Posted on: Friday, June 11, 2004

Census finds rise in new real estate firms

By Jim Hopkins
USA Today

SAN FRANCISCO — For nearly 500,000 new entrepreneurs, there's no place like home — especially when it has a "for sale" sign out front.

Fueled by the sizzling real estate market, more entrepreneurs started real estate sales and rental firms from 1997 to 2002 than started ventures in any other industry, new Census data show. The 483,339 ventures are among the smallest start-ups. They have no paid employees and often are part-time ventures.

Across all industries, the number of nonemployer firms soared 14.3 percent from 1997 to 2002 to a record 17.6 million. That growth is crucial to economic recovery. As many take root and prosper, young start-ups create most innovations and as much as 80 percent of new jobs.

Still, many new entrepreneurs are jumping into the real estate industry at a dicey time. Rising interest rates threaten the supply of cheap mortgages fueling home sales and higher prices. In a sign of a possible slowdown, average home prices rose 7.7 percent in the first quarter from a year ago. That was down from 8.1 percent growth in the fourth quarter, the Office of Federal Housing Enterprise Oversight said last week.

Luis Nanez, 40, is undeterred. He became a self-employed Century 21 agent four years ago in Petaluma, north of San Francisco. The Peruvian immigrant is betting on a niche he's carved — Spanish-speaking buyers and sellers.

Nanez is getting referrals from his first customers and plans to build on that base even if sales slump.

Other factors driving the trend:

• Women. The number of women-led businesses is growing faster than all companies. That's reflected in industry leadership and real estate brokerage ownership.

About 52 percent of brokers are now women, up from 44 percent in 1993. Ann Pettijohn, a broker in Orange, Calif., remembers when the industry was virtually all male. She's been in real estate since 1972. Now, more women with child-rearing duties seek self-employment because it gives them more flexibility.

"You don't have to be somewhere from 9 to 5," says Pettijohn, president of the 135,000-member California Association of Realtors.

• Technology. Cheaper computers and other technology cut start-up costs so entrepreneurs can easily build Web sites with digital photos of homes for sale.

Plus, contrary to predictions, Web sites that cut out the middleman haven't caused the same havoc in real estate that they've caused for travel agencies, says the National Association of Realtors.

Ventures like ForSaleByOwner.com are gaining ground. That site matches sellers and buyers, saving the 5 percent to 6 percent commissions typically charged by traditional real estate agents. The site lists 32,000 homes a month, up from as few as 2,000 a month three years ago.