PrintWhen it comes to getting a mortgage, building a new home or buying an existing one, there’s a good reason consumers don’t experience the same level of service that existed at the height of the housing boom five years ago. The ranks of real estate professionals have been devastated.
In those days, real estate was a hot field and workers were lining up to become real estate agents and mortgage brokers. Today the opposite is the case and the extent of the devastation is breathtaking. The exodus of workers is so severe that the quality and availability of some real estate related services has changed in many markets, especially mortgage finance and new home construction, the hardest hit. Unlike most other sectors of the economy, where this year employers have slowly begun to hire, housing related jobs continue to evaporate.
More than a half million people worked in mortgage lending as of October 2005-the highest month on record. Five years later, fewer than half are left. Headcount in real estate finance fell by another thousand based on the Third-Quarter 2010 Mortgage Employment Index from MortgageDaily.com.
During the third quarter, 3,216 layoffs were tracked, worse than the second quarter’s 2,028, according to the report, which reflects data tracked by Mortgage Daily and is an indicator of overall mortgage employment activity. Hirings also deteriorated, falling to 2,286 from the prior period’s 2,768. Nearly 400 lenders have left mortgage lending since 2006.
Federal licensing requirements, the disappearance of the yield spread premium and other regulatory burdens added to the suffering of mortgage brokers. The number of broker firms has fallen 72 percent since 2005. In 2005, brokers represented 31 percent of all mortgage originations, according to Guy Cecala of Inside Mortgage Finance. Now they represent 11 percent. In 2006, there were 148,200 brokers in the business; today there are about 58,100, a decline of 60 percent.
The number of appraisers has also declined, but not nearly as much, perhaps because of refinancing and government employment. In 2004, appraisers and assessors of real estate held about 102,000. By 2008, appraisers and assessors of real estate still held about 92,400 jobs. About one in four of these worked for local government assessment authorities and the balance included commercial as well as residential.
Home builders have suffered more than any other segment of real estate. The construction industry as a whole has been shedding jobs since January 2007 and over that period has shrunk employment by a total of 2.313 million jobs. That is more than one fourth of the total jobs lost in the entire economy since the recession started. Residential construction employment exceeded 1 million in 2006 and has declined steadily since, paralleling the decline in housing starts.
Brokers and agents, the largest category of real estate professionals, have somehow survived the depression is less true as time passes. ARELLO, the association of representing state governments reported that the number of licensed agents and brokers had reached over 2.6 million by 2006 and increased another 11 percent in 2007. Today the total of licensees is still over 3 million. But ARELLO’s numbers lag market realities. Agents and brokers may leave the business but still have their licenses. In many states, like California, issue licenses that are good for four years. Even initial licenses are good for two years.
Realtor membership, which is annual, might be a better gauge of the impact of the depression, though Realtors are probably better situated to survive than average licensees. During the boom, NAR membership topped out at 1,370,758 in October 2007. Membership, which is annual, began to fall the following year and now has reached 1,084,202, a 21 percent decline.
Leave a Reply