updated 8/21/2007 4:46:24 PM ET 2007-08-21T20:46:24

Plummeting stock prices. Mortgage lenders filing for bankruptcy or shutting down. Layoffs at homebuilders and banks. Soaring foreclosures and loan defaults.

Damage from the nation's slumping housing market is evident throughout the economy and permeates financial markets. Add real estate agents to the growing list of victims, although they know few tears will be shed for them.

The National Association of Realtors expects membership rolls to decline this year for the first time in a decade. The group ended 2006 with nearly 1.4 million members — almost double the roughly 716,000 it had in 1997 — but expects 2007 to close with 1.3 million, a drop of more than 4 percent.

Agents' ranks continued to rise even after the market began to cool about two years ago because of the 18-month lag between the downturn in sales and membership, says NAR spokesman Walter Molony.

Trade groups in two of the hardest-hit states — California and Florida — also forecast membership drops. The California Association of Realtors is expecting its first decline since 1997, forecasting a year-end tally of 185,000 members compared with more than 199,000 last year. The Florida Association of Realtors currently has about 154,000 members compared with more than 161,000 last year at this time, but expects flat membership by year-end.

Colleen Badagliacco, president of the California group and in the business since 1980, says many agents joining the last three years wanted to cash in on a hot market but weren't prepared to endure what she calls the "ugly perfect storm" that attracted more agents than a sagging market can support.

In California, applicants can get a conditional real estate license after taking one class, a loophole that will close after Sept. 30 when three classes will be required.

"You had very inexperienced people doing very expensive transactions," Badagliacco said. "There is the opportunity to make a lot of money, but the downside is there are a lot of fixed expenses whether you're earning money or not."

Fixed expenses include advertising and marketing, and everyday costs, such as gasoline in the car needed to drive clients to look at properties.

A report from the Federal Trade Commission and the Department of Justice in May confirmed that while the Internet has become an important tool in residential real estate, consumers have not saved as much as they expected. Outdated state laws and business practices stand in the way.

That's where real estate agents come in. The median agent's commission increased 25.5 percent to $11,549 between 1998 and 2005, according to the report.

Badagliacco said she knows people like to "poke fun at the Realtor in the nice car," but she expects there to be fewer objects for pokes and jokes in coming years.

In California, where home sales continue to decline, between 110,000 and 140,000 agents are sustainable long-term so she expects bigger drops in membership in the next two years.

Her firm's budget has been readjusted twice this year and cash reserves are below 2005 levels. Projections called for 100 transactions per month, but now the total is closer to 80, and her salaried staff has dropped to 12 from 15. The number of agents is about 105 compared with 120 when the year began. She has no plans to replace anyone who leaves or has left.

Nancy Riley, president of the Florida Association of Realtors, said membership more than doubled since 2001 and stood at 169,434 last year. The group had budgeted for a 25 percent drop, but expects roughly the same total by year-end.

"Most people getting out got in just to make a quick buck," Riley said, blaming tax issues, insurance costs and the media for the perception that Florida's real estate market continues to falter.

"It's not doom and gloom," Riley says, insisting the state is gearing up for another population boom.

Elsewhere, real estate associations in the Boston, Washington, D.C., and Chicago areas expect to end the year with roughly flat membership totals.

Beth Richardson, an agent in St. Paul, Minn., since 1991 said the problem is that real estate is one of few businesses "where the sales force is not the most highly trained part of the operation."

Training and certification programs teach agents nothing about how to negotiate, communicate and accumulate market knowledge. Richardson endorses a one-year mandatory apprenticeship before someone can become an agent.

The public is subjected to inexperienced people, partly because few buyers or sellers ask prospective agents the right questions.

"No one asks me how many transactions I did in the last year," Richardson said, adding that she had a high of 104 deals in 2003, which fell to 65 last year and is what she hopes to match this year.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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