In December 2023, California had 89,225 active real estate brokers, about 1,000 less than one year earlier. Today, the number of active brokers continues to decrease, in search of a bottom since declining from the January 2010 peak at 109,500.Conversely, the number of active sales agents steadily climbed from a 2014 low of 171,100 to a November 2022 peak of 226,300. As of June 2024, active agent numbers decreased slightly to 221,600.firsttuesday forecasts a dramatic fall back in sales agent licensing in 2024-2026, the result of reduced sales activity and branch office reduction by employing brokers. Watch for the next big wave of licensees to arrive — first with the return of speculators, then end-user homebuyers — to propel the housing market into its next expansion beginning around 2028.Updated October 7, 2024.
Chart update 10/07/24
The above chart tracks the number of active real estate brokers and agents licensed in California, based on data released monthly by the Department of Real Estate (DRE). These numbers exclude licensed brokers who do not use their licenses, and licensed agents who are not employed by a broker.
Chart update 10/07/24| Jun 2024 | Jun 2023 | Annual change | |
| Active Agents | 221,600 | 223,400 | -0.8% |
| Active Brokers | 88,400 | 89,500 | -1.2% |
Today’s inflated agent-to-broker ratio
In a stable market, a natural equilibrium develops between active real estate agents and brokers. This ratio has historically found balance at the level achieved in 2002: approximately 1.5 active agents for every active broker.As real estate entered the recovery phase of a market cycle in the mid-2000s, new agents arrived en masse: the Millennium Boom. The greatly inflated agent population grew to as high as 2.7 agents per broker. These individuals obtained a license with the optimistic belief that extra money was to be had working real estate.The ratio fell in the aftermath of the Millenium Boom, then reversed direction to rise again in 2014.Currently, the ratio sits at a still-inflated 2.5 active agents per active broker.In the second quarter of 2024, we are two years into continuously declining sales volume as we trudge our way out of the temporary but very disruptive pandemic economy.Keep in mind that these active licensee totals obscure the real depth of the inactive problem.Many “employed” agents simply do not report to work – as a real estate agent. Their license is left “hanging” with a broker, and they work as part timers at best, while they take up another occupation.Also, 28% of all 310,000 sales agent licensees report to the DRE as “inactive” – not employed by a broker. Yet many speculate in property as principals or negotiate purchases for family members, presenting themselves as holding a license.Agents speculate on the market
In October 2006, 376,600 Californians held agent licenses but only 261,000 were active agents. Compare this to the more stable period six years earlier of January 2000, when there were 122,300 active agents out of 196,500 total agent licensees. The total number of agents nearly doubled, while the portion of inactive agents comparatively decreased.Rather than just providing brokerage services to other individuals, this larger contingent of agents — active and inactive — bought and flipped properties. They speculated in the market while operating as insiders pulling (or saving) a fee when they, their family members and their friends decided to buy a property they located.Related article:California home sales volume
Big wheel keeps on turning
For the immediate future following 2024, anticipate a return in residential and commercial real estate markets to:- core economic principles – inventory for sale vs. buyers who are user-occupants or long-term income investors rather than speculators
- real estate fundamentals – price-to-rent and mortgage-to-income ratios as well as proper net operating income (NOI) capitalization rates for evaluation
Licensing in an economic recovery
Will this 1.5:1 agent-to-broker ratio return after a trough develops in licensee population after the mid-2020s?Probably. The boost in home prices experienced during the pandemic caused a classic increase in optimism among the prospective and existing agent population. A greater percentage of new licensees arrived while existing agents renewed their licenses. That enthusiasm waned, then fell apart after the mid-2022 drop in real estate sales.The public perception of a healthy real estate market when property prices increase also lures more individuals to become real estate agents. New sales agent and broker licensing jumped in 2021, and in 2023 attained their highest levels since 2007.Related article:Brokerage Reminder: CAR membership NOT required for MLS access
Boomtime distractions and consumer protection
Insufficient mortgage loan originator (MLO) regulation and oversight to protect consumers and public institutions from financial harm creates a relaxed mentality, leading eventually to another destructive real estate boom. This will likely happen in the years following 2027 as newly-minted agents begin to rapidly multiply. With any boom, the standards applied by real estate service providers diminish.It is up to the DRE alone to actively protect society from adverse licensee conduct. To do so, the DRE needs to become more aggressive during business recoveries.Initially, during boom times, a tightening up of the agent licensing exam is needed to control a too-permissive pass rate for agents. This move will limit the licensing of new agents to the most qualified, dedicated and committed individuals.Further, legislation is needed to mandate apprentice training for, say, two years before a new agent may operate alone as the brokers agent. Appraiser oversight already requires this apprenticeship work to gain sufficient experience to avoid harming the consuming public.Whether the DRE is politically able to do this is questionable, as they face opposition from big brokerage offices and entrenched trade groups. Large brokerage operations require a constant high number of agents-for-hire to blanket the market when sales momentum takes hold.Related article:Letter to the editor: Does the DRE “accredit” schools?
