Thousands losing jobs in housing crisis

An ailing market has taken its toll not only on buyers and sellers of real estate but also on people working in the industry, where less than two years ago everyone seemed to be making money.

Company lays off 7,000

In 2006, multiple buyers still lined up to bid on homes, 100% financing was practically a given, and prices kept rising, seemingly without limits.

Fast-forward to the present, when the subprime-mortgage fiasco has led to the demise of many big mortgage lenders and small banks. Thousands of jobs have been lost. Many real-estate agents who thrived during the boom years are now finding it difficult to make ends meet and are leaving the business or looking for additional work to supplement their incomes.

Chart: Who's out of work now?

Many who lived the high life are now sucking wind.

"No one ever saw it coming," Nick Vasilakis says.

Vasilakis was forced out of the mortgage business barely four months after he had entered it. A casualty of a 7,000-employee layoff by American Home Mortgage in August 2007, he had been hired as a software quality engineer the previous April. At the time, the company was the 10th-largest mortgage retailer in the U.S. and appeared to be on a roll.

Vasilakis says that employees were "kept in the dark" about problems at American Home and that the company kept hiring even as a complete wipeout approached.

Days before the formal announcement of the end, Vasilakis and his Long Island co-workers were advised to start updating their résumés. Vasilakis recalls that one colleague hastily scheduled a colonoscopy before his medical benefits were terminated.

Vasilakis had just bought a house in the area and was preparing for his wedding the following month. It took him four months to find a new job, as a business analyst with Ipreo, a consulting business for investment banks in Manhattan.

More than a year later, the 177,000-square-foot Melville, N.Y., headquarters of American Home remains empty and for sale. The loss of more than 1,600 local employees continues to affect neighborhood businesses (at one point American Home was Long Island's sixth-largest employer).

Crisis hits local businesses

Licia Sas tells a similar story. Until recently, she was a broker with the Partner Network in Norwich, Conn. During her 15 years in the industry -- she is a former

president of the Eastern Connecticut Association of Realtors -- she witnessed a local housing boom driven largely by area casinos, Foxwoods Resort and Mohegan Sun. But over the past year or so, the market has been tanking.

During the second quarter of 2008, median home prices in the Norwich and New London areas were down 12.7% from a year ago, according to the National Association of Realtors. Sales of single-family homes in southeastern Connecticut (New London and Windham counties) fell 39.9%.

Frustrated by her flagging commissions and in need of health care benefits, Sas gave up her career as a full-time agent in October 2007 and accepted an offer to work as an administrative assistant for the Mohegan Tribal Gaming Authority, the entity that operates and regulates Mohegan Sun. Sas says she knows of several agents who have given up real estate to take full-time or part-time casino jobs.

"I was offered a good job at a good place inside the casino, and I'm not getting any younger," says Sas, 45. "They made me an offer I couldn't refuse. I could have tried to stick it out to see if the market picked up, but we all know so far that hasn't happened. The declining market pushed me to make my decision sooner."

Some people in the profession are not-so-secretly thrilled that the housing crisis is weeding out agents who are less than totally committed to the industry.

John Bolduc, the executive vice president of the Eastern Connecticut Association of Realtors, says many of the people he sees leaving the business are hobbyists who got into the market during the boom years of 2001 to 2006. His organization's membership has fallen to 1,330 from 1,500 in 2007. He says he isn't concerned about the 11% decline.

Carolyn Tessada, a Norwich agent of more than 20 years, says it's misleading to characterize all those leaving the industry as dabblers. Many, she says, are "professionals who spent the better part of their lives" as agents and are now leaving to get other full-time jobs.

In March, Tessada took a second job as a sales representative for MonaVie, a distributor of fruit juices.

She still spends most of her work hours trying to sell homes. But her real-estate earnings are down 40% from last year, and she finds herself enjoying the work less. The median gross income for real-estate agents in 2007 is $42,600, down 13.6% from $49,300 in 2004, according to the national Realtors group.

Other industries and organizations see the exodus from the real-estate industry as an opportunity to recruit hardworking and hungry salespeople. Linda C. Davis, an agent for ReMax in Ledyard, Conn., has

received letters and e-mails from insurance companies wondering whether she wants to leave real estate to sell insurance.

State agencies throughout the country report increases in the number of real-estate brokers and agents failing to renew their licenses or to keep their licenses active. In Hawaii, for example, the state Department of Commerce and Consumer Affairs reported an increase of 33% in the number of real-estate agents who were inactive (not licensed to handle real-estate sales) between July 2007 and July 2008.

While agents have seen six-figure incomes dwindle or disappear, employees of the mortgage industry may be even worse off. As of September 17, 66 mortgage lenders have gone out of business this year, and that's on top of 150 failures in 2007, according to Mortgagedaily.com. Online job-search engine Simplyhired.com reported a 71% decline in the demand for mortgage-broker jobs between December 2006 and June 2008.

Traci Gregory of Marietta, Ga., is a single mother of six who has made her living in the residential-loan business (most recently, originating investor loans) for 20 years. In less than two years, her income dropped from $200,000 to $40,000. At 56, she has begun transitioning to the hedge fund industry, brokering stock loans.

Gregory says tighter regulations have made it difficult for her to earn a living in the mortgage industry. She estimates 80% of her time is now devoted to stocks.

"This has been a harrowing period in the mortgage industry. I have two kids in college and two kids in high school," Gregory says. "I ran screaming from the mortgage business as fast as I could."

James Gaines, a research economist at the Real Estate Center at Texas A&M University, says that as bad as things are in the industry, it's part of a normal cycle of boom and bust. The industry will recover, he says.

"When markets boom, jobs get created. When the housing market busts, they tend to go away," Gaines says. "When things pick back up, (companies will) go back into the market and hire accordingly."

Gregory is not so sure.

"The truth is they just don't need us all anymore," she says.

Produced by Anh Ly / Graphics by Joe Farro

Published Sept. 22, 2008