Ranks of Manhattan brokers swell, as market strengthens
This year marks the highest number of licensed agents since before the crash
UPDATED, 1:37 p.m., Dec. 20, 2013: As the real estate market has bounced back, and the wider jobs market continues to sputter, an increasing number of people are obtaining their real estate licenses in Manhattan. As of late November, the borough was home to about 27,000 licensed salespersons and brokers, or 5.5 percent more than the 25,600 who were licensed at the same time last year, according to New York State Department of State data provided to The Real Deal.
Breaking the numbers down further, there were 14,666 licensed salespersons in Manhattan — an 8.4 percent year-over-year increase and the highest number since 2007, before the housing bust. There were 12,337 licensed brokers, a modest 2.2 percent increase over the same period in 2011.
(More commonly known as agents, salespersons represent the first rung on the licensing ladder, while licensed brokers must have at least two years of industry experience and pass an additional licensing test. All agents must renew their licenses annually.)
While it’s difficult to pinpoint the exact cause of the growth, insiders pointed to two parallel trends bringing people into real estate: a healthier sales and rental market with more opportunities for deals, and a lackluster jobs market that is convincing some to try a different career.
A year ago, the real estate market looked “dark and scary” to those on the sidelines, but this winter a trickle of new developments, a hot rental market, and a stabilizing sales market — particularly in Manhattan — are all causes for optimism, said Gary Malin, president of Citi Habitats. “Once people start to hear positive news about a sector that was maybe getting battered earlier, they want to get in on that in the earlier states of a recovery, rather than in the middle of the recovery,” Malin said.
Larry Friedman, co-founder of A.C. Lawrence, which was recently acquired by Bellmarc Realty, said that he has not necessarily seen more agents coming into the industry, but he has seen “better quality” agents, who enter real estate as a second or third career, already equipped with contacts. (One recent A.C. Lawrence hire is a retired urologist, he said.) Rather than real estate being the proverbial “last resort,” the career is “something they’ve always wanted to do,” and see now as the right time to try, Friedman said.
As The Real Deal has reported, the industry experienced something of a purge of less experienced agents in the years immediately following the housing crisis.
Indeed, the number of licensed salespersons plummeted nearly 30 percent, from 16,928 in 2007 to 11,947 in 2009, while the number of licensed brokers (who, by definition, have more experience) fell only 3.2 percent between 2007 and 2009, from 12,715 to 12,309. The figures suggest that newer agents pursued other lines of work, while veterans managed to ride out the downturn. Salespersons began to return to the field in 2010 and 2011, and this year that trend has continued.
Between January and November of 2012 (the most recent figures available), the state granted 3,366 new salesperson licenses — an 18.9 percent increase over the same period last year, and more new licenses than in all of 2011. Meanwhile, the state granted 1,050 new broker licenses during the same 11-month period, or 8.6 percent more than a year ago.
And it appears that existing agents are also sticking around the industry: 4,773 salespersons renewed their licenses between January and November of 2012, or 16.6 percent more than in the same period the year before, while 4,943 brokers renewed, representing a 10.2 percent jump over the previous year.
While insiders viewed the growing number of agents as a positive sign for a recovering industry, the new agents also spell increased competition for a relatively small pool of potential sales and rentals. In the third quarter of 2012, there were about 7,600 closed sales of condominiums and co-ops in Manhattan, Brooklyn and Queens, according to the most recent figures from appraisal firm Miller Samuel. In October, there were about 3,000 new rentals in Manhattan and Brooklyn, another Miller Samuel report shows.
However, Malin said he was not worried, noting that many licensed agents do not work full-time, and as the market has strengthened, the “tentacles” of new construction and home purchases have pushed deeper into the outer boroughs.
The Department of State does not break down licensed agents into commercial and residential sectors, but residential agents are thought to make up the bulk of the numbers.