The Best Cities to Become a Real Estate Agent in 2018

Becoming a real estate agent can be a very lucrative profession. The Bureau of Labor Statistics show that the best real estate agents in the country earn over $100,000 annually. On top of a potentially high income, the job offers other attractive benefits including a relatively low barrier to entry, independence, few office politics, a flexible schedule, and opportunities to fast-track the growth of your net worth.

Just like other businesses, success in this industry largely depends on your location. Having all the competencies to get ahead may not be enough — you also need an environment that facilitates your growth as a real estate agent.

In this article, we looked at 50 of the largest metropolitan areas in the country to help you choose the best city to start your real estate business. To do so, we compiled data from sources such as United States Census Bureau, Trulia, Zillow, and the Bureau of Labor Statistics. We then analyzed the data for each metropolitan area to calculate a definitive ranking of the best cities to become a real estate agent.

In ranking the cities, we analyzed eight metrics that significantly influence the ability of real estate professionals to grow their business:

• Days on market
• Median sales price of homes
• Inventory measure
• Mean annual wages
• Location quotient
• Percent of flip
• Percent of listings with price reduction
• Median price cut percentage

Read on to see which metropolitan areas made the top 10 best cities for real estate agents followed by our definitive ranking of all 50 cities below.

1. Los Angeles-Long Beach-Anaheim

Number one on our list is the City of Angels as it puts up stellar rankings in almost all of our categories. Real estate agents can earn considerable commissions per sale as homes in LA have a median sales price of $595,100 — fourth overall. In addition, the city has one of the highest home inventories in the country with an average of 19,821.95 per month to rank ninth. Also, homes for sale don’t last long in the market as properties are usually bought within 64 days — tenth overall.

With a high median sales price, abundance of supply, and a relatively short time on the market, real estate agents in the city earn an average of $63,550 per year to place 12th. With such a favorable environment, one might think that the city has a high concentration of real estate agents. However, our research shows that LA enjoys a location quotient of 0.85 where the national average is 1.00 to rank 20th. In other words, competition among real estate agents may not be as stiff as in other cities.

Overall, LA offers the best conditions in the country to help you become a successful real estate agent.

2. Boston

Coming in at number two is Beantown with top 15 finishes in four heavily weighted categories. Just like LA, real estate agents in the city earn high commissions per sale as the median sales price of homes stands at $464,100 to rank sixth. Our data support this assumption because real estate agents in Boston make $67,400 annually to finish ninth overall. Lastly, the city generates an average of 12,741.80 homes for sale per month to come in at 15th.

3. San Francisco

The City by the Bay rounds out our top three, spurred by outstanding rankings in three heavily weighted categories. Properties in San Francisco have a median sales price of $900,000 to come in second overall. And with extremely high property values, real estate agents can earn generous commissions — $96,060 per year to rank second. Also, properties in the city sell quickly. It only takes an average of 40 days to get a property off the market, placing the city second.

Conditions in the city appear very favorable for real estate agents. Unfortunately, home inventory in San Francisco is scarce. It ranks 46th in inventory measure and 45th in percentage of flips. Agents often do well financially — as long as they find a home to sell.

4. Chicago

The Windy City grabs the fourth spot as it ranks within the top 10 in four categories. Home supply in Chicago is one of the best in the country with an average of 39,950.26 properties for sale per month to come in third. The city’s home inventory also gets a healthy boost from flipping as it accounts for 7.5 percent of all home sales to rank sixth. Moreover, it only takes 60 days for a property in Chicago to be taken off the market to finish eighth.

5. Washington

The country’s capital takes number five with top 15 rankings in five categories. Real estate agents can take advantage of the city’s expensive housing market and abundant home inventory. In Washington, properties are typically sold at $408,500 to place ninth. In addition, there are 17,315.71 homes put up for sale each month on average to rank 11th. This combination helps real estate agents generate a high median annual income of $62,320 to rank 12th in the category.

6. New York

The Big Apple lands at number six bolstered by four categories in the top ten. In terms of home inventory, New York comes second to none with an average of 84,654.74 homes for sale per month. The abundance in inventory help real estate agents to generate the highest annual wages in the country at $97,610. In addition, the median sale price of homes is one of the highest in the country at $419,100 to rank seventh.

7. Denver

At number seven is the Mile High City as it finishes in the top 15 in three major categories. Real estate agents in Denver earn one of the highest annual wages in the country, generating $78,630 to finish fourth. Even though median sales prices of homes in Denver are relatively high at $418,100 to rank eighth, people are still buying properties in a hurry. Houses in the city are often taken off the market in 67 days to rank 12th.

8. Miami-Fort Lauderdale

Coming in at number eight is the Magic City with top 15 placings in three heavily weighted categories. Miami places second to New York in terms of home inventory. The city generates an average of 43,531.30 homes for sale each month. The wealth in inventory helps real estate agents in the city generate bountiful commissions, and earn a mean annual wage of $72,380 to place eighth. Premium property prices in the city may have something to do with the relatively high annual wages of real estate agents. Houses in the city are sold for an average of $340,000 to rank 12th..

9. San Jose

The capital of Silicon Valley comes in at number nine, buoyed by top 15 finishes in four categories. San Jose has the most expensive housing market in the country as properties have median sales prices of $1,165,000. While properties are priced on the high side, they don’t tend to last long in the market. Houses are usually bought within 69 days to place 15th. With these conditions, real estate agents in the city make a decent living, earning $62,300 annually to rank 15th.

