There were 90,200 active real estate brokers in California during December 2022. The number of active brokers continues to decrease and has yet to find a bottom since declining from the January 2010 peak of 109,500.
Conversely, the number of active agents has steadily climbed out of a 2014 low of 171,100. Active agent numbers have increased to 226,300 as of December 2022.
Historically, approximately 1.5 agents actively practice per active broker. This ratio grew during the greatly inflated agent population of the 2000s to as high as 2.7 agents per broker. This ratio fell in the aftermath of the Millennium Boom but reversed direction beginning in 2014, and currently sits at an inflated 2.5 active agents per active broker.
firsttuesday forecasts a dramatic fall back in sales agent licensing in 2023-2025, the result of reduced sales activity. 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 to its next expansion — around 2028.
Updated January 26, 2023. Original copy posted March 2010.
Chart update 01/26/23
| Dec 2022 | Dec 2021 | Annual change | |
| Active Agents | 226,300 | 220,000 | +2.9% |
| Active Brokers | 90,200 | 91,400 | -1.3% |
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.
Do you plan to renew your real estate salesperson or broker license again?
- Yes. (90%, 459 Votes)
- No. (10%, 51 Votes)
Total Voters: 510
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 seen in 2002; approximately 1.5 active agents for every active broker.
As real estate entered its boom phase of the market cycle in the mid-2000s, new agents arrived en masse with the optimistic belief that extra money was to be had working real estate. In 2006, following the peak of the boom, there were a total of 2.7 active agents for every active broker. The high number of agents accompanied an inflated market, with unsustainable prices and little sense fundamentally.
After hitting the 2006 high, the ratio of active agents per broker began its downward trajectory towards historic norms bottoming at 1.6 in mid-2014. However, due to rising home prices, the ratio began to increase again, at an elevated average of 2.5 active agents for every active broker heading into 2023.
Keep in mind that the active licensee totals above understate the real depth of the problem, as many licensees remain technically “inactive.” They present themselves as licensees to speculate in property as principals or negotiate purchases for family members, all without being employed by a broker.
Agents speculate on the market
In October 2006, for instance, there were 261,000 active agents, but 376,600 Californians held agent licenses. Compare this to the more stable period six years earlier of January 2000, when there were 122,300 active agents and 196,500 total agent licensees.
Rather than just providing brokerage services to other individuals, the superfluous 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 the property they located.
Even now, as we anticipate a return to core economic principles (inventory for sale vs. demand by actual user-occupants rather than speculators) and real estate fundamentals (price-to-rent and mortgage-to-income ratios) in the residential and commercial markets, the chart above shows the licensee population is well above the standard 1.5:1 agent-to-broker ratio. Expect the current ratio to drop gradually in 2023-2025, following the downward path of home sales volume and prices.
Related article:
Licensing in the economic recovery
Will this ratio hold after the trough in licensee population?
Not likely. The boost in home prices experienced in the end of 2012 through 2014 caused increased optimism among the agent population. The perception of a healthy real estate market due to price increases has lured more individuals seeking career opportunities to become real estate agents. New sales agent and broker licensing jumped in 2013 and continued to escalate, now at their highest levels since the housing crisis fallout in 2008.
Insufficient lender regulation to protect public institutions and society from harm creates a mentality that eventually leads into another destructive real estate boom. When this happens, possible in the years following 2027, agents will begin to rapidly multiply once again, and standards will diminish.
It is up to the DRE alone to protect society from adverse licensee conduct. To do so, they will need to become more aggressive, initially tightening up the agent licensing exam to control a too-permissive passing rate. This move will limit the licensing of new agents to the most qualified, dedicated and committed individuals.
Whether the DRE is politically independent to be able to do this in the face of opposition from big brokerage offices and trade groups is doubtful. Large brokerage operations require a constant high number of agents-for-hire to blanket the market when momentum takes hold. And large brokerage offices mandate new agents be members of a trade organization.
