The Toronto Real Estate Bubble Now Has 1 In 59 Workers Selling Homes

The Canadian real estate boom has produced a gold rush, and now everyone is trying to sell you a home. It’s a country-wide phenomenon, as people see a low barrier of entry and large commissions. However, nowhere has taken to the trend like Toronto, which now has more Realtors than teachers. A lot more.

Not even global real estate hubs like NYC and LA come close to the concentration of Realtors in Toronto. It might seem harmless, but experts say this is typical of a bubble. The same experts also found the surge in Realtors also amplifies housing corrections.

Toronto Real Estate Board Has Seen Growth of New Realtors Double

Greater Toronto has seen a mind-blowing jump in the number of members at its local real estate board. TRREB reported 62,867 members in 2021, up 10% from last year. This works out to roughly 5,877 new members over the one-year period, ending in June. The rate of growth is usually high, but this is more than double the rate seen since 2017. Number dense blocks of text tend to lose all meaning, so let’s give it some context so you can visualize this.

Toronto Real Estate Agent Annual Growth

The annual percent growth of members at the Toronto Regional Real Estate Board (TRREB).

Source: TRREB; Scott Ingram, REALTOR; Better Dwelling.

Roughly 1 In 59 Workers In Toronto Are Realtors

First, let’s look at how this compares to Greater Toronto’s labor force. The labor force is the number of people in a region that are employed or looking for work. It excludes people that are retired, unable to work for various reasons, or don’t want to work. Statistics agencies use this number when calculating the unemployment rate. 

In 2021, about 1 in 59 members of Greater Toronto’s labor force were members of TRREB. This is up from 1 in 70 people, back in 2017 during the initial Toronto real estate boom. The number of people trying to sell you a home increased over 15% faster than the region’s workforce.

Not visual enough? How many public schools can you think of in Toronto? Multiple are in every neighborhood. The local school board employs one teacher for every 226 people in the region’s labor force. You’re almost four times as likely to meet a Realtor than a public school teacher in Toronto. Schools are everywhere you look, and even more people are trying to sell you a home. There can even be a Realtor behind YOU RIGHT NOW.

You were supposed to read that last sentence in a spooky voice, btw.

Toronto Has 1 Realtor Per 2 Homes Sold

Toronto real estate is very high volume, but even so — this is a lot of Realtors. TRREB reported 115,716 home sales in 2021, year to date as of November. The ratio of Realtors to home sales is roughly 1 to 1.8, and if December sales are mind blowing it might get to 1 in 2. This year was also an exceptional year, with next year expected to see fewer sales.

Most deals are also done by a relatively small group of elite Realtors. If you thought buying a home was competitive, wait until you see how hard it is to find and sell a home. Competition is very high for the size of market, meaning it might not be as lucrative as many assume. Unless you’re a super agent. But if you’re good enough to be a super agent, why not become a Rockstar or Astronaut? Your odds are similar.

Toronto Has One of The Highest Concentration of Agents In The World

Canada has a high concentration of Realtors in general, but nowhere is like Toronto. In real estate-crazed Vancouver, the board has one member per 116 people in the labor force. CREA, the national registry for Realtors, has one member per 146 workers across Canada. All three of these numbers are very high concentrations. Vancouver is still only half the rate, though.

Workers Per Real Estate Agent

The number of workers in the labor force per registered real estate agents in each region. i.e. Toronto has 59 workers per registered real estate agent.

Source: TRREB; REBGV; CREA; REBNY; GLAR; Better Dwelling.

Looking south of the border at global real estate hubs like New York City and Los Angeles is sobering. In New York City, 1 in 164 labor force members is registered to sell you a home. Los Angeles, a notorious real estate hub, has 1 in 257 labor force members working as agents or brokers. Global real estate Meccas have fewer agents per worker than Canada.

High Growth of Real Estate Agents Is Typical of A Bubble, and It Makes A Crash Worse

An economy with such a high concentration of Realtors is subject to a few issues, such as seeing an agent’s face on every bus. Kidding. A misallocation of capital is a genuine concern, though. New research also shows a surge in new real estate agents is typical of a bubble, and can worsen a crash. Not kidding this time. 

Whenever there’s a gold rush, an economy sees a disproportionate share of people chase it. Just like a real gold rush, only a tiny share of people ever make a fortune. Most people are just left with pans of dirt, and a few leftover flakes if they’re lucky. Those that don’t make the cut become a social liability, even without taking handouts. 

