Why this matters: The ebb and flow of real estate licensing reflects changes in the larger economy about the perception of opportunities in real estate. In contrast, successful licensees understand they need to adopt changes into their practice to provide effective services and fees, at each stage in a business cycle.
Fewer licensees and trending down
The number of Californians obtaining their real estate licenses is, as fully expected, trailing off from its pandemic-driven superficial high of 2021.
In the first quarter (Q1) of 2025, 4,000 new real estate agents and 760 new brokers received licenses from the California Department of Real Estate (DRE). Compared to one year earlier, newly-licensed agents declined 31% and newly-licensed individual brokers declined 12%.
Critical to the brokerage industry, 1/3rd of newly-issued broker licenses were sales agents who upgraded to broker. Other individuals issued broker licenses comprised attorneys and experienced individuals from other real-estate-related services who do not need to first practice as a licensed salesperson to obtain a broker license.
A total of 95,300 individual brokers and 307,350 agents held licenses issued by the DRE in March 2025. In comparison to one year earlier, the total number of individual brokers fell by 3,000 individual brokers – a 3% drop; individual agents slipped by over 3,600 – a 1.1% drop in their total.
Boomtime licensing gains from the pandemic year 2021 were expected to peter off and the volume for all sorts of real estate transactions will further decline in 2025-2026. Today’s new licensees face an industry-wide falloff in the need for services as the volume of sales, leasing and mortgage originations continues its steady year-over decline since mid-2022.
The stunning 30% increase in sales prices during the pandemic, fully reported by the various media, swayed prospective agents to become licensed, significantly bumping up growth in the sales agent population from 2020 into 2021.
In contrast, to remain productive and earn fees in a real estate recession, agents shift the focus of their services to adjust to changes in the financial dynamics of the real estate market. The market shift is from one most beneficial for sellers — a recovery — to a market most beneficial for buyers, a recession.
Also, to remain competitive, agents in any market phase need a professional upgrade to broker to attract better quality clients. An upgrade to a broker license is especially valuable as the market pivots fully into the current real estate recession. Even global think tank The Conference Board, which officially declares recessions, says the moment is coming soon.
The pace of active agents upgrading their licensing status as brokers ought to logically pick up the pace as we move deeper into the recession, but it likely won’t. Agents tend to believe in bonding, not education and licensing. Thus, upgrading remained low throughout the past decade’s business cycle.
In sympathetic reaction to the decreasing volume of real estate sales, leasing and mortgage origination — and in turn broker fees – agent licensing and renewals will fall off.
Today’s imbalanced areas of property pricing, inventories for sale or for let, job opportunities, and mortgage rate regimes are the primary culprits in the takedown in transactions. Additionally, ownership of all types of real estate is confounded by the parallel uncertainties of government trade wars increasing building material costs and disruptions of necessary migratory labor force.
Housing, in particular, is hit hard by the present global disruption in commerce. Turnover of owners and tenants has dropped, as a marketplace rigor mortis sets in for prospective buyers which limits transactions.
Further, all property values decline at about the same pace and for the same reasons, in a déjà vu observance this time around the business cycle.
Updated June 23, 2025.
Chart update 6/23/25
| Q1 2025 | Q1 2024 | Q1 2023 | |
| Agent Licenses Issued | 4,000 | 5,700 | 5,800 |
| Broker Licenses Issued | 760 | 870 | 980 |
Aggressive adjustments in the broker and sales agent population
New brokers come from the ranks of current sales agents and other real-estate-related professions. Compare the number of newly-licensed Department of Real Estate (DRE) brokers to the number of newly-licensed DRE sales agents and you find that for every five new agents there is approximately one new broker.
Importantly, newly-licensed sales agents tend to go on to become brokers, varying depending on when during the real estate cycle they become licensed. Agent licensees are most likely to become brokers within four years after first getting their sales agent license. Those who are not active sales agents can still qualify to become brokers by virtue of education or profession.
Read more about the DRE’s requirements to apply for a broker license here: Requirements to Apply for a Real Estate Broker License. Find out how licensing courses work here: DRE approved Broker Licensing Courses.
The current ratio in the population of total sales agents to the total of individual brokers is 3:1. While normalizing, it is a remnant of the abnormally high number of sales agents who flooded the profession in the 2000’s Millennium Boom and 2021 pandemic period. These boomtime growths, for both broker and agent licensees, are now in a steady decline.
