While continuing to be positive about the real estate industry in the state of California, Department of Real Estate Commissioner Jeff Davi acknowledges the industry is facing severe problems and his department remains dedicated to helping consumers and licensees.
Davi was a guest speaker at the Filipino American Real Estate Professionals Association luncheon meeting held this month in Milpitas. He addressed problems facing the industry.
As market conditions across the state slide, Davi said the number of real estate licensee applicants is slowly declining. There were 548,000 licensed real estate agents in California in 2007, up from 269,000 in 1991. Today, that number has dropped to 541,000.
"I'm happy to report the time frame for the processing of license applications has decreased and enforcement has stepped up, but this is because the number of licensee applicants is down and now staff can concentrate on enforcement," Davi said.
Davi said it only takes 41 days to process a license application today, as opposed to more than six months in 2004.
With the tenuous market conditions, the department has seen an increase in enforcement cases from 2003, when it had had about 6,500 cases to 9,000 cases in 2007. Davi expects enforcement cases to climb to 9,500 this year.
"We have stepped up enforcement by 20 percent since license applications and transactions are down," he noted.
In audits, the department finds the big issues regarding violations concern trust fund and record keeping, 46 percent; license and employment, 21 percent; and disclosure, 19 percent.
Davi said affordable housing continues to be a critical issue in the state. According to a recent report by the California Association of REALTORS®, the percentage of households that could afford to buy an entry-level home in California increased to 44 percent in the first quarter of 2008, compared with 26 percent for the same period a year ago. Davi said while this is good news, the state is in for problems.
"The affordability index has gone up, but they are not building new housing. We're going to have another housing shortage when demand increases," he warned.
The DRE commissioner indicated foreclosures in the state are still at a record high, jumping from over 12,000 in 2006 to over 84,000 in 2007. This year has already seen 80,000, with 20,000 foreclosures occurring just in the month of May.
"The next issue we're going to face will be how to educate people about REOs (Real Estate Owned), since you are selling more of these houses," Davi told real estate agents. An REO status indicates the property is now owned by the lender or bank as a result of a foreclosure.
"We can't stop foreclosures, but we can at least provide consumers with the resources from which to seek help," said Davi.
The DRE has increased its participation in consumer workshops, town hall meetings and mortgage workouts between lenders and borrowers throughout the state. The DRE is also conducting an aggressive mortgage advertising review campaign and appointed a new consumer/real estate industry liaison.
Davi repeatedly stressed the DRE is very much complaint-driven.
"I am urging all of you to report any violation to our department. We are intent on catching these violators," Davi promised.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
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