This story has "bubble" written all over it.
One of the few things increasing faster than house prices in California is the supply of agents licensed to sell them.Consider this contradiction: the number of new would-be real estate agents in California increased nearly 300% (and the number of total agents by some 20%, as you'll see below) over the same period that the number of houses sold in California declined 2%. This drop puts the Golden State in the avant garde of US housing market bubbles. Next-door Nevada saw the number of houses sold from 2004:I to 2005:I tank a stunning 10%. Watch Las Vegas as well.
More than 22,000 applicants took the state's real estate exam in April, nearly three times as many as in April 2003, according to the Department of Real Estate. To handle the surge, the department has rented six test centers around the state to supplement the five it already has.
The last time so many people wanted to sell real estate in California was in 1990. In what might be an ominous sign for the current boom, that year marked a peak in the housing market. . . .
"I didn't want someone else to get rich while I did all the work," [Silicon Valley real estate agent Joseph Petralia] says. "I'd rather put in the effort and see the results myself."The echoes of 2000 are deafening.
Justin DeSantis, his buddy in the next cubicle, concurs that tech is a bad bet: "Only one out of 20 dot-coms makes it."
A former personal trainer, 31-year-old DeSantis likes the unlimited potential of real estate. . . .
There are 165,000 Realtors in California, an increase of 49% since 2002. Only a handful of other fields is growing faster, including debt collection and waste collection, according to the state Employment Development Department. . . .Funny to see real estate right up there with debt collection. Those interest-only loans do have a unique way of bringing these two fields together . . .
"Everybody loves real estate now. It held up when many people were losing money in stocks. People talk about real estate in the grocery stores. That drives interest in the industry," said Janet Case, executive officer of the Silicon Valley Assn. of Realtors and herself a tech refugee. . . .Just as John and Jane Public followed stock quotes more closely than box scores in the late 1990s and made MSNBC anchors household names. This market is attracting speculators of every type, something which has even made Alan "Mr. Sunshine" Greenspan sit up and take notice. As Bloomberg writes,
. . . the new agents keep coming. Six years ago, people gave up good jobs for the excitement � and stock options � of Internet start-ups. Now some are leaving good jobs with tech companies because they find more thrills in real estate.
A survey of the Realtors group released March 1 found that 23 percent of homes sold in 2004 were purchased by investors.In hot spots like California, this figure has to be much higher, driving prices through the roof. Per the National Association of Realtors, the "affordability index" of houses in the West in March was 88.0; a year ago it was 105.7. The national figure is 129.4.
If real estate is setting tongues wagging in the grocery stores, you know the Day of Reckoning can't be far off.