A recent first tuesday poll asked readers whether the number of real estate license renewals was likely to decrease in 2020. According to this poll, 67% of respondents believed more licensees will fail to renew in 2020 than in previous years.
In reality, the number of license renewals has remained unchanged since January.
Intuitively, it makes sense that licensees might hold off on renewing their licenses in a year when home sales volume is down and jobs have plummeted — or in some cases change their career altogether. The coronavirus (COVID-19) pandemic presents an extra level of danger in the real estate industry, where face-to-face interaction is widespread and central to doing business.
The most recent licensee data from the Department of Real Estate (DRE) points to a different reality. Using a year-to-year average, the rate of license renewals as of May 2020 has changed little from the year prior — from 81% renewed salespeople as of May 2019 to 79% as of May 2020.
Broker license renewals have decreased on average from 93% to 92% — barely a drop in the bucket.
In addition, the total numbers of brokers and agents licensed by the DRE has remained steady over the course of the year.
The future of license renewals
Like agent and broker licensing trends, the rate of renewals tends to coincide with California home sales volume. That is, when sales volume is on an upward or downward trajectory, license renewals are likely to follow.
Currently, due to the effects of the COVID-19 pandemic and accompanying economic downturn, home sales volume in California has largely declined, if erratically, and is likely to continue to do so for the remainder of the year.
However, declining sales volume hasn’t had an immediate effect on the number of licensees choosing to renew.
While license renewals may yet decrease in the coming months as the recession deepens, it might be the case that renewal rates remain steady in California. Licensees up for renewal know how much time and effort goes into obtaining a real estate license in the first place, and most aren’t eager to rehash the process in the event they decide to get another license after failing to renew.
Licensees also know that, while the housing market is entering a slump, it will always recover. Although the current circumstances make economic recovery feel far-off, many licensees will want to hold onto their licenses for when the market picks up again. It is, after all, easier to simply renew every four years than to let the hard work of getting a real estate license go to waste.
