The slowdown in the housing market, mostly caused by the COVID-19 pandemic five years ago, has taken a toll on real estate agents. The rising mortgage rates and economic hardships drove most potential buyers away from buying homes, causing agents, who live on commissions, to struggle to keep their businesses afloat.
According to the Federal Reserve Bank of St. Louis, the number of full-time real estate agents and brokers was around 543,000 before the pandemic in 2019. That figure declined to 524,000 by 2021 and 512,000 by 2022. The decline accelerated in 2023 with only 440,000 agents remaining, and by 2024, that number dropped again to 398,000. These are the lowest levels since 2013, far from the over 504,000 agents at the start of the financial crisis.
In addition to economic factors, AI is changing the real estate industry. More people are using websites and apps to buy and sell homes without real estate agents, the industry is being disrupted. Online platforms offering home valuations, virtual tours, and market analysis are becoming more popular and downplaying the role of real estate agents as intermediaries.
Accordingly, the number of brokers and agents that are full-time has declined from its pandemic-era peak. Both regulatory reforms and tech disruption are responsible for this transformation.
Adding to the pressure, dozens of lawsuits have been filed against the National Association of Realtors (NAR). NAR settled with plaintiffs in March 2024 for $418 million for complaints that it required home sellers to offer big commissions to agents representing the buyers under the “cooperative compensation” practice of NAR. NAR changed rules under the settlement terms that forbade sellers from including the offer of commissions for agents representing the buyers within the terms of the property for sale.
Emily Oster, Founder of DALTX Real Estate, says this is part of a larger industry trend. “It’s the new era that agents have to be more flexible and focus more on niche areas,” she said. She cited the necessity for agents to leverage tools like AI for finding leads and processing transactions as the most vital tools for future agents.
Real estate agents need to adapt and thrive in the changing real estate market. With so many property websites available now, sellers and buyers are increasingly able to find homes on their own, without needing an agent. Agents who don’t keep up with the changes will be left behind. Future agents will need to specialize in market analysis, finance, and developing strong negotiation skills. While the tech streamlines the transactions’ process, agents are still valuable trusted advisors.
