No more easy money

From the Asbury Park Press:
Fallout

It’s not easy being a real estate agent anymore.

In the heady days of the market in 2004 and 2005, houses were selling like hot cakes as prices rocketed up.

That’s no longer the case. As home prices showed signs of peaking last year, buyers sensed a change in the market and no longer were willing to pay the asking prices on many properties. At first, homeowners were reluctant to drop their prices. The result? Real estate sales stalled in 2006.

And just as sellers and buyers have been struggling to adjust to changing market conditions, so has the real estate industry.

Since the industry’s revenue comes from commissions, when sales slow down, so does its revenue. To cope, agencies are employing a number of strategies. Some are cutting expenses, while others are actually increasing their marketing and spending more on training. Some agencies are diversifying into other areas of business such as insurance. Individually, some agents have decided to take some time off and are putting their real estate licenses on hold.

“The agents that are buckling down and are really going to focus on getting listings priced well and working with motivated buyers . . . are still doing well,” said Ric Martel, general sales manager at Prudential Zack Shore Properties.

“(But) people who were in the business for the easy sale or the quick sale, or they were going to try out the real estate business because they felt it was a great market, they have not done well at all.”

How big of a hit has the market taken?

Homes sales in Monmouth County through the end of November dropped by 18 percent to 7,406 compared with the same period a year earlier, according to Jeffrey G. Otteau, president of the Otteau Valuation Group in East Brunswick. Sales in Ocean County during the same period fell by 20 percent to 7,352 during the same period.
…
Real estate is big business in Monmouth and Ocean counties, with 14,701 licensed agents, according to the state Department of Banking and Insurance. And while it’s hard to track the number of agents who are leaving the business because of the slow market, anecdotally, brokers and real estate observers say it is happening.

Otteau believes the number of agents will shrink now and into the future.

“Although the market is beginning to recover, we don’t see it ever getting back to the pace we had in 2004 and 2005,” he said. “With a lower volume of business going forward, that suggests fewer real estate agents.”