How much did your real estate agent earn last year? Chances are, he or she got a raise — a big one, at least on paper.
In a report that some in the industry believe is an indicator that the housing market is recovering, the National Association of Realtors says that its typical member earned about 25 percent more in 2012 than in 2011, which is only the second gain in the past decade. Unfortunately, every silver lining seems to have its dark cloud: It also cost that NAR member more to operate his or her business last year than it did the year before.
Paul Bishop, the trade group's vice president of research, explained in an edited interview how its membership is faring in the recovery, and how the typical real estate agent increasingly is likely to have gray hair.
Q: What did you find out about your members in NAR's annual survey?
A: There are about 2million real estate licensees in the country, and about half are NAR members. The annual income numbers confirmed what we had suspected, in terms of more sales and higher home prices.
The median gross income of a Realtor rose to $43,500 in 2012, from $34,900 in 2011. Those numbers are consistent with the broader picture. There are a couple of ways to look at the increase in income. Certainly, with an increase in prices, every transaction is at a higher value than it would have been a year ago.
In real estate, every transaction has two sides, buyer and seller. And last year, among our members, the number of sides (that a member handled) increased from 10 to 12. So we're seeing more transactions, at a higher price level.
Our membership peaked in 2006, and for the last several years, it has remained steady, at 1 million. So you have the same number of members, with more transactions.
We also found, though, that many of our members have diversified into related services, such as lending, title and escrow services, and that's going to contribute to the income numbers.
And though there was an $8,600 increase in gross income, their take-home pay, after taxes and expenses, was just $4,200 more than it was in 2011. Their business costs increased from $4,520 to $4,900.
Q: I would have thought that the downturn in residential real estate would have meant a corresponding decline in the number of people in the business. But that's apparently stayed steady. Is that a surprise?
A: When times are good, a lot of people are interested in real estate, generally, and the numbers increase. We saw that from 2003 through 2006 (parallel to the period of the housing boom).
But the other side of that is, when the economy is more fragile or we're in a recession or there's economic uncertainty, real estate also tends to draw people in because it may be a good option for people who are concerned about their own financial well-being. They may regard real estate as a way to earn more income or as a fallback if their primary income falls away.
So we can track the top line, the gross numbers, very well, but there's a lot of activity under that number — a lot of people entering and exiting the business.
Q: I was a little surprised to see that within your membership, 94 percent report that their firms have a Web presence. I suppose that 94 percent of most anything else would technically be considered high, but 6 percent not having a Web presence seems like an awful lot of business people who aren't online. It's almost like saying you don't have a telephone.
A: Yes, you would imagine that it would be higher, but at the same time, when you talk with Realtors, there are a number who do nothing but referral (work) from past clients and past customers.
They're in a position where they don't need a visible presence online. They have a safe stream of referrals or are well enough known to focus on a type of property or location, and from their perspective there's no need for a Web presence.
More of the members had individual websites in 2012 than in 2011, 64 percent versus 62 percent. And there's active use of social media — 56 percent said they were actively using it in one form or another. But you can really see an age breakdown in this: For example, among those agents who are 29 or under, 79 percent said it was an active part of their business.
Q: But speaking of age, your report suggests that a significant segment of your membership isn't under 29. Isn't there a fair amount of discussion these days about the graying of the real estate industry and how it doesn't seem to attract a youthful component?
A: The survey shows the typical NAR member is 57 — up a year from last year's survey. Only 2 percent of all Realtor members are under 30, and another 4 percent are 30 to 34. Twenty-five percent are 65 or over.
The other aspect of real estate is that it's often a second or even third career for many people, and there's value in having people come in who have different types of experience. But yes, it's been a topic of discussion, how the industry in general needs to attract more people under 34.
Given the nature of how real estate agents are typically compensated — you don't get paid until the transaction closes — and when you don't have a book of business and interaction with clients, it takes a while to develop an income that's satisfactory. If you're 29 or 30, it's a hard transition to make. That's one of the things that's holding back people right out of college, as opposed to corporate real estate, where there might be a different compensation structure.