Technology TransactionsNAR Member Incomes Rise With Good Times
With high-tech firms and online sites facing tough times, perhaps the moment has come for Internet empowered workers -- "IEWs" no doubt -- to consider a new career.
While no one is promising instant riches or an IPO by Thursday, the 2001 member profile study from the National Association of Realtors suggests that real estate can be a solid career choice.
How solid? Look at these numbers from the study:
*A typical NAR member earned $47,700 in gross personal income -- and 23 percent took in at least $100,000. Member income is up 10 percent since 1998.
*If a typical NAR member earned $47,700 in gross personal income during 2000 than NAR members have a lot of clout: 760,000 members x $47,700 = $36.25 billion in buying power.
*Brokers do better than sales people. A typical broker generated $73,400 in gross personal income while sales folk earned $34,100. Interestingly, 15 percent of all sales people and 36 percent of all brokers earned $100,000 or more.
*In 1999, the last available year, typical household income nationwide was $40,816, says NAR. In comparison, the median gross household income for NAR members was $92,800.
*Among agents, 25 percent have a bachelor"s degree and 9 percent have a graduate degree. For brokers, the numbers are a touch higher -- 28 percent finished college and 13 percent have graduate degrees.
*As with most fields, longevity counts. Agents in their first five years typically earn $18,800 annually, while those with at least 10 years in the business generally take in $51,500 during years 11 through 15. Brokers with at least a decade in the business commonly earn $74,300.
The figure above raise an important question: Can those in real estate continue to do well?
To start, the numbers reflect NAR membership numbers, not licensees in general. NAR has roughly 760,000 members, but nationwide there are some 2.2 million people with real estate licenses according to the Association of Real Estate License Law Officials. Presumably, the earnings for all licensees are significantly lower.
In 2000, says NAR, the median sale price nationwide was $139,000 for existing homes and 5.1 million were sold. Another 903,000 new homes were sold in 2000 at an average price of $206,400, according to the National Association of Home Builders.
If you run the numbers, existing home sales amounted to roughly $708.9 billion in 2000 while new home sales were worth an additional $186.4 billion -- a total fairly close to $900 billion. Commercial real estate, leasing, land sales and other activities are extra.
The catch is that the last few years have been very good for real estate -- a solid economy coupled with low rates is just about an ideal situation. But what if rates rise, the economy flattens, or both?
Then brokerage -- like many fields -- becomes vastly more difficult. There are reduced commission opportunities because fewer transactions will be made and costs increase because it takes longer to market a typical home. The number of people actively in real estate -- as opposed to those with a license but who are not active -- will decline.
The good news is that many in real estate are preparing for the future. They are investing in -- what else? -- real estate. NAR reports that nearly 40 percent of all members own investment property, an income-producing hedge in tough times, an appreciating asset when local economies are good, and a source of tax write-offs each year.
For more articles by Peter G. Miller, please press here.