Employees not earning their maximum potential produce less tax revenue, and spend less. The excess labor attracted to real estate is also diverted from other areas of the economy as well. This produces a labor squeeze in those areas, increasing costs for certain segments. Inefficient labor squeezes are often inflationary, driving the costs and of goods higher. Society gets less than optimum tax revenue AND inflation. 

More important are recent findings from a US Federal Reserve economist and CUNY prof. In a paper called Heterogeneous Real Estate Agents and the Housing Cycle, the duo explores the agent boom at the housing cycle’s peak. They found a sharp increase in real estate agents is typical of the cyclical peak of a market (a.k.a. the bubble phase). Strong perceived incentives attract a rush of new, inexperienced agents. These agents amplify a correction. 

During a booming market, there is a whack of people that can’t pay their bills and are forced to sell. Liquidity is the reason defaults don’t make a sharp increase. A motivated seller can unload fairly fast, and sometimes for a profit. They often don’t even need to disclose they’re motivated in order to sell. 

The researchers found new agents tend to take longer to sell, and make less profit. This reduces the liquidity, amplifying the downturn. Sellers see increased odds of being unable to sell before an adverse event. They’ll often see reduced profits as well, since new agents have yet to hone their skills. In general, losses increase as more new agents capture the market.

The takeaway? Canada has a high share of its labor selling homes, but it’s comically large in Toronto. Also, if you’re in a tight spot during a downturn, spend more time vetting your agent’s experience. 

24 Comments

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  • Rob Turner 11 months ago

    We have doctors in Vancouver leaving to become Realtors. Incentives are stacked wrong.

  • Marc 11 months ago

    One of my classmates dropped out to become a real estate agent. He’s maybe done two deals since getting his license. It’s a lot of money per deal, but $50k for a year worth of work while most grads from CS are earning $70k reliably in their first year.

  • RW 11 months ago

    LOL. I hope this is in response to my comment where I said half the country will be retired and the other half will try to convince immigrants to buy homes.

  • cz 11 months ago

    Ladyies and gentlemen, Here comes Canada, the country of Real Estate!

  • Dan 11 months ago

    with this much competition you think commissions would go down… that would be the best outcome. Outsized commissions are not aligned to the work involved.

    • Sarah 11 months ago

      agree! average house price $1.5m * 0.05 commission is way too much when houses sell themselves

    • Matt 11 months ago

      The way Canada’s agent system works is you have to find a brokerage to register with TRREB. Your broker often determines your commission rate, since technically the agent doesn’t make the sale, the brokerage does. Sometimes there’s room for negotiating, but it comes out of your backend, not the brokerage.

      • Derek 11 months ago

        Sorry your wrong. The TRREB mandated commission rate is Minimum 4.5%. Non negotiable. Break this rule and you will lose your license faster than scamming an old lady out of her home. What you are correct about is that agents will split the commission with you after.

  • Kevin 11 months ago

    Sure but it’s unsustainable. The forecast for Real Estate agents is gloomy as more of their services are replaced by websites and apps. Competition is fierce and people are tired of the huge payouts they get for selling a house. The CS grads will continue to do well, join a large company or startup and get a pension with career growth. The Real Estate agents will fight for slim pickings and then one day find that their job has become irrelevant or redundant.

    I remember going to an open home and the Real Estate agent was just chatting with their friend. They knew nothing about the house (actually made me mad). I asked them a couple of basic questions and they had no clue (i.e. where’s the nearest school, what’s the property tax), they kept directing me to the pamphlet and continued chatting with their friend. Real Estate agents add no value to a product that sells itself.

  • John 11 months ago

    commissions should be cut in half or by a third – its a not a high skill job and real estate basically sells itself with little to no effort atm.

  • Heather 11 months ago

    I guess some of these agents decided to take the real estate exam while waiting for the pandemic to clear? Reminds of a story I heard years ago. Tons of agents, the market crashes, and all they are doing is holding their phone bills. It must annoy the long time agents who plod along, doing a good job. But I bet they have some good laughs at the expense of the newbies. Also, the last place I owned I sold on my own. Went to a Notary Public to fill out the paperwork and the seller had to use a lawyer. It worked and I saved commissions. And, no, it wasn’t that scary.

