In Real Estate, A Scrambles to Survive

Many people, the ex-wife include and judges who are safely isolated from the larger economic reality living off of the public sector, truly have no concept as to just what has happened to business that made the bulk of the revenues off of the residential real estate market. It has been brutal and revenues are down drastically leaving title companies, realtors, and real estate based law firms, surveyors struggling to survive. I visited the regional office of a large national title insurance recently, and half the employees that worked there in the boom days are gone. The same holds true in other real estate related businesses. A story in the Arizona republic looks at the case of realtors. Previously, a Long Island New York story looked at laid off attorneys - over 5,000 have been let go by large firms - seeking jobs as legal secretaries and paralegals mostly without success. It is grim and until residential real estate really recovers, do not expect a bounce back in the larger economy in my view. Here are some highlights from the Arizona Republic story:

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Real-estate agents have been among those hardest hit by the housing collapse. As the entire Phoenix real-estate industry remakes itself in pursuit of a recovery, agents who once sold 10 homes a week and earned six-figure salaries now tend foreclosure properties for little more than gas money while they hope for a listing. Brett Barry is a well-known north Phoenix agent who has gone from selling dream homes to handling evictions and open houses for foreclosure homes. He moved his office into his living room, works much longer hours for far less money but still makes his living selling homes.

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Former Valley real-estate agents are working at restaurants, grocery and clothing stores, and temporary office jobs. Some plan to go back to selling homes when the market recovers, while others have given up on the business. "I was recently at a restaurant, and the guy serving us used to be one of my big competitors," Barry said. "It's humbling for all of us. I told him not to feel bad about being a waiter because I am basically a runner for lenders these days, dealing with many unhappy people for not much money."

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In 2006, the typical commission for a local real-estate agent was 3 percent on a $270,000 home. Now, it's more like 2 percent on an $80,000 foreclosure home that requires a lot more work and up-front costs to sell.

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About 60 percent of all Valley home sales now are foreclosures. About 15 percent are short sales. Even if a home isn't in some stage of foreclosure, a seller must compete with foreclosure price levels.

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Of course, this huge decline in income has a ripple effect as purchase of other items drop drastically and those losing their homes to foreclosure have the credit destroyed - and the downward spiral continues in far too many localities.