The high ratio of 3:1 was unsustainable since artificially high volumes of home sales and rampant speculation by investors riding the momentum in hyper-inflated home prices was the fuel, not user acquisitions. Builders abhor speculators; brokerage offices love them.
Now, in the absence of the market distortions of past property pricing booms, the real estate profession is moving toward a more natural balance between the quantity of brokers and their sales agents.
Expect the issuance of new broker and sales agent licenses to remain low until inventory quantities peak and property sales volume increase, likely around 2028.
Broker licensing has historically been far more stable than sales agent licensing, However, the level of broker licensing is still forecasted by an analysis of the number of new sales agent licenses issued during the prior four years.
Licensing forecasts
How many sales agents are likely to arrive as new licensees in the second half of the 2020 decade? The answer to this question is in the monthly data for the recent influx of new sales agents. Between late 2007 and mid-2012, the number of new sales agents remained steady with a slight general decline, from 1,100 to about 1,000 monthly.
Then, licensing spiked in the first half of 2013, due primarily to excitement caused by the immediately preceding speculator frenzy, which ended a five-year period of doldrums.
With this history showing the duration of a recession’s impact on real estate transactions, anticipate an annual agent license of around 13,000 to 16,000 for the years 2025 through 2029.
Sales agent Population Movement
When transactions in sales, leasing and mortgage originations decline, the new agents entering the business are more likely to be from families that own investment property or have brokerage backgrounds. As new licensees, they enter for far better reasons and a much better likelihood of success than those who merely, to be charitable, hope to get rich quick during boomtime excitement.
firsttuesday forecasts licensing volume — that is, the total number of real estate licensees holding either a DRE-issued sales agent or broker license — will decline further in 2025 and continue until a gradual rise in licensing begins around 2028.
Related articles:
However, the new sales agents who entered after 2007 are of a different mindset and possess different talents than the “hit-and-run” types who entered between 2003 and 2007. This incoming batch is more dedicated and thus more likely to plan ahead for long-term market rises and falls.
Their actions will cause fewer future entrants to drop out after their first four years, a human resources problem the real estate industry has never managed to control. Many will be from families with experienced investment property or brokerage backgrounds, and they will enter for far better reasons, and with much better likelihood of success, than those who merely hope to get rich quick.
The number of sales agents who have upgraded to broker status in 2025 is on track to match previous years; around 810 annually for 2024 and 835 the year prior. These sales agents turned brokers have already found their sea legs in the real estate industry. Thus, most of them will remain actively employed by, or in association with, other brokers during the continuing bumpy plateau recovery.
Economic recoveries
At the end of the long, bumpy road following the Great Recession of 2008, the “go-ahead year” for the California economy was 2018. Then, suddenly within the span of four months at the beginning of 2020, 2.8 million California jobs were lost. These jobs quickly returned due to massive levels of all types of government stimulus. Now, job levels in April 2025 are a mere 238,800 jobs above pre-pandemic levels, a dismal 1.2% total increase in five years.
Employment growth has tapered off and become flat at the start of 2025. As a result, the demand for housing among “employed homebuyers” has normalized due to caution about job opportunities in the near future. Buyer demand continues to decline in 2025, just as the summer buying season took hold to diminish the bounce in sales volume. Further, expect no increase in residential construction starts until building costs are predictable and buyer demand is ascertainable.
Related articles:
Home sales volume picks up in earnest when:
- inventory of property for sale returns to a 9-to-12-month supply based on monthly closings;
- real estate sales volume and prices stabilize and begin to rise for a period of around 18 months; and
- residential construction increases.
No urgency exists for expanded real estate licensing and renewals until a pick-up in buyer demand for housing is reflected by annual increases in construction starts.
The drama of these end-of-the-decade shifts is quickly observed by real estate professionals. After all, an increase in licensees only reflects what is by that point already obvious by the increased:
- sales volume for all types of property;
- sales prices roughly nine months later; and
- property prices at a pace exceeding the rate of consumer inflation.
Once the number of annual home sales begins to rise at a steady and sustainable rate – an 18-month period – sales agent licensing volume, like home pricing, responds by rising.
Trackbacks/Pingbacks