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The California Real Estate Agent Bubble


gI_131552_Housing-Market-2013Is there a bubble forming amidst the increasing number of California real estate agents?

According to the media’s portrayal of new real estate companies and subsequent competition between agents, the saturation of the market could make it hard for new investors to contend. So, is there too much competition to be able to make a great living as a real estate agent in California? Could massive competition from sales people also hamper the efforts of California real estate investors and make it more difficult for them as well?

Recent licensing and exam data, compiled by the Calculated Risk Blog, acknowledges what is happening from a statistical viewpoint. When looking at the visuals on a graph, the truth becomes apparent. There are still 32% fewer sales persons than at the peak of the last boom, and the trend seems to be continuing downward. Brokers’ licenses have dipped slightly, but are only 8% off of their previous high. This suggests more are striking out on their own.

Despite the media hype, there is no bubble regarding licensed agents in the state of California. In fact, increasing individuals are allowing their licenses to expire. Of course, there are many new agents, but due to a distinct lack of real estate education and hands on experience, they normally make easy competition to overcome.

For those still worried about competition from their peers, it should be remembered that the 80/20 rule is still relevant. That is; only 20% of real estate agents are producing 80% of the sales and commission dollars. Many licensees only work part-time or maintain them for their own investment transactions.

Providing that you invest in real estate education, are committed to being great at what you do, find a way to be unique and stand out, you should have little to fear from any competitors.

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