AS FAR as jobs go, being a real estate agent looked like a no-brainer for Gen Z.
It was the height of the pandemic-era asset boom and home prices were heading “to the moon.” Buyers were moving fast, sometimes paying cash for properties sight unseen, and TikTok was flooded with tips about how to flip and sell properties. Gen Z’s digital know-how set them apart.
But just as the newest crop of real estate agents was settling into the business, the broader market — as well as the industry at large — got walloped by surging mortgage rates that froze the market and fueled layoffs at brokerages in 2023. Now, the industry’s new generation is in a frosty corner of a chilled labor market, exposed to unsettling early career turbulence.
Gila Goodman got in when times were good. She’d previously tried acting and was serving coffee on Hollywood sets, making “at most” $2,500 a month. But in 2021, when house prices were soaring, the 25-year-old met an agent. This time, he worked in real estate.
“He had a [Mercedes] G-wagon and was really put together,” Ms. Goodman remembers. “I was like, ‘All you do is show beautiful homes and talk to people.’ That got my mind turning.”
She pivoted. Ms. Goodman got her real-estate license, retooled her social-media accounts to focus on property content and left LA for Las Vegas, where home prices were on fire. Even with mortgage rates now near 20-year highs, Vegas remains “somewhat competitive,” according to the real estate company Redfin. Ms. Goodman said she sold 10 properties this October and earned almost $100,000 in commissions.
It’s an enviable story that has been hard to replicate for other young agents. Home sales slid last year as buyers balked at the higher borrowing costs and many potential sellers decided not to list their houses, fueling a shortage of available properties that has been building for years.
In recent weeks, there have been signs of a thaw. For one, there’s plenty of pent-up demand from first-time buyers stuck on the sidelines and current owners who want to move. And mortgage rates slid in the final weeks of 2023, dipping under 7% as the Federal Reserve eyes rate cuts in 2024.
COMMISSION SCRUTINY
But the challenges go beyond the market, with agents facing existential questions about the commission-based compensation that has long underpinned US real estate. In a bombshell verdict in October, a jury in Missouri found that the National Association of Realtors and others colluded to keep commissions — usually about 5-6% of a sale price split between the buyers’ and sellers’ agents — artificially high.
A larger class-action lawsuit focusing on the same central issue is expected to go to court in Illinois later this year and the Department of Justice has also been scrutinizing such practices. An end to the system could mean young agents struggle to bring in the income such commissions offered previous generations in an industry that is known for its boom-and-bust cycles.
That’s been a concern for Sabrina Powell, a 26-year-old agent in Los Angeles. After studying business in college, she met her boss through TikTok after he commented on one of her viral videos.
“I didn’t realize the issues with the real estate market until I was signing with a brokerage,” she said. “It wasn’t until I was in the field that I thought, ‘I missed the mark.’”
Ms. Powell said potential buyers have been telling her they don’t want to go through an agent, not realizing the amount of work she puts into a transaction. Despite her concerns, Ms. Powell maintains that the market is cyclical and is pushing to build up her practice.
Older agents have been through troughs before. And in part, age is what’s making the latest market downdrift difficult for younger real estate professionals. According to the National Association of Realtors, the typical member is “a 60-year-old white female who attended college and is a homeowner.” More broadly, people tend to think of real estate agents as older than twenty-something. And some buyers have a difficult time entrusting what is often the largest financial transaction of their life with a relative newcomer.
“When people see me, they think I’m 17 or 18,” said Amber Perkins, a 27-year-old agent in Los Angeles who is just on the cusp of the Gen Z age cutoff. “I’ve had people in my comment section say, ‘She’s young and inexperienced, she doesn’t know what she’s talking about.’”
CATCH-22
Ms. Perkins and her peers are grappling with a Catch-22 of early career real estate: You need deals to get experience, but you only get deals with experience. That’s especially hard in a market that abruptly turned down from historic highs that is now offering few transactions.
To deal with it, Ms. Perkins said she leans into her strengths as a digital native and pushes hard on social media. That’s where she gets most of her leads anyways.
“I’m young,” she said. “But I’m confident in my abilities and what I can do to get deals done.” — Bloomberg
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The article was originally published in Business World.
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