Early in May the Financial Post published an article “Canada’s next housing bubble: real estate agents”. It pointed out that there is now one realtor for every 245 Canadians over the age of 19. Wow. That is a lot of Realtors, 108,706 to be exact.
I was under the impression that the number of working Realtors in Canada was actually shrinking. Since the economic shock of 2009, every year in the world of real estate has been challenging. It has gotten harder, in an already tough profession to make a living. Here in Kitchener Waterloo, there has been downward pressure (not actualized) on prices. There has been an explosion in the number of condominium units offered up for sale. We saw time to sell extend and expand and then quickly contract. We changed from a robust market to a balanced market and now we are certainly in a seller’s market with a severe lack of inventory and a bevy of buyers searching frantically for a place to call home. I’ve witnessed a few new agents join my office, but they are not replacing the ones who are leaving. The leaving ones are either leaving the industry or moving to a brokerage with a better fee structure. It costs money to be an agent, BIG money.
You do two deals and you make $50,000
That is a great quote from the article but completely untrue. I remember reading somewhere that the average Realtor makes $42,000/year. The general public see the huge commissions and think we are all gloriously wealthy. They see the reality TV shows and think, “I can do that and I’ll make a lot of money doing it”. Of course there are other allures to the business.
The allures of becoming a realtor
You work for yourself. It’s a great lifestyle. You don’t have to check in at the office every morning at 9am and you don’t have to sit through inane meetings with sales managers and HR professionals.
You can and should find your niche. You can’t do everything, but you should do something to set yourself apart from every other agent out there. Be it, blogging, door knocking, blanket advertising, open housing, committee membering… there are dozens of ways to succeed as a Realtor.
It is pretty easy to get into. $3,000 and a few months of study and tests and you’ve got your provisional license. It is likely the profession that offers the highest income potential with the lowest level of income. Notice I said potential.
It is also a job that everyone can get. Brokers make money on the backs of their agents. They’ll hire you. If you are a recent graduate of high school, college or university, if you are recently unemployed, a new Canadian, someone looking to get back into the workforce, bored or burned out in your present job, young, old, man, woman, experience, no experience, whatever, a career in real estate looks good and is attainable.
Too many realtors.
Anyone in any profession thinks that there are too many of them. We have a “shut the door behind me” mindset. I got my license. Let’s make it harder for you to get yours.
Of course, the housing industry is massive and getting bigger. The number of people employed in construction has grown from about 5% of the workforce a couple of decades ago to 7.6% of the workforce today. During the last economic crisis, money stopped flowing to manufacturing and into real estate. We are big and getting bigger, like a balloon or a bubble.
Too much fake glamour.
I think there are too many realtors. But I also think commissions are too high. Here’s an idea. Let’s cut commissions in half and do twice as much business. I’d do that.
We should take the fake glamour away from the business and perhaps we wouldn’t have so many new agents joining the industry, only to flame out in two, three or five years.
Something happened in the 1990s that saw almost 40% of the agents leave the business. I don’t know what it was. I was living in Asia during the 90’s. I was working in advertising, not real estate. During the 1990’s the number of members working in organized real estate fell from about 100,000 to near 60,000. There are a lot of reasons given for this. You can read about them here.