10. Riverside

Concluding our top ten list is the City of Trees as it manages to rank within the top 15 in four categories. The concentration of real estate agents in the city is relatively low. It has a location quotient of 0.63 compared to the national average of 1.00 to place 10th. In addition, Riverside generates an average of 15,703.18 homes for sale each month to finish 13th in the category. While home selections are wide, prices remain on the up and up. The median sales prices of homes in the city stand at $339,900 to rank 13th.

*Federal data not available for Denver. We used state-level data instead.

Methodology

We based our ranking of the best cities to become a real estate agent on eight metrics. We then analyzed the data and assigned the following weights for each category based on the category’s importance:

Days on Market – 17.5 percent

This metric is defined as the average number of days that properties spend on the market. We assigned the highest weight to this category because real estate agents earn their living through commissions, so a high turnover rate will benefit them. Cities that ranked high on this metric provide more income opportunities to real estate agents. They are able to sell homes more quickly, which frees up their time to find other properties that they can sell.

Median Sales Price of Homes – 17.5 percent

For this metric, the data focuses only on single family homes. We also assigned the highest weight to this metric because, like days on market, the income potential of real estate agents largely depends on the property’s sales price considering that they earn their salaries based on commissions. Real estate agents are more likely to earn more in cities with higher median sales price.

Inventory Measure (5-year average) – 15 percent

This category is defined as the average number of homes that are for sale for a given time period. We assigned considerable weight to this category because studies show that housing inventory continues to be tight while demand remains high. The Global Property Guide writes that housing construction stood at 1.5 million units on average annually from 1990 to 2007 before crashing to under 600,00 units in 2011. Even though residential construction has bounced back, it is far from the highs recorded in 2005 to 2006.

Real estate agents need to sell homes to generate income. Cities that ranked high on this metric offer more opportunities for agents to sell properties.

Mean Annual Wages – 12.5 percent

This metric is defined as the mean hourly wage multiplied by full-time working hours of 2,080 hours per year. Cities that ranked high on this category offer lucrative income opportunities to real estate agents.

Location Quotient – 12.5 percent

This category is defined as the ratio of the area’s concentration of real estate agent employment to the national average. Cities that ranked high on this metric have lower share of real estate agent employment than average. Real estate agents in these cities enjoy the advantage of having less competition.

Percent of Flips – 10 percent

The metric is defined as the buying a property at market rate with the intention of selling it for profit due to improvements or price appreciation. Considering the tight home inventory, cities with higher percentage of flip offer real estate agents additional income opportunities. However, our research reveals that home flipping is a relatively small market. We did not assign a heavy weight to this category because not all real estate agents can rely on flips to sustain their lifestyle.

Percent of Listings with Price Reductions (5-year average) – 8 percent

The category is defined as the percent of homes that had their sale prices reduced while they were on the market. As real estate agents rely on commissions to generate income, price reductions can put a dent on their cash flow. However, we assigned the lowest weight to this category because our research reveals that price cuts are not a common occurrence in today’s housing market.

Median Price Cut Percentage (5-year average) – 8 percent

This metric is defined as the median of the percentage price cut for homes that saw their sale prices reduced. Same with the percent of listings with price reductions category, we decided to include this metric because discounts can hurt the income potential of real estate investors. But, we also assigned the lowest weight to this metric. Our research shows that the price cut percentage is significantly low in today’s market.

Data Sources

Days on Market

We relied on the latest data provided by Zillow. The online real estate database releases a Buyer-Seller Index that takes into account the sale-to-list price ratio, the percent of homes that are subject to a price cut, and the time that properties spend on the market. For our analysis, we only looked at the time properties spend on the market. Cities where homes spent fewer days on the market received higher rankings.

Median Sales Price of Homes

For this metric, we sourced data from the National Association of Realtors (NAR). For our analysis, we used data from single family homes with prices updated for the third quarter of 2017. Cities that have high median sales price of homes got higher rankings.

Inventory Measure

Zillow provided the data for this metric. The online real estate marketplace releases home inventory numbers for cities per month. We used figures from October 2012 up to October 2017 to get the five-year average of each city’s available housing inventory per month. Areas that have high inventory received higher rankings.

Mean Annual Wages

We relied on data provided by the United States Bureau of Labor Statistics through its Occupational Employment Statistics Query System. The BLS provides real estate employment data for up to May, 2016. Cities that offer high mean annual wages were given higher rankings.

Location Quotient

The United States Bureau of Labor Statistics was our data source for this metric. Same with Mean Annual Wages category, we used the Occupation Employment Statistics Query System to get May, 2016 data on real estate employment. Cities that have low location quotient received higher rankings.

Percent of Flips

For this metric, we sourced data from Trulia. The online real estate website relied on BuildZoom to look at properties with city-approved permits and matched them with records of properties that were flipped in a given year. We used 2017 data for our analysis. Cities that have high percentage of flips received higher rankings.

Percent of Listings with Price Reductions (5-year average)

We relied on data provided by Zillow. The online real estate database provides monthly data on for sale properties on Zillow with a price cut. For our analysis, we used figures from October 2012 to October 2017 to get the five-year average for each city. Cities that scored low on this metric were given higher rankings.

Median Price Cut Percentage (5-year average)

Zillow was our data provider for this metric as well. The online real estate database provides monthly data on the median price reduction percentage for homes with price cuts. For our analysis, we used figures from October 2012 to October 2017 to get the five-year average for each city. Cities that scored low on this category received higher rankings.

The Bottom Line

Our analysis shows that cities near the coast are the best cities for real estate agents. Leading the way are coastal cities, such as Los Angeles, San Francisco, New York, Miami, and San Diego. Similarly, many major inland cities placed in the lower-half of our ranking.

What are your thoughts about the results of our research on the best cities to become a real estate agent? Feel free to share your comments below.