Homeownership rates in the cycle
California demographics, and the extremely low 2024-2025 demand by occupying homebuyers, point to a return of “2021 excitement” in the field of real estate in the coming recovery around 2028 and beyond.Even in the pandemic era, the rate of buyer-occupant homeownership had dropped from 61% in 2006 to 55% in 2022. Homeownership rates will continue to suffer for several years due primarily to lack of inventory for sale sufficient to bring prices down to levels willing buyers, well, can pay. Here, construction in California of hundreds of thousands of dwelling units is the cure.Further, as mortgage interest rates continue their current half-cycle of a persistent long-term rise, downward pressure is continuously reasserted on pricing for all property. Brokers and agents representing investors interested in acquiring income property to hold long-term will find investors have shifted from relying on earnings produced by resale profits and refinancing to relying on annual earnings from rental income operations. Related article:Agents and brokers: recession-proof your life
Market variables are changing
For the next years into 2028, fewer brokers and agents will be needed to service the purchase and sale of real estate. This slowing demand to acquire real estate will be partially offset by the increasing needs of landlords for property management and owners for mortgage originators.Capitalization rates investors apply to a property’s NOI to price property suitable for long-term ownership are moving upward. It is simply investor adjustment to the multi-decade cyclical increase in long-term interest rates and the risks of owning real estate for the long haul. The risks include illiquidity, active participation in property management, income and expense decisions, and adverse changes in local demographics. In the past, these risks were covered by profits from rising property prices generated primarily by the pre-2013 decades of declining mortgage rates, not by real estate fundamentals.Related article:Real estate speculators during recessions and recoveries
Agent and broker population, past and future
2021 saw home sales volume leap as a result of historically low interest rates, individual stimulus checks and a fierce fear-of-missing-out (FOMO). However, the pandemic stimulus fuel was quickly spent, and sales volume in early 2022 began a collapse which will likely continue at least through 2026.Sales agent numbers accelerated rapidly during 2021, and through mid-2022, with an influx of “quick-buck” real estate agents. Expect to see these new-career agents drop out — as has already begun — and prices decline through 2026. Easy money, all the time, does not exist in any industry due to perpetually recurring business cycles.For licensees to survive financially, they need to embrace more sustainable, long-term real estate strategies. These include focusing on improved services to locate property for buyers and non-conventional sales assistance for sellers.Industry behavior
Large single family residence (SFR) brokerage operations with branch offices have always depended on a constant flood of newly-licensed agents to fill their cubicles. These brokerage operations generate a high turnover rate for agents. Freshly-minted agents burned through their family members and social contacts without personal marketing to brand themselves and develop a viable client base.The big brokers and their office managers have been able to mitigate the eventual loss of sales production experienced by client-exhausted agents through aggressively soliciting new licensees (and all the personal contacts who come with them) as replacements.These “list-and-run” agents also disappear from the ranks of new agents when the total annual number of new agents drops dramatically. The last such drop was in 2007-2014 before the commencement of the mid-2010’s recovery. Previously, during the peak activity years of 2004-2007, new agents were licensed at the unsustainable rate of 5,000 monthly – triple the 2024 pace.Despite this history, the number of new hit-and-run agents crept higher in the pandemic years of 2020-2021. And again, brokers spent little time training and supervising new agents and more time mining them for prospects.Related article:Pivot to find profits during a recession: Focus on homebuyers
Facing economic reality
firsttuesday forecasts a dramatic fallback in sales agent licensing in 2024-2026, the result of reduced buyer, leasing and MLO activity. Watch for the next wave of licensees to arrive, first upon the return of speculators, then end-user homebuyers, to propel the housing market to its next virtuous expansion, likely around 2028.When viewed in terms of disappearing short-term agents, rather than vanishing homebuyers — the rate of homeownership statewide was stuck at 56% at end of 2023 — what appears is an economic reality which forces employing brokers to:- shutter their least productive branch offices;
- release the weakest office managers and under-performing agents;
- attempt to locate agents who actually generate business;
- upgrade office locations and cut rent expense by taking advantage of office and retail vacancies offering ever lower rent;
- develop new profit centers with service divisions for escrow, finance, homeowner/tenant insurance, appraisal/broker price opinions (BPOs), property management, investor syndication and other brokerage services; and
- require agents to “get back on the street” to engage in the community, gather property information in greater detail from local agencies, and smoke out new leads which generate transactions.
