Tough housing market slams Realtor income
The median income of Realtors dropped almost 35% over the last eight years, according to new data from the National Association of Realtors, as home sales across the nation struggle to gain footing. The median income for real estate professionals in the NAR network last year was $34,100, a 4.5% decline from 2009. Realtor income dropped every year since 2002 when the peak salary hit $52,200 and salaries are down 34.7% between then and 2010. Paul Bishop, vice president of research at NAR, told HousingWire that Realtor income is highly dependent on market conditions, meaning when the industry tanks, so will a real estate professional's salary. "The biggest factor in what we're seeing with Realtor income really depends on what were seeing in the overall market," Bishop said. "How many transactions and what the properties are selling for will determine what professionals are making." The majority of Realtors earn money through commission, with 68% compensated through a split commission agreement, 18% receiving the total commission and 3% earning commission plus a share of profit, according to NAR data. About 11% reported being compensated in some other manner. Home sales in 2011 are rising comparative to the last couple of years. NAR reported seasonally adjusted sales rose to an annual rate of 5.14 million in the first quarter, up 8.3% from the prior quarter. However, compared to historical norms, sales are tanking. In March 2007, sales peaked at an annualized rate more than 6 million properties. Home prices fell on an annual basis in the first quarter, as well, driven by a large amount of distressed property sales. The median sale price during the first three months of 2011 was $158,700, according to NAR, down nearly 5% from a year earlier. Real estate agents in the Century 21 network complained in a recent survey that lending standards are preventing them from making sales. Approximately 89% of respondents had at least one customer in the past six months experience some level of difficulty in qualifying for a mortgage, while 87% said credit score and related financial qualification requirements were the biggest obstacles. Roughly 93% of real estate agents believe they could be closing more sales if their customers had a "quality subprime mortgage alternative." On average, agents said they feel they could have 32% more transaction volume with such a mortgage product available. Bishop said transaction volume is unlikely to offset a drop in income caused by declining home prices, however. An agent could close a similar number of deals for several years straight, and still attain a progressively lower salary, he said. "We expect an environment in which more transactions will take place, but there will not be a lot of growth in home prices," Bishop said. "We are not anticipating a big jump in Realtor income going forward." A difficult work environment and unstable salaries are driving potential job candidates out of the market. NAR had less than 1.1 million members in 2010, a 21.3% decline from the peak in 2006. The average age of a NAR member is 56, the organization said. "We have seen fewer real estate professionals coming into the business, and that's mostly attributable to the fact it's a tough time in real estate," Bishop said. "Plus it really takes three or four years to build your business." NAR said only 6% of its members claim real estate as their first career. NAR members in the business for two years or less earn a median $8,900 per year, the organization said. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.