Little More on NAR 800K

A while back, over on Notorious, I speculated that the number of real estate agents would drop further. Since the best measure of the number of real estate agents is the membership of NAR, I thought we’re headed to about 800,000 members of NAR from the around 1.2 million number we’ve heard recently.

As of January of 2011, NAR had 1,039,988 members, which represents a drop of 4.96% from January of 2010.

Well, I’ve been doing some research and number crunching for a presentation I have coming up, and wanted to share this little tidbit with you all.

Looking at Trends

First, a lovely little chart which shows off just how bad my graphical design skills are (Click for a larger picture):

Apparently, there is a fair amount of research that shows that the Real Estate Bubble really started inflating in 1997. Indeed, we see that REALTOR numbers were sort of up an down, but relatively flat around the 700,000 figure from 1980 to 1996. Starting 1997, however, we see a sustained rise and a fairly dramatic one beginning around 2002.

If you plot a straight line trendline from 1980 to 2010, we see that while REALTOR numbers went way above long-term trends from 2004 to 2010, we should have hit the long-term trend. NAR and Associations and the industry as a whole should cease wholesale bleeding of members, and by 2016 or so, we should be above the 1.2 million number that we had back in 2005.

If, however, you believe that 1997 to 2006 represent the Bubble Years, and therefore plot a trendline from 1980 to 1996, you get the red line above. That suggests that we are still way above the long-term trend, and that by 2016 (five years from now), we should be right at the 800,000 number.

That’s another 20% in membership decrease to go.

A Couple of Things To Consider

Inman News recently reported that a major brokerage in South Carolina dropped its Association affiliation because what the agents were getting in services wasn’t worth what they were paying in dues. So maybe the loss of NAR membership isn’t due to people just throwing in the towel on being a real estate agent, but merely people electing not to join NAR (and the state and local Associations, of course).

But here’s something to consider. In that story, Inman reported that the Central Carolina Realtors Association — the one that the brokerage left — ran a $151,280 deficit in 2009, reducing its net assets (i.e., reserves) by 21% to $562,632. That was prior to the brokerage bolting.

The NAR Membership report shows that South Carolina as a state lost 10.31% of its members between January 2010 and January 2011, to 14,571. Note that South Carolina as a state lost 13.4% between 2008 and 2009, going from 18,343 members to 15,879.

Two things about this.

First, I’d like to see what CCRA’s deficits were in 2010; its public filings as a non-profit should tell us in a couple of months.

Second, Inman reported that the president of CCRA called its finances “very sound”. Well, if we have another 20% to go from January of 2011, before we hit the long-term trendline, how sound would CCRA’s finances be when its membership count isn’t 14,571 but 11,656?

Since CCRA is hardly unique in the country, I suspect that this has to be one of the top concerns of every single Association executive.

What To Do About It?

Well, that’s well beyond the scope of a blogpost. Besides, I get paid for that sort of thing. 🙂 But more seriously, there is no one answer, because it depends on a particular Association, its particular situation, its particular strengths and weaknesses.

But I will offer one general suggestion: if you’re not thinking about it, not dealing with the reality of the situation, and just hoping that times will change… um, there’s no hope of solving anything.

-rsh