trepidation about entering the field right now. If buyer demand starts to wane and inventory doesn’t increase, there will be fewer clients and still a low number of homes.
Growth in the profession may slow down from the past few years, but it’s still a good time for a person who’s interested in the field to get his or her feet wet. Within a few years, a strong base of experience could position these agents for success when the market forecast becomes more favorable again.