A Look at Oregon’s Real Estate Industry in 2017June 1, 2018 Oregon’s real estate industry isn’t easy to analyze. Job growth is often complicated by economic and non-economic code changes that shift employers to or from real estate and another industry group. That situation is further complicated by the self-employment status of real estate agents and brokers.
Real estate industry employment in Oregon is reported by two related sources: 1) the Employment and Wages by Industry (QCEW) series; and 2) the Current Employment Statistics (CES) series. The QCEW series is drawn from unemployment insurance tax reports submitted quarterly by employers subject to Employment Department law; self-employment is excluded. The CES series includes self-employment, which in the case of real estate creates a rather large gap.
Covered and Non-Covered Real Estate Jobs
Holding a real estate broker or agent license doesn’t necessarily indicate employment – only the active ones engaged in sales and affiliated with a licensed broker or real estate company are included in the industry’s CES employment. These jobs are essentially adjusted into the CES industry series as non-covered employment (not covered by Oregon’s Unemployment Insurance system).
The non-covered real estate broker and agent share of CES employment has changed over time, peaking during the housing bubble in 2007 at nearly 44 percent, falling during the bust and then gradually rising again as the recovery took hold. In 2017, the Employment and Wages series reported close to 21,300 jobs (covered), while the CES series averaged 36,800, producing a gap of about 15,500 or 42 percent.
Economic and non-economic industry code changes complicate over-the-year employment growth, particularly when looking at data over several years. Real estate lost just over 700 jobs due to economic code changes since 2007. While the industry’s covered employment rose by 1,200 jobs (+6%) since 2007, its economic code changes have been significant. The CES series produced the same 10-year job gain (+1,200) while yielding a much lower 3.4 percent increase.
Employment and Wages in the Real Estate Industry Group
Oregon’s real estate industry encompasses far more activities than just land, home, and commercial property sales. Real estate has eight component industries. Its largest component industry, real estate property managers, averaged nearly 9,600 jobs in 2017 or 45 percent of the real estate group’s covered employment. Offices of real estate agents and brokers averaged close to 3,900 jobs (18.1%), followed by lessors of residential buildings with just over 3,800 (18.0%). The five remaining component industries together represented close to 19 percent of real estate’s covered employment, averaging 4,000 jobs.
Annual pay in the real estate industry, as reported by Employment and Wages, averaged $44,120 in 2017, well below Oregon’s $51,132 all industries average. Covered payroll in real estate reached nearly $974 million in 2017, an increase of about $270 million since 2007.
Two of real estate’s component industries paid in excess of $70,000 annually: 1) other activities related to real estate paid an average of $76,093 in 2017; and 2) lessors of nonresidential buildings shelled out $72,006. On the low end, wages paid by lessors of other real estate property averaged just $24,303, while mini-warehouse and self-storage unit operators earned slightly more, at $24,916. Offices of real estate agents and brokers surpassed Oregon’s all industries wage, averaging $56,747, while offices of real estate appraisers landed close behind, at $55,163. Real estate property managers ($41,010) and lessors of residential buildings ($36,407) both fell below the real estate industry’s 2017 average wage.
An Older Workforce Earning Less
According to the Quarterly Workforce Indicator series (QWI), 30.5 percent of Oregon’s covered real estate industry jobs were held by a worker age 55 or older in 2017; the all private industry share was around 22 percent. Young workers, under the age of 25, held 7.2 percent of Oregon’s covered real estate jobs compared with 12.5 percent for all private industries. Workers ages 25 to 34 (19.9%), 35 to 44 (21.2%) and 45 to 54 (21.2%) held a relatively similar share of real estate’s jobs.
Monthly earnings (2017-Q1) averaged in excess of $4,000 in three of real estate’s age groups, led by workers in the 45 to 54 category at $4,330. Compared with all private industries, monthly earnings in the 45 to 54 age group were about $1,300 higher. Workers in the 55 to 64 age group averaged $4,303, while workers age 35 to 44 brought home $4,158. Two of real estate’s age cohorts, those ages 22 to 24 and 19 to 21, earned slightly more than their private industry counterparts.
Although wages are lower in real estate, the gender gap remains, with males earning an average monthly wage of $4,419 compared with $3,176 for females, a difference $1,243 or about 28 percent. For all private industries the gender wage gap reached $1,667 or nearly 33 percent. Employment was flipped, with females holding a 53 percent to 47 percent advantage in real estate compared with a 47/53 split for all private industries.
Broker and Agent Earnings - Commissions and Occupational Wages
Where to begin? That’s an excellent question with a not so straight forward answer. Real estate commissions may be split in multiple ways. The percentage split is spelled out in agreement between broker and agent, typically reflecting the level of services and support the broker provides, although sale price and volume matter. The agent may be paying a desk fee, there are buyer and seller representatives, there could be a referral involved, and there may be franchise fees. Also, new models of service have emerged with fixed-fee and fee-for-service listing brokerages where an agent earns a salary rather than a commission or a base plus commission arrangement. While it’s possible to narrow down the typical commission paid in a real estate transaction, it’s not possible to say with any certainty how the commission will be split.
Real estate commissions may of course be negotiated and depending on your market, a range of 4 percent to 7 percent could be expected, although the level of service offered may vary. How’s that for nebulous? Since the fee will vary from one brokerage to the next, it pays to negotiate and choose the level of service that meets your particular needs.
According to the Bureau of Labor Statistics, the U.S. median wage for real estate brokers in 2017 reached $56,730, while sales agents earned $45,990. The range is fairly broad, with the lowest 10 percent of real estate brokers earning less than $24,160 and the highest 10 percent more than $151,660. For real estate sales agents, the lowest 10 percent earned less than $23,130 and the highest 10 percent earned more than $109,490.
In Oregon, real estate agents earnings averaged $50,142 in 2017. On an hourly basis, real estate agent wages ranged from $10.80 at the 10th percentile to $42.98 at the 90th percentile, while the median paid $19.44. The Central Oregon area reported the highest median in 2017, at $22.95 hourly, while Portland Tri-County’s 90th percentile wage topped all areas at $46.77.
Oregon real estate brokers earned an average $77,335 in 2017 with Portland-Metro brokers leading all areas at $89,931 and the East Cascades lagging considerably at $48,612. Hourly wages ranged from a low of $12.75 at the 10th percentile to a high of $74.44 at the 90th percentile. The East Cascades area paid just $10.01 at the 10th percentile, while Portland-Metro led all areas, paying $91.40 at the 90th percentile.