Realtor Incomes in California and the U.S.

In recent years, more Americans are working two, three, or more jobs on a weekly, monthly, or yearly basis in order to cover their monthly expenses. This is especially true in the pricier states such as California, Washington, New York, and Massachusetts. As a result, more people are considering obtaining their real estate license to work on a part-time or full-time basis as a way to supplement or increase their annual income levels.

With published economic charts and other types of data being fairly complex, let’s simplify below the main difference between the two most commonly reported income descriptions for income:

Household income: This is the total estimated amount of combined household income that a family or group of friends living together earn on a monthly or annual basis. In many cases, both the husband and wife may work full-time, part-time, or some combination of both. In other family situations, there may be a grandparent working, both parents, and an adult child in his early 20’s all living together. Collectively, their annual combined household income may be listed as $85,000+ per year and reported to agencies like the U.S. Census Bureau or other data collection services.

Per Capita Income: The per capita income (PCI) or average income is the measurement of the average earned earned per person or individual in a given area (city, county, state, etc.) in a specified year. Many times, it’s calculated by dividing the selected region’s income by its total population. In California, the more expensive coastal counties like San Diego, Los Angeles, Santa Barbara, or San Francisco are likelier to show in their published income data collection surveys a much higher reported dollar amount for income than more inland county regions such as in El Dorado, Inyo, Kern, or San Bernardino. The obvious correlation between higher income and pricier properties to purchase or lease would just be one factor why income would be higher on average near the California coast where homes typically exceed $1 million dollars.

2016 Income Data – U.S. Census Bureau

Please note that the definition of median income and average income (or “mean income”) can vary widely, especially in states like California. With median income, the very highest and lowest income levels are removed from the calculation to arrive at a lower average that is somewhere closer to the middle.

In California, some wealthy residents might earn millions or hundreds of millions of dollars each year near the top end of the income bracket while other workers may be lucky to earn more than $10,000 per year on their own without any public assistance. With median income calculations, the top wage earners collecting hundreds of thousands or millions of dollars each year and the lower income groups of people earning amounts somewhere less than $20,000 or so per year would be removed from the income calculations to arrive at the more general “middle of the road” type of typical income levels in the state. The average income, on the other hand, is usually much higher because all of the income is combined and divided prior to arriving at a much higher annual average income. The wealthy millionaires and billionaires included in this income valuations should really increase the overall annual income levels reported when the income is reported as “average” instead of “median.”

According to the most recently published U.S. Census Bureau data as well as from the American Community Survey 2016, let’s review below the income data for California residents using the inflation-adjusted dollars for the same 2016 year:

  • Per Capita Income: $31,458 per California resident
  • Median Household Income: $63,783
  • Average Household Income: $91,149

Median Household Income by Age in California

  • Household Resident under 25 years $30,785
  • Household Resident 25 to 44 years $66,979
  • Household Resident 45 to 64 years $76,370
  • Household Resident 65 years + $46,749

Realtor Incomes as reported by various sources:

  • Per ZipRecruiter, an online employment recruiting and data service, the average annual pay for a Realtor across the nation is $89,265 per year as of October 2018.
  • According to the employment recruiting and database firm named Indeed, the average income for a Realtor was $78,324 per year in the state of California, a figure that was 13% above the national average.
  • Other publishing sources claim that the median income per individual in the U.S. is closer to just $25,000 per year. If so, this is almost equivalent to a gross commission earned for the sale of just one California home at a very common $1,000,000 (3% commission = $30,000) sales price.

California vs. National Income

The median annual income in California was reported as $10,122 higher than the median income calculated as the national median income numbers, according to the U.S. Census Bureau in 2016. While the income may be higher as calculated using “median” or “average” numbers, the cost of living expenses to live and work in the state are among the highest in the nation. This is especially true for the state income tax bracket ranges that go as high as a whopping 13.3% tax rate that is the highest income bracket in the nation as of 2018.

A major determining factor for Realtors’ income is the number of hours that they plan on working on a weekly basis. While some part-time agents who work less than 20 hours per week in this real estate agent profession as a 2nd job may earn decent amounts of income, other agents who are willing to focus on this profession on more of a full-time basis (40+ hours per week) may easily collect more than $100,000 per year in their very first year in the business.

The power to succeed in the real estate profession exists within each and every person who is brave and dedicated enough to take the very first step of applying for their real estate license. We here at License Solutions will do our best to help students reach their dreams that are related to achieving their highest and best income goals.

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