…and do we need this many?
There are just shy of 3,100 Realtors in the Ottawa Real Estate Board (OREB) at time of writing. This is one Realtor for every 322 residents in our City of a million population and one for every 129 residences in the city. (Based on 400,000 residences-an approximation)
This doesn’t count the Quebec side, as real estate is regulated provincially, so there is a completely different real estate market on the other side of the river.
If you think this sounds like a lot of Realtors, how about Toronto? The Toronto Real Estate Board (TREB) references over 53,000 members, serving the GTA and its 6 million plus population. This works out to 1 Realtor for every 113 residents or almost triple the concentration here in Ottawa.
What do Realtors think?
Most Realtors would agree that there are far too many agents, far too many part time or inexperienced agents and far too many poorly trained agents, doing 0-2 deals a year and just too many poorly qualified agents that reflect poorly on the industry as a whole.
Why are there so many agents?
Relatively easy access to industry and potential for significant income: The barriers to entry in real estate have always been relatively easy, with a suite of courses to be taken and minimum hurdles to pass and obtain registration to trade in real estate. The potential for significant income is available from day 1, too and does not necessarily require years of apprenticeship to realize an uptick in income.
This is helpful for franchise broker networks, too-as they need an ever increasing supply to agents to optimize their profits. Realtors are independent contractors typically on 100% commission and are highly mobile and quite often move from broker to broker or out of the industry. So while no Broker of Manager would say they subscribe to the “masses of asses” philosophy, there is certainly a need for brokerages to maintain and grow their headcount to remain profitable.
- Population growth and geographic range:
Our population has grown and with that the number of homes, condos and commercial and industrial properties, therefore more professionals are needed to service this growth. Ottawa is spread across 2,800 sq. km and incorporates urban, suburban, exurban and rural areas plus numerous smaller villages and communities, many with their own somewhat unique real estate needs. This alone dictates a wide network of professionals is required.
The increasing complexity of the real estate marketplace and our geographic sprawl, has meant increasing levels of specialization for Realtors, in order to become experts in a particular market, be it geographic or vertical or by property type.
- Volume of business:
Our business volume in Ottawa has grown significantly, doubling the number of residential transactions completed over the last two decades and given the labour intensive nature of the business, this necessitates additional personnel.
- Service levels:
Buyers and sellers require a highly responsive and available Realtor on their team, so there are limits to how many clients and customers a Realtor can successfully engage at any one time.
- Large numbers of Realtors paying fees keep costs down for all:
Given that Realtors are on commission, there is not a huge $ cost for a brokerage to carry a Realtor, and all have quota’s and franchise fees and other overheads to pay, so there is a bias to having more rather than fewer Realtors contributing to overheads.
Even those Realtors who say there are “way too many Realtors” benefit from the fact that their own fees are much lower when 3100 Realtors are splitting Board fees (for example) compared to what it would cost them, if there were only 1,000. But believe me, if these same Realtors had to pay 3x the fees for insurance, provincial and national association fees, provincial registration fees and broker splits…they would not be in favour
Demographics and diversity:
Internal migration and a wave of new immigrants to Canada, have both helped fuel Ottawa’s growth and also its Realtor population. Home buying and selling is often quite tightly aligned with cultural, religious, nationality, language or other demographic group and our Realtor ranks have grown significantly to reflect this.
Realtor population fluctuates:
Being commission based, the Realtor population can fluctuate widely. Though Ottawa is one of the most stable markets in Canada, we have had some historic highs and lows, brought on by adverse economic conditions. At the end of the 1980’s and what had been a very strong period for real estate, the Ottawa Board had 2,566 members…a pretty robust number!
This changed quite dramatically through recession and government cutbacks in the 1990’s, where the Realtor population contracted to only 1,341 members by the end of 1996…a 47.7% drop. It would take until 2009 to get back to the total membership number two decades earlier!
With low mortgage rates and continued growth in Government and high tech in Ottawa, the Board has grown from 2,547 at the end of 2009 to our current level of 3,078, though the numbers look to be pretty flat going forward.
While there are certainly some good arguments for fewer, better trained and more professional Realtors, we believe that the fact that there is a healthy, thriving and robust Realtor and Brokerage industry is indicative of the health of the overall market and provides more choice and competition for consumers.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage 613-435-4692 firstname.lastname@example.org