Some of you think a trade association has a duty to enhance the real estate business or protect the status quo, while others think we shouldn't exist at all. I would argue, we fall somewhere in the middle - part of our role is to provide you with information and insight so that you can devise ways to smash the status quo before the forces of capitalism, demographics and technology do it to you. However, it's not enough to simply provide information without some context for the information. It is up to members, however, to figure out how to use the information and apply it to the trade.

About a year ago we published an article asking agents to reconsider their decision to pursue a career in real estate. We did not base that unusual statement on a desire to see Association revenues fall, but instead on a broader fiduciary concern about the long-term health of our client base. We have stated publicly, on numerous occasions, that there are simply too many people chasing too few transactions which have the effect of diluting the compensation of those professional full-time agents.
Some thoughts for you to ponder:

This housing market is not going to rebound to a level that will provide the average agent with 9 transactions per year in the next 24 months. I know that is bold statement, but it is consistent with what we published in October 2006. This market has yet to hit bottom and from many of the indicators, we still have a ways to go.

Like sellers in the marketplace today, we simply have an excess agent/broker inventory. The housing market for home sales will not improve until the inventory is significantly reduced. It is no different for sales per agent. Unless we see a dramatic reduction in the number of agents/brokers, the number of transactions per agent will continue to decline. Over the last few years, sales have been declining while membership numbers have remained constant. We have fewer transactions to spread across more REALTORS®. As the transaction pool continues to contract, so will total (aggregate) compensation.

Lending standards are not going to ease up any time soon. We "sold forward" to a number of people during the 1999-2005 market. Many of the consumers who would have been looking to purchase over the next few years are already homeowners. Some should not have been homeowners because they didn't understand the true cost and responsibility of homeownership. Unless hundreds of households with incomes above $85,000 move to San Diego in the next 12 months, we will be looking at lower unit sale figures over the next year or more.

Too many homeowners are in a situation where they simply cannot sell because of second, third and fourth mortgages. Homes are not ATM machines and some of these owners thought that price inflation would continue to support their spending habits. Because they borrowed heavily against their homes, they need a selling price higher than the market will support. This adds to the inventory, prolonging the housing recovery.

There are more foreclosures and short sale properties on the way. These properties have two market implications: 1) in concentration they begin to devalue entire neighborhoods, which means the inventory grows and depreciates; 2) they compete with homeowners in need of a specific dollar amounts to sell. Where do you think stressed out sellers will look to increase their bottom line? It is happening already and it is possible that there will be a race to the bottom on compensation.

Agent/broker numbers must fall or the industry will evolve in to a part-time activity. Until the industry sheds excess agent/broker inventory, agent productivity will continue to fall. How many is too many? In my humble opinion, we're about 40% heavy. This is not going to make me a popular person, but unless the median agent is closing 9 transactions a year, it is difficult to understand how you can be considered a "professional" possessing some special skill or knowledge about the real estate transaction.

How did I come up with "9"? Take the median priced home in your community and figure out the median commission on that home and multiple by 9. Then ask your relatives, friends and neighbors if they consider anyone making less than that amount, minus business expenses, a professional who has mastered a skill or talent?

Please understand before you send me a scathing email or talk about me on blogs, the median hourly wage in San Diego is $16.97 an hour. If you take my "9 transactions a year" and calculate out the annual earnings you will be very close to the state's median hourly wage. Do you think a consumer believes a person earning $35,000 a year is a "professional"? Does that remind you of any other professions?

Please understand we're saying this because we care about the business, the survival of agents/brokers and of a profession that requires tenacity, innovation and entrepreneurial skills like very few in America.

Fewer members mean less dues income for the Association. We're prepared to lose that income if it means our client has shed excess agent/broker inventory and thereby increases the quality of service to our customers. The only way to stabilize falling incomes is to reduce membership size across the industry. The Mortgage and Title industries have already begun downsizing. It is time for agents and brokers to consider the same. Before you pay your 2008 Association dues, please think carefully about whether or not you should continue following this career path