Economists' Commentary: Census Non-employer and NAR ...

National Association of Realtors ? By admin on Wednesday, September 7, 2011

By Arun Barman, Research Economist

By and large REALTORS? are self-employed individuals. Being self-employed presents unique challenges to REALTORS?, for instance access to affordable health insurance and ?potentially volatileearnings. Self-employed individuals are also a challenge to statisticians who attempt to describe the business charactersitics of the U.S. economy. In order to quantify the business of the self-employed, the Census Bureau creates data based primarily on IRS records on ?nonemployers? (which are essentially self-employed individuals). Recently the Census Bureau published statistics on 2007 nonemployers. The Census Bureau publishes these numbers by state and metro area, also by industry code. Most REALTORS? fall under the Census category of NAICS 5312: Offices of Real Estate Agents and Brokers, so this analysis will primarily look at that data. ?

The past decade witnessed a steep rise in home sales and prices, followed by a sharp decline. Rising home sales lead to a higher number of self-employed real estate professionals seeking to meet the demands of the marketplace. ?The chart below shows this rising trend in the number of self-employed (nonemployers) real estate agents and brokers. The number of self-employed in this industry rose from just over 500,000 in 2001 to over 800,000 in 2006 before declining a slightly in 2007. However, some agents and brokers may be employees of organizations such as large firms with significant real estate assets, so not all agents and brokers are self-employed.

Chart 1: Self-employed Real Estate Agents and Brokers

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NAICS 5312: Offices of Real Estate Agents and Brokers

While the number of self-employed increased sharply between 2001 and 2006, most of the increase was warranted by rising sales activity and higher receipts (basically equivalent to annual earnings). However, when home prices and sales began to decline, total receipts shrank. One interesting measure to look at is receipts per self-employed person, which is shown in the chart below. ?Receipts per person increased from around $40,000 in 1998 to just under $50,000 in 2005. However, there was a sharp decline over the next two years with receipts per person falling to just under $40,000 in 2007.

Chart 2: Average Annual Receipts of Self-employed Real Estate Agents and Brokers

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A comparison among several states can highlight some underlying differences in nationwide trends in the real estate industry. The table below shows the differences among some of the largest states: California, Florida, Arizona, Texas and New York. The first three states saw a great deal of market speculation with prices and sales rising quickly earlier in the decade, before declining sharply. Unsurprisingly, the number of self-employed real estate agents and brokers rose sharply in the middle part of the decade in these states, before falling. The number of self-employed agents and brokers in California rose almost 30 percent between 2003 and 2006, only to fall almost 10 percent between 2006 and 2007. Total receipts and receipts per self-employed agent and broker also rose and then fell considerably. Receipts per person fell about $15,000 between 2005 and 2007 in California, Florida, and Nevada.
The numbers from Texas and New York tell a slightly different story. Receipts and the total number of self-employed rose steadily between 2003 and 2006, before falling slightly in 2007. Receipts per person also was more stable than in states which experienced a greater level of speculation, only falling around $2,000 between 2005 and 2007. The difference between states like Texas and New York and the three more speculative states (Florida, Arizona, and California), highlights an additional way in which differences in the performance of the housing market played out across the country.

Table 1: California, Florida, Arizona, Texas, and New York Self-Employed 2003-2007

While the nonemployer statistics can reveal many interesting trends in the real estate market, NAR membership data reflect similar trends. NAR membership rose during the early years of the decade before decreasing as the real estate market weakened. It should be noted that NAR membership data differs from the Census data in that members of NAR not only include REALTORS? who are agents and brokers but also appraisers, property managers and other real estate professionals. Also, not all real estate professionals are REALTOR? members of NAR. The data can be found at: http://realtors.org/library/library/fg003

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Chart 3: NAR Membership 1997-2008
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For more statistics on the self-employed or to see data from other states or metro areas: http://www.census.gov/econ/nonemployer/index.html

This is one in a series of commentaries by the Research staff of the National Association of REALTORS?. Read more commentaries

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more

Related posts:

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2. Economists' Commentary: July Existing Home Sales
3. Economists' Commentary: Greening Homes
4. Economists' Commentary: Market Outlook for August
5. Economists' Commentary: Climbing Out of Recession

Tags: NAR, Realtors

Source: http://nationalrealtynews.com/economists-commentary-census-non-employer-and-nar-membership-data/

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