Earlier I wrote that when house prices increase real estate commissions don’t fall very much but instead we get increased entry and wasteful competition. A recent article from the LA Times (reg. required) describes the process:
One of the few things increasing faster than house prices in California is the supply of agents licensed to sell them.
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.
and get this:
There are 437,000 agents in California, enough to form the state’s eighth-largest city. With only 680,000 home sales a year, competition for listings can be savage.
Thanks to Paul N. for the pointer.