Real Estate Industry Faces Economic Slowdown: Agents, Brokers, and Ancillary Services Struggle

Real Estate Industry Struggles as Sales Plummet and Businesses Suffer

The real estate industry is facing a significant downturn as home sales continue to plummet and businesses within the sector struggle to stay afloat. The once-booming market has taken a sharp turn, leaving agents, mortgage brokers, and other professionals in the industry desperate for business.

Helen Jeong, a real estate agent with 17 years of experience, saw her most prosperous year in 2020 with five successful sales. However, as mortgage rates skyrocketed, the industry was turned upside down. Sales dropped, commissions dwindled, and Jeong found herself closing just three more sales over the next 2 ½ years.

The pandemic-fueled home sales boom came to an abrupt halt as mortgage rates soared above 7%, causing a nearly 50% decline in Southern California home sales over the past two years. Despite the drop in sales, home prices continued to rise due to a shortage of available homes on the market.

Industry analyst Pat Veling of Real Data Strategies highlighted the severe impact on ancillary services around real estate transactions, leading to a significant economic slowdown within the industry. Sales revenue has decreased by 35% in Southern California, with the average real estate agent conducting 19% to 29% less business.

The effects of the slowdown are evident across various sectors within the real estate industry. Mortgage brokers are experiencing a significant decrease in lending activity, with mortgage applications hitting a 27-year low. Companies providing services such as home inspections, home warranties, and natural hazard disclosures are also feeling the pinch, with business down by 20-40%.

At the recent California Association of Realtors conference in Anaheim, industry professionals discussed survival strategies in the face of the downturn. Agents are advised to stay proactive in marketing themselves, engaging with past clients, and exploring new avenues for business growth. Some agents have resorted to part-time jobs or alternative forms of stress relief to cope with the financial strain.

While some agents, like Vicky Maliszewski, have managed to thrive in the current market by ramping up their marketing efforts, others are struggling to make ends meet. The industry as a whole is grappling with the challenges posed by the ongoing slowdown, with businesses forced to adapt to survive in a rapidly changing market landscape.

As the real estate industry continues to navigate these challenging times, the future remains uncertain for many professionals who rely on home sales for their livelihood. With no immediate end in sight to the industry downturn, agents, brokers, and businesses must find innovative ways to weather the storm and emerge stronger on the other side.