A purge has occurred in the ranks of Hawai'i real estate agents, with roughly one out of five giving up their license at the end of last year following three years of dramatically slowing property sales.

The drop equates to about 4,600 agents statewide, according to figures from the state Real Estate Commission.

"It's just timing," said Judith Kalbrener, principal with Re/Max 808 Realty and president of the Hawai'i Association of Realtors. "We've all been through this before."

The end of 2008 was the first time well into the present industry downturn that real estate agents had to decide whether to keep their licenses, which come up for renewal every two years.

So while the shakeout was dramatic, it wasn't necessarily a mass exodus. Agents had been competing for less business in the last two years, and some quit working in that time as the industry cooled off from a nearly five-year boom in sales volume and prices.

According to the commission, two out of five licensed agents were on inactive status last year.

Still, the year-end tally of license renewals was the first large statewide decline in Hawai'i real estate agents in a decade.

Some industry observers had expected an earlier thinning, but licensees rose in the fiscal year ended June 30, 2008, to 21,868 from 19,375 a year before. Of 21,984 licensed agents at the end of last year, 17,325 renewed their licenses.

The Real Estate Commission data show that workforce declines have finally begun rippling through Hawai'i's real estate industry much like other employment sectors shaken by the recession such as tourism, retail and construction.

Most of the agents who have left the business don't show up in state unemployment statistics that spiked to a 31-year high of 7.1 percent, which represents 45,850 people out of work, or more than twice as many as there were unemployed a year earlier.

That's because real estate isn't a primary job for many agents, some of whom sell property on the side or got a license to sell or buy a home for themselves. Also, many agents working with large firms are often independent contractors instead of employees.

According to the state Department of Labor and Industrial Relations, real estate employment has generally stayed between 12,000 and 13,000 over the past decade.

In the past three months, the broad job sector that includes positions tied to real estate such as appraisers and clerical staff employed 12,400, which was down from 12,700 last year and 13,100 in 2007.

The Real Estate Commission licenses sales agents for residential and commercial real estate. Licensee counts also include property managers and companies.

According to the commission, 3,976 salespeople and 645 brokers (a higher license class allowing an agent to open their own office) didn't renew their licenses. The commission also reported that 38 branch offices gave up licenses.

Industry veterans say expansion and contraction of agent counts typically lag the rise and fall of real estate cycles, and that the shakeout is predominantly borne by agents who got into the business thinking it would be a way to earn easy money as a side job or hobby. Some agents that have made a career at selling real estate also are finding it harder to stay in the business.

According to Prudential Locations, 70 percent of residential real estate agents on O'ahu last year made two or fewer sales, while about half of this group, 36 percent, had no sales.

Prudential Locations said its number of agents was up 1.5 percent to 276 at the end of March compared with 272 a year earlier.

At Coldwell Banker Pacific Properties, where all the agents are full-time, the number of agents was down 9 percent at the end of March to roughly 400 agents compared with a year earlier.

"In this point of the cycle, there are more people having concerns about this being a career," said Chason Ishii, company president.

Historically, it often has taken a few years for agent ranks to adjust to the growth or decline in the real estate market.

For instance, the prior agent peak in Hawai'i's largest housing market, O'ahu, occurred in 1990 when there were 12,439 active agents, according to Real Estate Commission data. That peak followed a roughly five-year doubling of median home prices, though by 1990 the number of home sales was already three years into what would become a near-decadelong slump during which median home prices fell and the number of active agents dwindled by more than half to 5,775 in 1999.

Since 2000 when O'ahu's housing market began pulling out of the 1990s slump with slight median price gains, the number of active real estate agents gradually rose almost every year.

Many new agents were enticed by a market that was white-hot at its peak in 2005 when homes were selling fast with little effort for almost 30 percent more than a year earlier, and a doubling of median home prices over five years effectively doubled the pay for commission-based agents.

Last year on O'ahu, there were 9,000 active agents, up a little from about 8,700 in the prior two years despite a drop-off in home sales that began in 2006.

There were 6,674 single-family home and condominium sales last year on O'ahu — nearly half the 12,607 sales at the 2005 peak, and the lowest level since 6,151 sales in 1999. This year through March, sales are down 23 percent from the same three months last year.

Commercial real estate also has slumped severely over the past three years, falling from 431 transactions valued at $4.3 billion in 2005 to 166 transactions valued at $788 million last year, according to Colliers Monroe Friedlander counts of commercial property sales over $1 million.

Colliers said its firm has seen little change in agent turnover because the industry is more specialized and doesn't expand and contract like residential real estate agent ranks. At rival large firm CB Richard Ellis, three of about 40 brokers have left in recent months.