Brokerage Reminder: Is your team playing by the rules?
Fee splitting problems
Even more troubling for large brokerage operations is the bickering over brokers’ fee-splitting arrangements with their agents.In the meantime, employing brokers take in fewer dollars and shoulder the costs of overhead, promotion and servicing unmarketable property listings. The listing board offices used in the past now has a companion “buyer representation board” for agents to keep full.Gradually, the younger and more aggressive agents employed by large brokerage offices will look for new opportunities. They may become brokers or team up with other brokers and agents, transitioning into smaller flexible operations.Others with a long-term client base will join “rent-a-desk” operations to reduce the fee percentage extracted by the broker, and hopefully take home more net earnings. Pyramid-brokerage operations are risk-prone. They have a strong tendency to encourage recruitment of employed agents and reduce services rendered by those higher up the profit-sharing ladder in the office.To be cautionary, agents jumping out on their own too often do not have the business acumen to set up and operate a broker office, whether they employ agents or operate independently. Their motivation to do so is based solely on the belief, right or wrong, that their current broker is taking too large a share of the fees.Survival and success
Brokerage offices need fewer agents to effectively service the real estate needs of the public – until the recovery of willing buyers starts to takes hold, likely in 2027.Blasphemous talk?Not at all; a pivot toward efficiency is necessary to steer a brokerage operation into full recovery stage.Brokers who market appealing property negotiate asking prices which quickly generate offers. Also, brokers who enforce written buyer=-broker representation will earn a living and prevail during an economic downturn. Such conduct, a requisite for success, is dependent on rational sellers, willing buyers, a savvy managing broker and skillful agents.During short-lived bursts of speculative fervor, discussion of a stable, disciplined office environment sounds like nonsense to brokers and agents with a short-term outlook. However, real estate is not a business where you can “fake it until you make it.” Misrepresentations by non-disclosure (or otherwise) and carelessness due to inexperience will undo you quickly, every time.Brokers who learn to cut overhead and eliminate operating inefficiencies while beefing up their staff with competent agents and broker-associates will be in the best position for the long-term uptick in annual transaction numbers, likely to begin in 2027.Employing brokers operating successfully through 2025 will be defined by their ability to plan ahead. As practical visionaries, they will be prepared to get in on increasingly frequent closed transactions and mortgage originations as the Federal Reserve and Wall Street mortgage bond folks return to easy lending standards, now underway as anticipated.A look ahead for smaller brokerage offices
In the near future, smaller brokerage offices with fewer than 16 agents will probably continue to recruit agents in the manner they always have.Large brokerages typically use mail-blitzing campaigns and seminars to entice both seasoned MLS agents and newly licensed and prospective agents into their branch offices.Single-office brokerages traditionally recruit by local word-of-mouth referrals. Brokers maintaining a single office with a staff of agents and broker-associates tend to have several different types of business clientele. They focus on more than the numbers game of market share to drive property owners, buyers and tenants to their office for representation.These smaller brokerage offices are the most likely to attract the more thoughtful entrants into real estate. These entrants seek a diverse long-term advantage of training and working with agents and broker-associates who work income property, land and property management as well as SFR transactions.The broker takes charge
To operate a successful brokerage office, the broker needs to employ viable agents, those with talent and skill.It is the maturity of the agents in a brokerage business model that produces the end result sought by successful employing brokers, i.e., broker fees. As in all service businesses, the linchpin for achieving success is the ability of management to orchestrate the efforts of agents to act and earn as permitted by DRE regulations and real estate law.Talented agents are made, not born
Brokers are best served when employing agents who practice beyond the small and limited circle of friends and family. However, some brokers ignore the responsibility to train and supervise their agents. Brokers who do not dedicate sufficient time and energy to their agents will spend time and energy replacing agents instead, a formula which fails to strengthen their own position.Brokers need to be more than distant observers limited to providing remote oversight for the agents and sharing fees. They or their administrative assistants and managers are required to supervise and police the business-related activities and conduct of the agents they employ.Related video:Policing of business-related conduct
