New York Magazine had a recent story on the glut of real estate brokers in Manhattan. Like the housing market, there seems to be an endless supply of individuals looking to make their fortune in real estate. Well, it looks like reality is beginning to set in.
Doing the Math (annual):
27,081 brokers in Manhattan
20,000 residential sales per year (2 sides x 10,000 sales)
1.4 brokers for every sale per year.
See a previous post, [Out of Commission](http://matrix.millersamuel.com/?p=94)
This is a national phenomenon.
Since the entry into the brokerage profession is relatively simple, the employment should be more reactive to changes in the real estate market as compared to many other professions. Boom in the housing market = surge in brokers.
I have no stats on it, but I suspect the fallout rate, Darwin’s survival of the fittest should correlate as well. However, the large number of drop outs creates more opportunities to enter the profession.
[The Big Picture also posts this chart](http://bigpicture.typepad.com/comments/2005/09/manufacturing_v.html), which was originally [taken from PIMCO](http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2005/IO+September+2005.htm). It compares the trend of real estate agent hires versus manufacturing jobs. The chart is misleading since the lines don’t really cross at the “X” because the scales are different, but the trend is apparent, real estate or service jobs are increasing and traditional factory jobs are declining as a percentage of the population.
Also taken from the Big Picture, which was taken from Mike Panzer, [this chart relates membership in the NAR as a percentage](http://bigpicture.typepad.com/comments/2005/04/a_bull_market_i.html) of US total population and total labor force. The trend spiked in the late 1970’s and trended downward until the past few years.
I look at this chart very skeptically. I wonder if the NAR became a more effective organization in the mid-1970’s for such a pronounced jump, almost overnight.
With current membership running at 1.1M members, thats pretty significant, anyway you slice it.
It might be interesting to compare number of brokers in the market to actual commission dollars available. This might explain why people are jumping from possibly low paying manufacturing jobs to the real estate industry. Also, even if the “newbie” brokers are on average making less than $50,000 annually, as suggested in the NY Magazine article “The Broker Glut” , the hope of making that one big sale and getting a huge piece of the pie looms tastely!
Your point is valid, but the first chart is just plain stupid.
There’s no X in that chart. The lines do not cross! The creator invented arbitrary and differing y-axes and plotted the lines so that they would cross.
You could invent an equally honest chart for any two trendlines, as long as one was generally increasing and the other was generally decreasing.
How about “number of NBA basketball players” (increased by 50 or so when they added the last batch of expansion teams) and “population of Massachusetts” (decreased by 3800 due to migration).
Clearly, we have a problem when there is an X in the NBA players vs. Mass residents chart!!!
I know you didn’t make the chart, but the original source doesn’t allow comments. And I’m disappointeed that I’ve seen this completely stupid chart on three blogs now!
Quesara, you are absolutely brilliant, thanks for the feedback. The chart is completely stupid, but it illustrates the trend and sure is fun to look at. Thanks for reading.
It is a nice article and comparison between number of brokers and residential sales per year gives an idea about whether to enter in this competiive real estate business or not.