Is Real Estate Agent a Recession-Proof Career?

When considering a recession, there are some careers that many consider recession-proof. This means that they are always in demand and can withstand turbulent economic times. What types of careers fall into this category? Nurses and teachers are high on this list because there is always a demand for healthcare, and schools continue throughout a recession.

Another industry that does have some turbulence but is often stable is real estate. Even when there’s a recession, people are buying and selling homes. In fact, when families are going through difficult times, one of the first options may be to consider selling their home and moving. Things also depend on how the housing market is doing, and the number of agents in the area that are trying to get business.

The goal is to help realtors understand how a recession can affect them and the factors that can help them be successful in having a career in real estate through an economic downturn.

What about Australian property market opportunities during a recession?

Since February, the number of real-estate businesses has continuously declined in 2022. During this time, the market cooled a bit for different reasons, and sellers and buyers both took the time to evaluate their needs.

With the changing market, sellers started keeping their homes longer, watching the market. Although this could question individuals pursuing a career as a real estate agent, the market does turn at some point. This is one of the reasons why the job of a real estate agent is consistently evolving. Basing a decision on whether to become a real estate agent solely on a recession isn’t a very good idea because it’s just a short span of time.

The reason may not be obvious, but it’s quite simple.

Can you make money in real estate during a recession?

Quora has quite a few comments from real estate agents from another perspective. Many people wonder if real estate is a good career. According to these agents, the issue is the number of agents that get the bulk of orders, not the recession itself. Many comments also allude to the idea that time is not that important because the recession will eventually end while a real estate career continues.

“A few economists have predicted that 2022 will experience a downturn in the market,” says Brian Kline of Realty Biz News.

“But, the majority believe it’s durable enough to last. Real estate is a career that has longevity, so consider what happens after the next few years. Real estate is not new; it’s been here since the beginning and will continue whether we’re in the industry or not. That means choosing to become a real estate agent is a good choice at any time.”

This invites the question. Is real estate a good career in Australia? When you have people afraid to become a real estate agent because of a fluctuating market, this can be advantageous for those who believe a real estate agent career is a great opportunity. According to The Real Estate Institute of Australia (REIA), more than 96% of property managers and sales agents assist the housing spectrum. With Australia being one of the most expensive real estate markets in the world, the real estate agent career path is very competitive.

When you’re determined to be great, fear is not an option.

It Takes Time to Build Your Income

Becoming a successful real estate agent is a process. When considering how much a real estate agent make, time is a crucial factor. According to the NAR, new agents that have less than two years of experience are often on the lower end of the spectrum, with a median gross income of about $8,800 per year, but with experience comes reward. Indeed indicates the average annual salary for realtors in the U.S. is $97,853. Those that remain in the field and have more than six years of experience can make over six figures.

Are real estate agents rich? It depends. If this is your passion and you are dedicated to putting in the work, this can be lucrative. While that seems promising, the reality is that many people who become licensed agents don’t last. In fact, 87% of all real estate agents fail in less than five years. That equates to 13% of the collective deciding to stick it out and work hard to earn that six-figure income.

What about Australian real estate agents?

Here are some Australian real estate agent statistics to help put things into perspective:

• The average Australian real estate agent earns a yearly salary of $48,000 plus bonuses and commissions of $28,000 (PayScale, 2020)
• Around 120,000 people are employed in the real estate industry. 65,000 of that number consists of real estate agents, business brokers, property managers, principals, and representatives (REIA, 2011)
• In 2018, real estate agencies generated an estimated $2.8 billion in revenue (Statista, 2020)
• Gold Coast real estate agents earn about 14% more nationally, while the real estate agents in Adeline earn about 20% less (PayScale, 2020)
• The largest firm in Australia’s real estate market is the Ray White Group, although no one company has more than 5% of the market share (IBISworld, 2019)
• Data indicates that 68% of people who already have a real estate agent would recommend them to friends and family (CoreLogic, 2015)

Australian Property Market Forecast 2023

Current interest rates have increased significantly over 2022, creating a turbulent year for Australian property. While things look to level off, this surge caught many people by surprise. Interest rates will be a huge factor in 2023, and opinions range from optimistic to pessimistic.

The current cash rate set by the RBA is 3.10%, with the last three increases at +0.25% after five straight months of increases at +0.50%.

Commonwealth Bank forecasts that December’s rate hike was the final one for this cycle, suggesting that the 3.10% rate is the new ceiling. In contrast, NAB expects another increase of at least +0.5, which will create a new ceiling of 3.60% by March 2023. Westpac and ANZ think that rates will get even higher, with the ceiling at 3.85% by May 2023.

According to a recent report by the SQM Research property analysis firm, home prices in Australia will increase next year if inflation drops and the rate rises are paused by the Reserve Bank. In fact, the 2023 Housing and Boom Bust Report also distributed by SQM Research forecasts home prices in the capital city will rise 3% to 7% if the interest rates remain below 4%, inflation drops to 5%, and unemployment remains at 5%.

This forecast is quite different from PropTrack’s which indicates home prices are going to continue falling across the country throughout 2023, including those areas in certain regions that have continuously been up almost 50% since the beginning of the pandemic.

So, is a real estate agent a good career choice, particularly in 2023?

As it currently stands, the Australian market shows signs of being better in 2023 than it was in 2022. Many believe that the situation in 2022 was a direct result of 2021’s record-breaking housing prices. Cyclical history has shown that huge rises always result in a decline on the other end.

It is important to note that the analytics do not consider external microeconomic factors like the current gas problem in Europe or China’s real estate crisis which could have a direct impact on how things move forward. While it’s easy to blame everything on what you see, the market fell in 2022 for a reason. Making moves solely based on the domestic market analysis for what will occur in 2023 is a mistake.

Many people in the industry wonder if Australians will continue actively buying and selling at the same pace in 2020 and 2021. Realistically, the answer may be no, but COVID was a significant factor in how things panned out in the previous few years and the market remained steady and thriving. For a quick comparison, there were over 20,000 homes for sale in Atlanta but now there are only 9,000 on the market. Chicago went through similar circumstances, with its inventory dropping from 40,000 to 17,000 homes during the same time.

KPMG indicates that the years beginning 2020 through 2023 will have around 25,0000 and 20,000 lower stocks of homes in Victoria and New South Wales than would have been the case if the pandemic didn’t occur. At the same time, 2021 saw peak pricing in the Australian real estate market. While real estate is smaller, prices continue to rise.

Many people thought COVID would have lessened the number of real estate agents in the market, but the reverse happened – there has been a surge of new agents in the United States that came about during the pandemic. According to the National Association of Realtors, 2020 and 2021 saw a 60% jump in people entering the real estate field.

Is a real estate agent a risky career?

Being a real estate agent deals with how you adapt to the market situation. While many people consider the risk involved, this is an industry where selling and buying may slow down, but it won’t ever stop because people will always need houses. Conditions in the market depend on and are influenced by what goes on with the economy and how people react to it.

Good real estate agents understand market conditions and fluctuations over time, which helps them adapt and adjust to ride the wave and capitalize on opportunities. When considering the question “Is Real Estate Agent a Recession-Proof Career?” it’s important to think about the types of property owners and their individual situations rather than the professionals working in the field.

The job of a real estate agent work isn’t in the intricacies of the profession itself, it’s the steps taken to successfully be a real estate agent. Doing the research, making connections, and setting a standard where you’re always in demand are some of the qualities many agents must consider when deciding if real estate is good career planning. When becoming a real estate agent, being determined and getting past fear can make a huge difference.