Here we are, caught up in a housing slump where sales have gone “south” (there’s a pun in there we’ll get to later) while the number of real estate brokers and agents is growing. The California Department of Real Estate says 541,580 Californians held real estate licenses in August, a one-month increase of 2,982 over July 2007. That figure is a 30,121 increase from August 2006 and a whopping 82,873 more than August 2005. It is 139,000 higher than in August 2004. San Diego County’s numbers have increased by around the same percentages, with more than 34,000 residents now holding real estate licenses.

What is going on here? Why are the ranks of agents continuing to swell? How will these folks earn a living in such times? And what does this have to do with Baja housing?

The “why” is easy. California’s population is growing, and that drives expansion of its housing, industrial and commercial real estate markets. During hot housing periods such as the one recently concluded, large numbers of people decide the time is right for them to switch careers and maybe earn substantially more money selling real estate. Doing so requires taking classes and tests, a process that can take a year. So many who started during the boom are becoming licensed when times are not so great.

How the established as well as the newcomer can earn a living during this period is quite another challenge. Since real estate income is primarily from sales commissions, many newcomers will keep their original jobs or go back to them. The veterans have ridden this cycle before and many will succeed as it plays out. People still are buying homes.

In hindsight it is clear the residential market was headed for the dive simply because high prices were steadily putting home ownership beyond the reach of an ever growing percentage of wage earners. And despite the slowdown, overall prices really haven’t fallen much.

This leads us to the pun of “south”—i.e. Baja. Affordability is what continues to fuel sales along the northern Baja California coast. Buyers can secure 1,600 square feet of good to high quality housing for less than $200,000. Developments at the higher end, with prices to match their better views and luxury amenities, are seeing sales slow.

With Baja’s housing market now securely established, some question whether California’s expanding ranks of licensed real estate brokers and agents can earn commissions on south-of-the-border sales. Some believe it is illegal for California-licensed real estate professionals to sell out-of-country homes in California. They are wrong.

State real estate regulations say, “A representative of the owner/seller, who in the expectation of compensation solicits in California a prospective buyer for real estate, whether the realty be in Mexico or any other place, must be licensed under the California Real Estate Law. If licensed as a salesman the person must work under the supervision of the licensed real estate broker under whom the person is a licensed salesman.”

California has no jurisdiction over out-of-country subdivisions marketed here, but can regulate the marketing material. The state requires a disclaimer for delivery to any Californian to whom a solicitation or an offer is made, whether by mail, advertisement or in person prior to the execution of any contract or receipt of any consideration. The provision governing the disclaimer that must appear on promotional materials is very specific and includes the exact language and size of font to be used.

So California’s licensed real estate practitioners can sell Mexican properties, either by working directly with Mexican developers or through Mexican real estate offices. The major U.S. brand names such as Century 21, Executive Realty, Prudential and ReMax are very well positioned along Baja’s coast and they all work with U.S.-licensed agents.

The potential exists to earn commissions selling high-quality, affordable housing along Baja’s coast. A large segment of Southern California’s population is about to retire and many desire a quality of life that will no longer be within their means if they remain near home. For them, Baja California’s lifestyle might just be the solution, not to mention a nice real estate commission for the agent who brokers the deal.

Patrick Osio Jr. can be reached at posiojr@sandiegometro.com. The veteran consultant also has issued The Mexican Perspective, an intensive primer on business culture and protocol. Copies are available at hispanicvista.com/sales/book_sale.htm.