Related article:
Brokerage Reminder: CAR membership NOT required for MLS access
California demographics, and the extremely low 2023-2025 demand by occupying homebuyers, point to a return of “2021 excitement” in the field of real estate in the coming recovery of 2026 and beyond. Even in 2021, the rate of buyer-occupant homeownership had dropped from 61% in 2006 to 55% in 2022, and will continue to suffer. For the next several years into 2026, fewer brokers and agents will be needed to service the purchase and sale of homes. This slowing will not be offset by an increasing need for more property management, leasing, and commercial mortgage operations.
Further, as mortgage interest rates continue their current half-cycle of a steady long-term rise, downward pressure is continuously placed on all property prices. Brokers and agents representing investors interested in acquiring income property will find a shift by investors from relying on earnings produced by resale profits to relying on annual earnings from rental income operations.
Capitalization rates investors set for pricing property they are willing to own are moving upward to adjust to the increases in the 10-year Treasury note rate increases and the profit margin for the risks in real estate ownership of illiquidity, material participation in property management decisions, and adverse changes in demographics affecting property values.
Related article:
Agent and broker population, past and future
2021 saw home sales volume leap, the result of historically low interest rates, individual stimulus checks and a fierce sense of a fear-of-missing-out (FOMO). However, the pandemic fuel was quickly spent, and sales volume in early 2022 began a collapse which will continue through 2024.
The acceleration of sales agent numbers was rapid during 2021, carrying over into 2022, attracting an influx of “quick-buck” real estate agents. Expect to see these new-career agents drop out — if they haven’t already — as sales volume and prices continue to decline in 2023-2024. Easy money, all the time, does not exist in any industry due to perpetual business cycles.
For licensees to survive financially, they need to embrace more sustainable, long-term real estate strategies likely focusing on improved services for buyers and non-conventional sales assistance for sellers.
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Industry behavior
Large SFR brokerage operations with branch offices have always depended on a constant flood of newly-licensed agents to fill their cubicles. This practice was enabled in the past by a high agent turnover rate, as freshly-minted agents burned through their family members and social contacts without developing a viable client base.
Brokers and office managers were able to mitigate the eventual loss of sales production from client-exhausted agents by aggressively soliciting new licensees to bring in as replacements.
These “list-and-run” agents disappear from the ranks of new agents when the total number of new agents drops dramatically, as in 2008-2014 before becoming the late 2010’s recovery. Previously, during the peak years of 2004-2007, new agents were licensed at the rate of 5,000 monthly.
However, the number of list-and-run agents crept higher in the pandemic years of 2020-2021, with brokers spending little time training and supervising new agents and more time mining them for prospects.
firsttuesday forecasts a dramatic fall back in sales agent licensing in 2023-2025, the result of reduced sales activity. Watch for the next wave of licensees to arrive, first with the return of speculators, then end user homebuyers to propel the housing market to its next expansion, likely around 2028.
Related article:
Economic reality
When viewed in the context of disappearing short-term agents, rather than vanishing homebuyers — the rate of homeownership statewide stuck at 55% heading into 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 generate business;
- upgrade office locations and cut rent expense by taking advantage of office vacancies and ever lower rent;
- develop new profit centers with service divisions for escrow, finance, homeowner/tenant insurance, property management, 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, and smoke out leads which generate sales.
Even more troubling for large brokerage operations is the bickering arising over brokers’ fee-splitting arrangements with their agents.
In the meantime, employing brokers take in fewer dollars and shoulder the costs of overhead, promotion, often servicing unmarketable listings at great cost. Gradually, the younger and more aggressive agents employed by large brokerage offices will look to become brokers or team up with other brokers and agents relocating into smaller operations. Others with a long-term client base will join “rent-a-desk” operations to reduce the fee percentage taken by the broker.
However, 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. They attempt to do so under the belief, right or wrong, that their current broker is getting too large a share of the fees.
Survival and success
Sellers who continue to demand unreasonable prices (the sticky price phenomenon), or who involve themselves in other conduct which keeps the property from selling within a 30- to 60-day marketing period, need to have their listings cancelled — their employment of the brokerage office terminated. This seller belligerence surfaces in a recession suggesting that brokerage offices need fewer agents to effectively service the housing needs of the public until the recovery of willing buyers takes hold, likely in 2026.
Blasphemous talk?
Not at all when an efficient brokerage operation is what it takes to get into the full recovery stage without first going broke.
