Jack Jentzen never saw it coming. Four years ago, as a successful real estate agent, he was enjoying the rewards of the most frenzied U.S. housing market in decades, and money poured in.
Now he’s fighting to keep his home.
The real estate slump that hit in 2006 eventually stifled home sales, shrank prices and unleashed a wave of foreclosures. And as it did, the hardest-hit victims included a group of people, such as Jentzen, who never imagined they had anything to fear: real estate agents themselves.
Tens of thousands of Realtors have been forced to quit the industry in the past couple of years. Some are enduring their own agonizing foreclosures. Agents who had staked their fortunes on galloping home sales now struggle to afford health care, utilities and other basics.
Some, like Jentzen, are trying to build new careers. Others are pursuing drastic and aggressive tactics to tough out the housing slump, from embracing new marketing plans to spending thousands to earn advanced designations they hope will help them stand out from the competition. Some say the housing collapse is undermining their own professional self-esteem.
“I’m looking at jobs that are way lower than what I was once making,” says Jentzen, 43.
He’s feeling increasingly desperate. His wife, Laura, a wedding photographer, has multiple sclerosis, and they’re spending thousands out of pocket on her prescriptions. He also lives with and cares for his father, who has lung cancer and is on oxygen. Jentzen and his 17-year-old daughter now have no health insurance because they can’t afford it.
Jentzen is interviewing for a host of jobs outside of real estate to try and continue making his mortgage payments. But so far, he continues to be turned down as overqualified.
Disappearing Income
“The realty industry is quickly becoming a shadow of what it was,” says Mark Zandi, chief economist of Moody’s Economy.com. “For those who remain employed, their compensation has plunged. Realtors were also among the most aggressive housing investors. Many made the error of working and investing with leverage in the same industry, something financial planners counsel strongly against.”
That was true for Jentzen. As his business started to wither away, so did his financial security. He took out an equity line on his house. He exhausted most of his savings. The value of his home plummeted, and his lender cut off his equity line. Credit card bills climbed.
“The money in the bank is going to run out. If we lose this house, what do we do? What does my daughter do? My dad? I felt depressed and saw a psychologist. The market’s just so tough now.”
Signs Of The Ttrend
Real estate agents are fleeing the business. After steadily rising during the housing boom, the number of real estate agents fell by nearly 25,000 from December 2006 through December 2007, compared with a growth of 12,500 from December 2005 to December 2006, according to the Bureau of Labor Statistics. Overall employment of real estate agents dropped from 1.5 million in 2006 to 1.47 mil-lion last year.
After seeing its membership swell 89 percent from 1998 to 2006 (hitting 1.36 million), the National Association of Realtors saw its numbers slip 1.5 percent last year, to 1.34 million. At the end of June this year, the NAR had 1.26 million members.
Payroll employment of brokers has dropped from a peak of about 380,000 jobs in spring 2006 to 340,000 jobs currently, Zandi says. Many more non-payroll jobs have been lost. And more losses are coming as home sales sink back to levels last seen in the early 1990s.
“Some members are saying there are too many Realtors out there who are bringing additional competition, and a shake-up is expected,” says Lawrence Yun, the NAR’s chief economist. “We do anticipate lower membership going forward since housing recovery is taking longer.”
Some Realtors who hope to withstand the real estate recession have been flocking to training programs. The number of NAR members who hold at least one professional designation rose by nearly 21,000 over the past year, reaching a total of more than 428,000 – more than one-third of the NAR’s membership. Some may receive a designation such as senior specialist, serving seniors. Others might pursue the rank of CIPS, for certified international property specialist.
Meanwhile, though, pay for Realtors is dwindling. Overall median Realtor income was $42,600 in 2007, down 10.7 percent from $47,700 in 2006, according to the NAR.
