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updated 7/1/2005 12:51:19 PM ET 2005-07-01T16:51:19

Three years ago Mark and Kristin Carvalho abandoned their lucrative careers in management consultancy to become realtors in the simmering housing market of Phoenix, Arizona.

"Aside from the low cost of setting up as a realtor, the economics in Arizona seemed right," he says. "You have strong job growth and a lot of migration of people from California, where housing is hugely expensive, and from the Midwest, where the weather is cold."

The gamble has paid off handsomely the couple are on track to sell $20 million of property this year.

As property values have soared so has the level of interest in working in real estate. The number of realtors in the U.S. has jumped by 45 percent over the past four years to 1.1 million, and many have left blue-chip companies or even delayed college to join the property jamboree. More joined the profession last year than at any time since records began in 1975.

Add in jobs in residential construction, furniture and DIY stores and mortgage finance, and the buoyant property market emerges as the main driver of employment growth over the past four years. Economy.com, the consultancy, estimates that about a third of the 2.6 million jobs created in that period were in housing-related sectors.

This raises the question of what happens to these workers when the housing market cools.

Economists disagree vigorously about whether house prices will fall. But almost none dispute that the volume of housing activity is likely to decrease. Nearly one in 10 of the nation's single-family homes was bought and sold last year. About 900,000 condominiums were sold over the past year close to double the rate seen in the late 1990s.

Meanwhile, builders started work on 1.65 million homes in the year to May -- the highest number since records began in 1959.

Even if house prices remain high, any slowdown in this frenetic activity could endanger jobs, says Mark Zandi, chief analyst at Economy.com.

"Traditionally, the housing market has only really got into trouble when the employment situation got worse," he says. "This time we could see the reverse, with a slowing housing market acting as a drag on employment."

U.S. house prices have not fallen since the Great Depression. But jobs in housing-related sectors have quickly disappeared when the market has cooled. Between 1989 and 1991, as home sales dried up, almost 60,000 of the nation's 820,000 realtors closed shop. The profession remained in decline until 1997.

Tom Kunz, who heads Century 21, the nation's largest realtor, is urging his brokers to prepare for harder times.

"This is a profession with very low barriers to entry in terms of getting licensed and with all the media attention on housing a lot of people have been keen to get involved," he says.

"A lot of people think that a monkey could make money in this environment. As the market tightens a lot of people will drop out and only the professionals will be left."

Workers in residential construction are also likely to feel the chill if activity slows. Since May 2001 about half a million jobs have been created in residential construction and specialty trade contracting, taking total employment in the sector to 3.16 million. This may even understate job growth in the sector, as many people are self-employed.

Michael Carliner, an economist at the National Association of Homebuilders, says employment in residential construction could decline by about 300,000 if the market cools. He is hopeful, however, that this could be offset by continued demand for home remodeling services. "If you call up a builder to do work on your home, many may be too busy to call you back," he says. "There is a lot of pent-up demand that will cushion the sector if home building slows."

Not all economists are convinced. "People may be less willing to spend money on remodeling when the housing market is not effortlessly generating wealth for them," says Nigel Gault, director of US research at Global Insight, a consultancy.

At the very least, economists say a slowdown in transactions will leave a large hole in job creation for other industries to fill. Further complicating the issue, many of the jobs created in other growth sectors, such as education, may have been made possible by extra tax revenues gleaned from the booming housing sector. Economists say the feeling of wealth created by property values has also provided a boost to employment in tourism and retail.

"It is not hard to imagine that the property market could become quite a significant drag on employment," says Ian Morris, an economist at HSBC. "There is scope for a lot of people to get shaken out."

With employment growth still failing to match previous economic recoveries, this is the last thing the US economy needs.

In spite of warnings of a housing bubble, Mark Carvalho has no regrets about his new profession. "There may well be a mass washout in the realty industry. But I don't expect to be leaving the profession myself."

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.

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