Brokers who market property which appears attractive from the curb and can set listing prices which will quickly generate offers will earn a living and prevail during an economic downturn. Such conduct, a requisite for success, is dependent on a rational seller, a savvy managing broker, and the talent of their agents.
At times of speculative fervor, which are always short in duration, discussion of a stable consistent office environment sounds like nonsense to those with a short-term outlook. However, real estate is not a business where you can “fake it until you make it.” Non-disclosure and misrepresentations will undo you every time.
In a market recovering from a downturn, time lost hurts everyone, a lesson inept policymakers — both state and federal — learned from the totally ineffective “extend-and-pretend” loan modification fiascos and 2009-2010 federal and state homebuyer price subsidies.
Brokers who learn to cut overhead and eliminate operating inefficiencies while beefing up their staff of performing licensees will be in the best position for the uptick in annual sales volume; probably to begin mid-2025, possibly not until mid-2026.
Employing brokers operating successfully today are defined by their ability to plan ahead. As visionaries they will be prepared to get in on the uptick in transactions when the Federal Reserve and Wall Street return to easy lending standards, a time of greater frequency for property sales, leasing, and mortgage originations.
Related article:
Pivot to find profits during a recession: Focus on homebuyers
Looking ahead for smaller brokerages and others affected
In the near future, small brokerage offices with fewer than 16 agents will probably continue to recruit agents as they always have. Large brokerages typically use mail-blitzing campaigns and seminars to entice both seasoned MLS agents and newly licensed agents into their branch offices.
Conversely, smaller one-location offices traditionally recruit from local word-of-mouth contacts. Brokers maintaining a single office with a staff of agents tend to have several different types of business clientele and need to focus on more than the numbers game of market share to drive the listing and marketing of SFR properties.
These smaller brokerage offices are the most likely to attract the more thoughtful entrants into real estate looking for the long-term advantages of being around others who work income property, land, and property management.
The boom during the mid-2000s saw five times as many individuals enrolled in licensing courses as compared to the late ‘90s.
Further, the license renewal rates among brokers and sales agents (especially for those hit-and-run agents) dropped to unprecedented lower levels by 2011. Watch for a similar dynamic to occur by 2025-2026.
The broker takes charge
To operate a successful brokerage office, the broker needs to employ viable agents, those with talent.
It is the quantity and quality of agents in a business model that produce the end result sought by employing brokers to be able to be successful, i.e., broker fees. As in all service businesses, the linchpin for achieving success is the ability of management to orchestrate the efforts of qualified agents to act as permitted by law.
However, most brokers employing agents tend not to dedicate sufficient time and energy to the supervision of their agents. A level of seemingly deliberate neglect prevails in most SFR brokerage offices, consistent with the proverbial “dumb agent rule.” This has historical roots in the 1979 independent contractor misrepresentation of the status of what is an employee absolutely — licensed agents and broker-associates working for an employing broker as they must.
Thus, agents are most often left to learn the trade by observation or some third-party training, and to hone their skills by trial and error. This is an empirical result based more on the agents’ good instincts than on training, procedural policy indoctrination, and constant supervision by the broker — all required by law and enforced by the DRE.
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 need to learn to supervise and police the business-related activities and conduct of their agents.
Related article:
Policing of business-related conduct
Supervisory conduct by brokers and managers includes:
- setting the production goals to be attained (listings and sales);
- an analysis of the agent’s income and expenses;
- the setting of fees needed for the agent to become financially viable 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 time spent working for the broker); and
- the insistence that compliance reports be prepared and delivered periodically to management. [See RPI Form 520]
Further, the broker needs to be actively involved in the agent’s fulfillment of the duties the broker owes to clients with whom the agent has contact.
Thus, the agent knows from the beginning just what level of production is expected by the broker as a requirement for remaining with the office. Also, the broker will be demonstrating their expectation that the sales agent is to maintain a competitive attitude about producing sales listings and buyers ready, willing and able to deal.
Further, an environment needs to be created to nurture a greater probability of producing closings based on purchase agreements, leasing agreements and mortgage originations, which spell success for all involved.
Read more:
See RPI ebook Real Estate Matters: Chapter 2
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.