California real estate job market for the most part depends on the condition of the State’s economy. With the second unemployment rate in the nation which fluctuates in low 20%* it is no wonder that real estate jobs offerings in California are largely consist of openings for real estate agents. Most brokers are trying hard to reduce their overhead to cope with drastically reduced cash flow. For every in-house clerical position you will find 10-15 ads recruiting real estate agents. The math is simple, the more agents the better chances to increase revenue.
Agents are in a pinch. Since 2007 California real estate market is in continuous decline. With housing prices plummeting to 40% and in some areas 50%, agents can make only half of what they used to make in the previous years. The lowered home prices have moderately contributed to the real estate activity and now we are in the market with fewer transactions, low pricing and overflow of real estate inventory. Speaking of inventory, currently there are close 165,000 properties listed on the market. So called “shadow inventory” where homeowners are late on payments or going through foreclosures is around 463,000.
But perhaps the biggest problem we are facing is the ever increasing numbers of unemployment which not only directly affects the dynamics of the real estate market but also damages consumer confidence and prevents potential buyers from entering the market. Is that what you have expected when the government bailed out banks with your money?
It is quite remarkable that the same people who never believed five years ago that their homes will ever depreciate in their lifetime now are quite willingly speculate that the prices may go down even further. That’s why many potential real estate investors are quite cautious to enter the market. Today buyers mostly consist of people who are looking for a humble place to live while maintaining low mortgage payments.
California Real Estate Markets
Some of the California’s realty markets are doing better than others and if you would like to find out why, look at the employment rates. Market’s that have managed to at least partially sustain the employment rates are doing much better than those who didn’t.
For real estate agent who is looking for a job or thinking about expanding service area in a pursuit of additional leads paying attention to local trends has become an important factor. If you are an agent you may consider concentrating on areas with highest real estate activity, not the highest home prices.
When market is slow there are fewer leads. California real estate agents have to work hard to maximize their visibility online because most of the leads come from internet traffic. Since there is no lack of agents in California it is reasonable to assume that realtors who are not pursuing online lead acquisition will not be able to continue in these market conditions. Self-marketing has become an essential part of successful agent’s daily activity.
Is there a chance for improvement? There is always a chance and a very slight signs of improvement are showing. As much as we would like to be optimistic in our projections about real estate jobs in California and the overall welfare of the State, there are no indicators that economy will get strong fast.
For economy to continue to grow there should be incentives for small businesses and the truth is that California’s legislators are not the small-business-friendly-bunch. The taxes, fees and regulations have driven many companies out of our State. Interestingly enough, it is the small businesses which had the potential to employ many people locally were hit the most in comparison with businesses who offshore their labor or have satellite offices in different states in effort to reduce their operating expenses.
Some of the job growth projections we have seen online are based on previous California recovery trends seem to look quite promising. But to treat economy as some kind of meteorological event is not wise. Yes, we live in California, and if it rains today there will be a sun tomorrow or the next week. This kind of mentality is not very helpful in economics. What we have to look at is the environment in which economic growth takes place and as of today there are no indicators that this environment exists or being cultivated in the State of California.
California Real Estate Job Sector
Getting back to the real estate job sector. Some of the most successful local realtors have managed to increase their real estate agents enrollments in record numbers by extending full commission to all agents combined with low monthly service fee policies and have managed to create remote agent support systems which in many cases, outperform traditional broker office support levels. This, in turn, has produced a substantial reduction in their operational costs. Such ingenuity has opened a possibility for California’s agents to compensate for market losses and leverage their income. Not all the brokers who offer 100% commissions are increasing their numbers; agents have learned that some companies are more agent support oriented than others. Perhaps, this is the only positive side of the current real estate market situation – it has created a competitive environment for brokers to do more for their agents and resulted in a new innovative type of real estate business which has managed to adapt to complex market conditions.
Real estate agents must do more to be productive. In the past, established agents could allow themselves to rely on a stream of referrals with little advertising. Today, it’s all about marketing and lead generation. As we see it, it is the combination of brokers and agents efforts in the field of marketing and client services that will produce tangible results. Waiting for things to get better will not pay off.
*A note from the author – The official unemployment numbers are based on logarithmic expression which somehow always comes up lower than the actual numbers. Officially, California’s unemployment rate is 11.9% at the time of writing this article.