The numbers speak of the distress in the property market.
The downturn in the economy has forced a lot of real estate companies to scale back their operations as an effect of the recessionary economy of the country. The California Department of Real Estate, which relies on real estate professionals’ licensing fees, renewal fees and examination costs, has announced an increase in its fees. Not a single penny from the state budget goes to the office’s operations so there’s no other immediate choice to sustain their activities but the rise in fees. Another setback that it faces is the declining number of people applying for a license. In a report by RealtyTimes.com, Bob Hunt writes, “There are not as many people seeking real estate licenses as there were during the past few years. In the last half of 2008, the department administered 11,626 real estate salesperson exams. That is down 80% from the 57,518 exams that were given during the same period the year before. Broker exams were down 42% from the previous year. During the same half-year period, 6,810 new salesperson licenses were issued, a 67% decrease from the 20,567 issued in the second half of 2007. The drastic drop in license applications has taken a serious toll on the department’s financial health. In the past twelve months, reserves have decreased from $45 million to $30 million, a 33% drop. Were losses to continue at this rate, in two years the DRE would be insolvent.”
Aside from the slowdown in sales, we’ve observed some interesting facts about California’s real estate professionals.
FSBOs are increasing in popularity because of the associated costs with broker-assisted sales.
California’s real estate licenses already began dropping in November 2007 as reported by the DRE. This trend has remained consistent since the crash after a six and a half year increase. Recovery won’t be as easy the 2002 pick up.
The number of total residential constructions continues to fall. Naturally, this pulls down the confidence of real estate professionals to close a deal.
Real estate jobs are also affected by seasonal booms and busts. Since the entire labor force is on a downhill, the local industry’s heavy hit is reflected in the latest findings of the DRE.
Independent contractors are not included in the DRE’s count. This underestimates the real condition of the real estate labor market.
The drop in examinees for the real estate licensure occurred can be attributed to the influence of more agents and brokers going out of business or taking part-time assignments instead.