  • Wajid 11 months ago

    Well Analyzed.. Even this unique creature which almost 5 times than school teachers , They don’t hesitate to kill a goat for their a pond meet .

  • MG Masterson 11 months ago

    A trained chimp can do what RE agents can. Be proud you 1 outta 59ers.

  • RM 11 months ago

    The worst part about this is that, in the truest economic sense, real estate agents add very little productivity to the world. I’m not saying that some aren’t good at what they do (though my experiences buying and selling haven’t been great), but Tech has just reached a point where the profession is largely obsolete, or could be if lobbying didn’t handcuff it.

    So you have 60k people in Toronto being diverted from jobs that could otherwise help society. Fantastic.

  • Jimmy 11 months ago

    Now for the article on number of foreign students please.

    Our economy is a scary joke.

  • Scott 11 months ago

    And the only way I could get an appointment with a neurologist is at Millhaven…

  • tony sbrocchi 11 months ago

    Here’s a stat for you Steven, 95% of trades are done by @ 5% of the Realtors. There are thousands of Realtors that do no business at all and end up parking thier license and actually not trading but are still part of the count. You go into a lot of depth but don’t provide all the info but that’s been typical of all your articles.

    • RW 11 months ago

      Literally from the article:

      “Most deals are also done by a relatively small group of elite Realtors. If you thought buying a home was competitive, wait until you see how hard it is to find and sell a home.”

      Doing a great job at showing Realtors don’t have a very high educational barrier, but think they’re geniuses.

  • Anthony Bossio 11 months ago

    The agents in the Greater Toronto Area are all greedy and simply put untrustworthy!! They conduct themselves in a unethical manner by lying about everything,. Things like listing a property this is a brand new home, except that it’s a rebuild and been lived in for over 3 years, or pricing homes very low to attract from all over in order to get multiple offers from people who either can’t afford the original price or from people who just did quite well from their current sale and have the extra cash to buy out everyone else who genuinely can only afford the listed price. Or how about saying not accepting any offers before a certain date, then selling it before the offer date. Come on!! Thank God things have slowed down and I hope most of them will be out of work.

  • Derek 11 months ago

    People in Toronto don’t become real estate agent to sell you a home. They become real estagents because it gives them first access to the database of listings. They can view them before they become public and can get ahead of buyers if they want the property. They also get first access to new home sales. Most of these agents own multiple homes. These people buy preconstruction homes and resell them. They develop a relationship with developers and developers will offer favourable terms to them to buy new construction. Think about it! If half of these so called agents buy a preconstruction home in Toronto, there would be a constant lack of supply. Like Vancouver, these agents in Toronto own vast portfolios of homes. I know agents that own 8 homes and they are in their 30s. I know agents who specifically go after listings for homes that can’t close. They get to the seller first then make an offer. They then close the home and flip it for a $200k profit in a month. They get commission+ $200k.

    • Trevor 11 months ago

      This doesn’t happen. If the agent tells the client it’s going on the MLS, which is how a seller obtains maximum value, it goes on the MLS. Agents are required to present all written offers to their clients, unless there’s a specific written agreement for the criteria of exemption.

      The cases where agents have bilked little old ladies out of their home by not showing them publicly, often result in disciplinary action.

      In either case, if an agent is doing that, having access to the MLS before the public isn’t an advantage. They’re criminally selling to a related party. Why would any agent try to get lower commissions, if they weren’t taking it on the backend?

      • Derek 11 months ago

        LoL. You live in fantasy land. FYI my aunt just bought a house $1.8M. She submitted her offer. Her agent came back and asked her to increase the price by $50,000. She asked how many other offers is she up against. The agent replied she is the only offer. She declined. She would have fired him but she liked the house and felt it would be a unfavorable to her. Period. I really hope your not an agent because you are definitely not smart, I’m being kind.

      • jim 11 months ago

        “often result in disciplinary action”!! More like: “rarely result in disciplinary action”. See https://www.youtube.com/watch?v=ShBvRe0Jv68

  • Eddy 11 months ago

    Real estate Commissions are too high, especially when the average detached home is worth over 1m!

    Fees should be 3% for sales under 600,000
    2 % for sales between 600,000-1,000,000
    1% for anything over 1 m

    SUGGESTION

    Start charging 25,000 / Annual fee to keep their Realestate
    License.

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