In a recent video by real estate expert Michael Bordenaro, the current struggles of real estate agents in today’s challenging market were laid bare. The video highlights the economic hardships faced by agents due to a significant slowdown in the housing market and impending policy changes. According to Bordenaro, the real estate industry is at a crossroads, with many agents struggling to make ends meet.
A Market in Decline
Bordenaro opens his video by pointing out the historical low in home sales. “We’ve seen the lowest amount of home sales since the year 1995,” he says, describing the situation as “almost incomprehensible.” This 30-year low in home sales has severely impacted the livelihood of real estate agents who depend on transactions to earn their income.
Financial Struggles of Real Estate Agents
According to Bordenaro, only 41% of real estate agents are making $75,000 a year or more, which he considers a threshold for a living wage in today’s economy. This means that a staggering 59% of agents are earning far less. Bordenaro highlights a chart from the National Association of Realtors showing that the bottom 21% of agents make less than $10,000 annually, indicating that many are treating real estate as a side hustle rather than a full-time career.
Policy Changes and Their Impact
Bordenaro also discusses potential policy changes from the Biden administration, particularly a proposed rent cap law that aims to limit rent increases to 5% per year. He criticizes this proposal, suggesting it could lead to fewer new developments and poorer maintenance of existing rental properties. “In almost every city that has their own rent control laws, there’s been a mass exodus from developers,” Bordenaro explains, pointing out the unintended consequences such policies can have on the housing market.
The Economic Realities
The economic realities for real estate agents are stark. Bordenaro notes that the average number of transactions per agent has decreased, with typical sales volume falling from $3.4 million to $2.5 million. This drop in sales volume translates to a significant pay cut for agents who earn commissions based on these transactions. Despite these challenges, some agents remain optimistic, believing the market will improve in 2024 and 2025. Bordenaro, however, remains skeptical, viewing such optimism as potentially unfounded.
The Broader Market Context
In discussing the broader market context, Bordenaro highlights the affordability crisis and lack of inventory as major barriers to home purchases. According to a report from the National Association of Realtors, the primary reasons potential buyers are staying on the sidelines are the high cost of housing and the scarcity of available homes. Bordenaro emphasizes that even if interest rates were to decline, the overall cost of purchasing a home remains prohibitively high for many buyers.
Rent Cap Controversy
Bordenaro is particularly critical of the proposed 5% rent cap, arguing it could deter landlords from maintaining properties and discourage new developments. He contends that such measures would ultimately lead to a reduction in housing supply, exacerbating the affordability crisis. “The government can’t be telling people how much they can charge for rent,” he asserts, framing the issue as a matter of property rights and economic freedom.
Landlord Expenses and Real Estate Market
The expenses faced by landlords have been rising faster than those of owner-occupants, Bordenaro explains. Higher property taxes, insurance premiums, and maintenance costs are making it increasingly difficult for landlords to operate profitably. He warns that if rent control laws are implemented, fewer people will want to become landlords, further reducing the housing supply.
The Need for Market Patience
Bordenaro advises potential homebuyers to remain patient, arguing that holding off on purchases could force prices down as inventory builds up. He cautions against giving in to the fear of missing out (FOMO) that often drives people to make hasty buying decisions. “The more people that remain patient in this environment, the better deals everyone is going to get in the future,” he suggests.
“The Middle Man Needs to be Cut Out”
People in the comments shared their thoughts: “The realtor that sold me my house didn’t bother showing up to the signing because she was ‘too busy’. I don’t care if they are suffering”
Another person added: “The “middle man” needs to be cut out of every transaction. People that actually work make far less.”
One commenter concluded: “I can only speak for myself, but in buying two houses and selling, one, I never came across and honest agent concerned about my best interests – only a commission check. So am I concerned about how well they are doing? NO.”
A Call for Caution
In conclusion, Bordenaro’s video paints a grim picture of the current state of the real estate market and the financial struggles of agents. He calls for cautious optimism and strategic patience, urging agents and potential buyers alike to navigate these challenging times carefully. His insights highlight the complex interplay between market forces, policy decisions, and economic realities that are shaping the future of the real estate industry.
Impact of Rising Landlord Expenses
What are your thoughts? How might the proposed 5% rent cap law affect the availability and quality of rental housing in the long term? What strategies can real estate agents adopt to survive and thrive in a market with historically low home sales? What impact will rising landlord expenses have on the overall housing market, and how can this be mitigated?
For an in-depth look, view the complete video on Michael Bordenaro’s YouTube channel here.
