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REALTOR®: Number of Agents will Decrease, but Housing Downturn Just Part of Cycle, according to DRE Commissioner

Monday, November 12, 2007

California Department of Real Estate Commissioner Jeff Davi reports there are about 547, 311 real estate licensees today, which means one out of 53 persons is a real estate agent, but he predicts as the market slows down, the number of licensees and practicing agents in the state will drop. He’s already seeing it. Today there are 35 to 40 applicants a week, compared with 1,000 per week just a few months ago.

The reason? As in the case when the market weakens, not all agents will survive the downturn, and only the good, serious agents will survive.

The drop in numbers is a natural occurrence with any industry that witnesses change, Davi says. “Real estate is cyclical. We’ve seen it in the 1980s and in the 1990s.”

The difference between the downturn in the market today compared with that of the past is the economy is continues to do well today, especially in the Peninsula and in Silicon Valley, according to Davi. He says housing cycles have their peaks and valleys. In 2006, sales were the 11th highest on record. Even with sales down and an increase in foreclosures, he does not believe California is in for a recession because the economy is performing well and jobs are being created.

Davi says as the number of agents increased over the years, the Department of Real Estate has made great strides to facilitate the licensing process by encouraging agents to use the Internet for their needs. Online activity has cut down the licensing processing time by 65 percent - from 175 days to 66 days. Davi reports that 53 percent of license renewals, 59 percent of all miscellaneous license transactions, and 79 percent of all examination scheduling requests are now conducted using e-licensing processing.

It is the DRE Commissioner’s goal to speed up the licensing process even more through electronic license exams. He says the project is underway, plans are being finalized, and construction of the project should be completed by next spring.

It is the Department of Real Estate’s mission to protect the public in real estate transactions and provide related services to the real estate industry. Even as the number of licensees has more than doubled since 1991, Davi’s staff of 342 employees has remained the same. The proposed DRE budget is $4.6 million annually.

Regulatory cases have increased steadily in the last six years because of the increase in the number of licensees and problems currently besetting the market. During fiscal year 2001-02, the DRE had a little over 5,000 cases. Davi expects the department will have 11,000 by the end of the 2007-08 fiscal year.

Audit findings show 35 percent are major violations, resulting in a revocation or restriction of a license; 23 percent are minor violations, usually resulting in suspension of a license; and 24 percent result in a corrective action letter. Most of the violations – 52 percent – stem from trust funds/records; 20 percent, licensing and employment; 11 percent, disclosure; 4 percent mortgage loans; 4 percent, supervision; and 3 percent, broker escrow.

Davi invites agents to visit the DRE Web site at http://www.dre.ca.gov/ for e-license processing, to check on the status of a license and new requirements. He also encourages agents and the public to report violations.

“That’s the only way we can get those bad actors out of business. … We are very much complaint driven,” Davi notes.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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