Supercharged with Covid-19 stimulus, the real estate market experierenced considerable growth over the the last 4 years. The bump in activity has lead to bigger prices, more sales, and more real estate agents.
In 2023, real estate has been in a decline. To control inflation, the Federal Reserve Bank has instituted multiple rate increase since March of 2022 to bridle inflation. This policy is working to control inflation and, as collateral damage, deals for realtors.
This historical data for the Abilene market shows the impact of this contractionary policy on deals and realtors. Pulled from MLS records this table summarizes:
- Total transactions - all the deals that take place in one year from Halloween to Halloween. The MLS records this as "sides" referring to the buyer's side of the transaction or the seller's side of the deal. Each completed deal counts x2 - one for each agent participating in the deal.
- Agents with at least one deal - ideally, I'd like an accounting of how many agents have an active license, but no one seems to account that - even our board office (and I wish they would by month).
- Average deal per agent - this is the total transactions per annum divided by the number of agents with 1 deal per year.
- Agent growth since 2012 - 2012 is our base year with 245 Abilene MLS agents selling deal in Taylor County. Working from that base we can see that we've more than doubled the number of agents since that year.
- Total nominal volume of all deals - the sold value of all homes in the year.
- Total real volume of all deals - as we know from 2022, inflation has been part of the story and distends prices. Using the CPI deflator, prices are adjusted to 2023 terms for comparability.
- annual real volume growth - annual growth in real dollar transactions
- Average agent deal size - this averages total volume by total transactions to get a rough dollar estimate of the size of each deal.
- Average agent sales volume - average agent deal size x average deals per agent gives us an idea of sales for the average agent.
- Average nominal income - there is no set commission rate charged by agents, but a commission rate of 2.5% was used to estimate the average agent's income.
- Average real income - to adjust for inflation nominal estimated income is adjusted using the CPI deflator.
A few observations:
- Our peak of 8400 transactions took place in 2021 when stimulus money was most available. We are down by 455 this year versus the peak.
- 598 agents or brokers did sales in the last year. This number is up 144.08% over agents/brokers doing deals in 2012.
- Even before the decline to 7945 transactions, we were seeing a decline in deals per agent. If we go back to 2012, an active agent did, on average 25 deals. Two years ago when we had peak sales of 8400, agents did roughly 10 deals less than 2012 (24.85-15.41 ≈ 9.44 less). Today, the number of average deals per agent is almost cut in half (12.425 ≈ 13.29).
- In every year evaluated, the number of agents have grown. One only sees a 9-agent swing between 2017 to 2019 and this tracks with single-digit percent growth in overall volume sold during that period. 2016 and 2014 saw single-digit percent growth in volume and the number of agents booking one deal grew from 294 to 378 - a gain of 84 agents - during this time.
- Another way to look at the incentive to join the ranks of realtors is real income per agent in the last column. It fell in 2014, fell again in 2016, and continued to rise until the 2023 decrease to $47,860.