Supervisory conduct by brokers and managers of their agents and broker-associates includes:- setting production goals to be attained (listings and sales/leasing/originations);
- an initial and annual analysis of the agent’s income and expenses [See RPI Form 504];
- setting fees needed for the agent to become financially viable working solely rendering services as a real estate agent;
- establishing the personal routines and activities which will likely make the agent productive, (i.e., overseeing the agent’s management of their time spent working for the broker); and
- expecting compliance reports to be prepared and delivered periodically (weekly) to management. [See RPI Form 520]
We stopped using real estate brokers because few brokers understand the term brokering a deal. It means bringing the selling party and the buyer party together and help to construct a for both parties an acceptable integer deal. We do not need copy and past most of the agents do that, in some cases the documentation provided is poor outdated and uninformative. Decent they demand knowing everything about the buyer including proof of funds. They refuse to show their mandate to sell and refuse to give any guarantee that the so called PoF or Bank letter of comfort that to will only be show n to the seller. By the way the financial comfort provided is not even worth the paper that it is written on.Third the real estate agents push the prices upward which is good for the seller and bad for the buyer. However it destroys the business and may result in the future in balance sheet adjustments. Last point is their commission : they will want to sit in on any conversation between seller and buyer and would if they could have somebody permanently living with the buyer and seller in order to control then deal. Do the real este agents or their companies provide any guarantee about the claims they make? of course not. Last but not least there is the arrogance of some of these top agents in HNW circles by not answering and claiming they know it all. This may work int he USA but it will push away overseas investors. They also believe by taking properties of an don the market that they can improve their sales chances. We use a lawyer who is providing us with all of the necessary details information we need without revealing anything and is capable of negotiating a deal with the owners that increases the sellers margin and provides us with a better an secure deal. Show me any broker who is prepared to do that!
You obviously don’t know about demand and supply.
Real estate agents do NOT push the prices upward. The market does that. It’s the result of buyer demand.
Agents do not have any control over pricing. They just want to get a house sold as quickly as possible.
They don’t care about an extra $20,000, as they get less than 2% of that, which in this case is less than $400.
Would they botch a deal over such little money? You can bet most agents would not.
What is a broker? There are broker license holders who are functionally agents, then there are brokers who employ agents. Your article appears not to distinguish between the two. Would like to know how many brokers were under contract to an employing broker in 2010, how many worked solo, and how many worked primarily as employer/supervisors. That would give a much more accurate picture of the profession.
John Souerbry – My thoughts exactly. Making this a totally irrelevant, superficially “researched” and understood article of little value.
I want to become a real estate agent. After reading these articles now I am not so sure. I’m an optimistic person, but I need to make a living but don’t want to be ripped off in the process. If I am committing myself to studying and taking the necessary exams to become licensed, I would like to at least make a living afterwards. Advise and thank you.
Real estate is a business (sales business, not a profession, the title companies are the professional side) where the 80/20 rule applies (80% of business done by 20% of agents, if that) Even if you are the listing agent, the commission is going to be split with your broker, and 90% of the time with the buyer’s agent and broker. So your cut might average 1.8%. (6% x .5 = 3%, then 3% times .6 =1.8% Typically agent 60%, broker 40%). So if you are in on $2,000,000 of sales in year (unlikely until you are in the game a while or stumble into something by luck), your gross will be $36,000, of which 15.24% ($5,486) goes to self employment tax off the top, Add in your MLS fees, vehicle, meals, insurance, etc, etc, and you won’t have much if any left. That is probably a best case scenario for the first few years, most really don’t make anything and just rack up expenses. That is why there are a lot of female agents, with the spouse providing the income and health insurance base. And full disclosure, I have a degree, am retired from a professional career in land management, and have a real estate sales license and experience. I would only advise those in very financially sound situations to venture into real estate sales. Though the classes are interesting and mostly about the legal and regulatory side of the business, the day to day reality is more like being a car salesman, so consider the move carefully!
