As housing slumps, realtors quit

Real estate is a line of work filled with mothers returning to the workforce, older workers squeezed out of lifetime careers, and young opportunists looking to trade sweat equity for potentially big cash-outs. Indeed, the industry norm is that only 4 percent of agents choose real estate sales as a first career.

In Georgia, realty ranks had swelled to 48,000 at the peak of the market. In the end, many say, there were too many inexperienced agents hawking houses.

"There's a lot of money being spent [on real estate classes] teaching agents how to waste a year of their life," says Atlanta agent Sandy Koza. "Then you get a downturn and a bunch of people get bumped. To [experienced agents like] us, it cleans out the business a little bit."

Florida's Cape Coral, a canal-sliced beach community, saw 800 building permits a month fall to 25 to 30 in the past year. The rapid slowdown left real estate agents, investors, and brokers holding the bag on big-money deals.

"It's a gold-rush mentality," says Michael Davis, an economist at Southern Methodist University's Cox School of Business in Dallas. He has been struck by how many agents, brokers, and investors, acting against conventional wisdom of portfolio management, converted large percentages of cash holdings into only a single and somewhat risky investment: property. "I don't know whether they're ignorant or optimistic, perhaps a little of both," says Dr. Davis.

Many others became the foot soldiers in the housing boom, second- or third-careerists drawn to the self-determination, relatively low entrance costs, and perhaps even the allure of the trade as embodied by novelist Richard Ford's legendary character Frank Bascombe, an angst-driven realtor who wanders the Jersey Shore for deals and revelations.

A former computer developer, Thomas Banecke of Sandy Springs, Ga., spent most of the summer baby-sitting a new condo development – usually a plum assignment. But when the Atlanta condo market tanked, foot traffic dwindled to almost zero.

Mr. Banecke is now back in the computer business and is putting his real estate career on hold. In some ways, he says, the cold housing market forced real estate agents, especially rookies, to confront their own abilities, schemes, and dreams. Upfront costs, marketing, association fees, and the crucial contacts are either more costly or harder to procure than an aspiring real estate agent usually expects, Banecke says.

"This kind of thing will wipe up a whole bunch of people who thought they could do this to make a living," he says.

As for McMahon, the Atlanta agent, she still had a nice listing book and plenty of leads when she called it quits. In the end, unreliable buyers, surly sellers, and a lack of office camaraderie contributed to a decision that solidified when home sales and prices dipped. "I was waiting for a time to kind of swing out," she says. She's planning to become a high school science teacher.

One problem for out-of-work agents is that their skills may not transfer easily to other careers. California is waiting to hear on a $9 million federal retraining grant after 6,000 people lost their jobs in the housing industry since September.

But Dr. Baen of the University of North Texas is optimistic about their futures. "These people are hustlers, hard workers. They're used to getting on the phone," he says. "They'll end up in insurance, in mutual funds, in retirement planning, and commodities."

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