Have you seen the latest news releases from NAR? According to the big association, it is now "representing about 800,000 members involved in all aspects of the residential and commercial real estate."

This is a lot of people, especially when you consider that the nation is having a recession, unemployment is up, and in October NAR included "more than 760,000 members."

So NAR has added some 40,000 members in just three months, a remarkable achievement. But why are all these folks entering real estate?

The clearest reason is that the country IS having a recession, people are losing their jobs, and yet the real estate sector is enormously healthy.

The latest figures from NAR show that existing home sales reached 5.25 million units in 2001, up 2.5 percent over 2000 and an all-time record. New home sales were also strong: NAR says 902,000 new units were sold, another record and far more than the old standard of 885,000 new homes sold in 1998.

If we assume people are logical then it follows they will migrate to the fields where there is the best opportunity to prosper. Lodging, travel, dot-coms, telecoms, and a number of fields are now losing ground, so brokerage looks good.

Moreover, people don't have to look far to see the benefit of property ownership. Home values have generally increased: The national median existing-home price for 2001 was $146,600, an increase of 5.5 percent over 2000. That's remarkably good when you consider the rate of inflation and also that Wall Street had another losing year: The Dow closed at 10,021.5 -- down 7 percent while the Nasdaq finished at 1950.4, off 21 percent.

But if unlimited numbers of people continue to enter real estate, does that mean experienced brokers will lose money to newcomers? After all, there are only so many sides and every commission earned by a new salesperson means fewer dollars for everyone else.

There have been predictable calls to raise barriers and effectively limit the ability of newcomers to enter the field. Let's insist, some suggest, on vastly more education before individuals can practice, let's raise test fees, and let's make admission more difficult. Let's require college training for newcomers -- those with licenses today would be grandfathered in, of course.

None of this is surprising, those who are "in" want to protect their turf and their wallets. But one of the qualities which makes real estate interesting is that it benefits from new blood. New people bring fresh ideas and distinctive approaches, they challenge the existing status quo, and they make the field more competitive.

It may well be that such qualities have helped brokerage combat online competition. While booksellers, travel agents, and stockbrokers have readily yielded marketshare and revenues to online sites and services, that hasn't been the case with real estate. Where is the example of an online site that has displaced a local broker? Where is the Internet FSBO center that has impacted the industry?

Brokerage remains a localized business defined by limited profits per transaction, the result of intense competition. And while some argue that real estate could be made "more efficient" and prosper with fewer licensees, there has not been much interest in opportunities to earn less -- the inevitable result of "more efficient" programs.

Part of the process of being competitive means there must be ready opportunities for newcomers to join the field. Some will succeed, most won't, but everyone should get a chance. That's an approach which seems to have worked remarkably well despite evolving market conditions, an approach which should be continued.

For more articles by Peter G. Miller, please press here.

Published: January 11, 2002

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