Success depends a lot on if you know people in your area who would use you for their business and what firm you start off with. Many firms have an 80-20% split with a cap, meaning they will stop taking your money at say $15000. If you sell a $450,000 home with another agent, you would gross $13,500, pay your broker $2700 and take the rest home. You do pay monthly fees or quarterly, depending on your house “brokerage firm”, I am with an independent and only pay $120 a quarter to two brokers in two states. The annual NAR and boards are around $800. If you are with a Keller Williams or ReMax they also charge you a monthly fee. Commercial brokerage is different, land and business sales. There is money to be made, but it takes money to make money, as they always say. If you have a savings account, you will use it. If you have friends and family who are ready to use you, it will go smoother.
This article is incorrect! There are currently fewer real estate agents that sell real estate due to the fact that loan officers who work for brokers through the BRE must become a real estate agent. Most loan officers I know have never sold real estate and have no desire to do so even though they are included in the chart in this article.
I would like to gratitude for sharing such a great and helpful information with us. A good agent will always be about what is going on in the market about properties or houses price rate. I think if you want to hire a real estate agent for selling or buying a house or other properties, then you should choose a licensed and experienced agent that helps in everything.
Great article. I always take my work seriously and keep up on the new laws. Education is knowledge and a key to staying in business. I can relate to a lot of the comments about it too. Ethics must be no.1 priority. I treat my clients the way I would want to be treated. I get a lot of referrals from my clients and some of my clients have done multiple transactions with me. As agents we see a lot of good and a lot of the bad in the business. It’s not hard to be a good agent and be ethical.
Sorry to read the complaints about training and the number of agents, etc. Freedom is a *****. You are free to market yourself in the best possible manner, and to flourish or fail accordingly. It is the exact opposite of the govt. No one owes you any assistance at all, unless you are somehow in tune with them, and no one should be envious of your success. We have all seen newcomers enter the field and waltz right past our success, based upon their zeal and community reputation.
Regarding the overly optimistic projections of various Real Estate groups: they would not be so harmful if only the overpaid, highly touted Teachers, dared educate the population about financial matters. Who the hell cares what John Quincy Adams had for lunch, if you can attend school for 12 years and barely know the how debt and interest rates work. ?
The main thing to “improve” the quality of this “profession” is to eliminate the 0 day sale. It being allowed is one of the most hard to justify things in the business. Dual agency can be somewhat defended because of the agency disclosure forms, but 0 day is impossible to justify.
thank you liz for saying what needs to be said. the realtor associations sold out the agents years ago and have done very little if anything to further the value of the ‘realtor” brand at any time i can recall. their “economists” are cheerleaders and have never been willing to call the market correctly even when it was tanking.
the assn of realtors accepts for membership anyone with a license, a check and a pulse…it is about as exclusive a club as a supermarket savings club. it is shameful that a newly minted realtor is on par, as far as the association is concerned, with an agent with 20 years in the trade and a nice book of business. i dropped my membership years ago…they are of no value to me.
If the sense is we need more licensees, I disagree. What we need are more educated and professional licensees. Its the Quality versus Quantity argument. On the other hand the Realtor Associations just want more… more members means more dues which means more money for staff salaries and benefits because I haven’t seen Realtor dues going down at any time during this downfall. Did anyone see the Brokers Insider article showing NAR’s Executive Officer Dale Stinton making $1,938,726 in 2010, that was after receiving a $500,000 raise over his 2009 salary! So while the housing crash decimated income for agents and brokers, the heads of Realtor Associations saw their paychecks keep rising through the downturn according to tax returns filed by the very same associations. We should be asking ourselves if the Realtor Association ideology is helpful or harmful to the working Realtor?
I believe that less agents and brokers may not necessarily be a bad thing. Leaves the true professionals on the job. Yes, I believe that the DRE should screen new agents better too. Ethics seem to be only words to some agents and not the practice of, which has brought this profession spiraling downward in recent years. Weeding out the bad apples is always a good thing!
Real Estate cost money and the MLS is too much for the newbies like me and you do need good training and a mentor. Mentoring is hard to find.
The NMLS has pretty much caused more hardship on potential borrowers than it’s done good. Been a broker and lender for many years, licensed in 1976. I have made hundreds of personal and “brokered loans”. However, I have Gone Galt now and make zero loans in California. Decided it was not worth the hoops getting in the way of my normal business practices. Using the Internet I can do business in states more friendly to borrowers and brokers. In addition, some of the loss in agents and brokers could have been caused by DRE regulations and not the economy. Wake up California, and AMERICA!
In addition, loans can also be made in foreign countries with rock solid “rule of law” foreclosure process.