Market reports about the Greater Toronto real estate market often focus on whether buyers are on the sidelines or if sellers are biding their time as the region grinds through a generally slow period. Rarely does anyone mention the financial trouble that a lack of sales causes for the 52,000 realtors who are members of the Toronto Real Estate Board.
Sharon Soltanian worries about the realtors. Her independent brokerage, Soltanian Real Estate Inc., focuses mainly on the old city of North York. The Willowdale area has been the most fertile hunting ground for her business for more than 15 years. But, since peaking in 2016, Willowdale and the neighbouring Newtonbrook area have seen some of the sharpest declines in sales in Toronto, and she has seen agents who once had a decent living drop out of the business, go homeless, put their cars on lease-breaking websites and turn to side-hustles such as driving for Lyft or running an Airbnb.
“I know for a fact, in our small brokerage, a few of our agents – and outside a lot more – they did not pay their taxes, their HST. They have huge problems with CRA because they don’t have income,” Ms. Soltanian said. “Before … they had $20,000 income [a month], now they have $2,000 and they don’t know who to pay first.”
One of Ms. Soltanian’s former employees, not a top producer but making about $50,000 a year, came to her asking whether he could sleep in the office for a few weeks because, after a months-long dry spell, he couldn’t pay his rent and was evicted. That agent eventually left her brokerage and she lost touch with him.
“I know in the public eye, real estate agents are ruthless, heartless, all they want is to make money,” she said. “The reality is, the majority of these people are educated people, immigrants. … I have Phd-from-Harvard agents. I had a dermatologist that cannot work here as a doctor. These are normal people, they become agents, it was easy a few years ago for them, but now it’s very difficult. I was talking to a few of the big brokerages in the area, and they are all saying the same thing: In this area, income is down maybe 50 to 70 per cent.”
Statistics from TREB help show how quickly the area fell. In 2016, the Willowdale East submarket sold more detached houses than anywhere in Toronto with 295. In 2018, only 86 houses sold in that market – a 71-per-cent drop. For realtors, that amounts to 200 fewer commissions to share, and average sale prices fell to $2.3-million from $2.6-million. Several other submarkets in the area had similar crashes: Willowdale West sales are down 52 per cent, Newtonbrook East sales are down 59 per cent. By comparison, the rest of Toronto saw detached housing transactions decline by 36 per cent in the same period.
“The places that went crazier on the way up are the places that are crashing harder on the way down. Perhaps another way to look at it is that these areas became the most detached from value fundamentals,” said Scott Ingram, a sales representative with Century 21 Regal Realty Inc., and a CPA who publishes market analysis on his blog.
The situation means realtors working in those markets – and in nearby York Region markets such as Richmond Hill and Markham that have seen similar declines in sales volumes and prices – face some tough career choices, according to Zoocasa chief executive officer and broker of record Lauren Haw.
“There was a time when you could walk on the street and a deal would hit you in the face. The available commissions are half what they use to be,” Ms. Haw said. “We have far too many agents across the GTA. It has gotten harder, and people that used to do well in real estate will have to leave. There will be agents that will need to get other jobs.”
According to some data crunching by Zoocasa on home sales by agents, in 2018 approximately 18,000 TREB members recorded no home sales, and another 9,000 only had one home sale registered. That’s 57 per cent of all TREB agents, and while about 20 per cent sell five or more houses (roughly 10,000 agents) only 2,550 sell 12 houses or more in a year: barely 5 per cent of the total TREB membership. Zoocasa’s analysis is based on data that they collect from a third party and it doesn’t include presale contracts or “exclusive” listings that never appear on MLS, so there’s a margin for error in these figures.
Not all agents suffer equally though: Re/Max Realtron’s Willowdale office has 230 agents and is one of the better-known brands in the area. Gene Cheng and Barbara Raber, the brokers and co-managers of the branch, say that while they have had some agents leave in the face of a tougher market, they’ve had many more agents apply to come work with them.
Ms. Raber said the team has seen signs of a flight to quality as their marketshare has grown: During the boom years her office would sell perhaps one of every 15 houses in a hot area, while now they are selling more like one in every nine houses. And while Mr. Cheng estimates the rest of the market saw sales drop 40 per cent, he believes Realtron agents outperformed the slowing market with only 15-per-cent to 20-per-cent drops.
“I see two different types of agents: veterans, who have been in the business 10-20 years, they remember the slowdown in 2008 and say ‘I know how to work this market,’” Mr. Cheng said. “Then there’s new agents, the only times they’ve worked in is when things were booming. In every hot market, everybody thinks it will never end, and in every down market, people think we will never get out of it.”
In the meantime, struggling agents who are not dropping out of the business are finding ways to cut costs, leaving full service brokerages such as Soltanian or Realtron for lower-fee or discount brokerages that cost them less overhead, or trying to find ways to raise cash on the side.
“Some are driving Uber because they can’t make ends meet. They are doing all sorts of alternative things to make some money," said Anita Soltanian, Sharon’s daughter and partner in their brokerage. She has colleagues in the industry who have put their leased luxury cars on Leasebusters.com, which indeed is packed with recent model BMW’s and Mercedes. But some who can’t get out of leases have embraced Turo, a “sharing economy” app that claims 10 million users worldwide - 340,000 cars in North America - which lets car-owners rent out their car for as little as $10 a day, like a mini-Enterprise or Budget rental.
And according to the younger Ms. Soltanian, it’s not just Willowdale that’s feeling the heat. “I know people downtown, in the condo market, they are suffering too. When the market slows you feel the ripples,” she said.
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.