British Columbia's addiction to real estate has created a job sector that's ballooned over the past decade, with real estate jobs growing 53 per cent in the Lower Mainland.
In the province, full-time jobs related to real estate have grown 39 per cent in that time span. Those jobs don't include construction jobs, which grew in the Lower Mainland by 27 per cent from 2007 to 2017, according to Stats Can data.
Real estate jobs, which would include appraisers, property managers and realtors, have outpaced B.C.'s traditional forestry and logging jobs, which dropped 23 per cent, and fishing and hunting, which dropped 21 per cent. Over all, employment went up 12 per cent.
In terms of numbers, there are 51,000 jobs in the real estate sector in B.C., not including part-time positions. Forestry accounts for 18,600 jobs, and fishing and hunting 2,300 jobs. Mining grew by 47 per cent, with 28,900 jobs.
The British Columbia Real Estate Association says the province's 11 separate real estate boards have over 22,000 licensed agents. The Real Estate Board of Greater Vancouver says it oversees over 14,000 of those.
Andy Yan, director of the Simon Fraser University's City Program, summarized a recently released BC Stats tabulation on employment and unemployment rate by industry. Statistics Canada's Labour Force Survey originally collected the data.
"From a celebrated history as hewers of wood and drawers of water, B.C.'s economic present and future is being shaped by purveyors of real estate," says Mr. Yan.
Mr. Yan is referencing economist Harold Innis' famous line regarding Canada's long-standing dependence on resource extraction. Those days appear to be over.
Jock Finlayson, economist and chief policy officer for Business Council of B.C., says that people believe real estate, particularly sales, is a high-income profession that requires little training or education. Those jobs are likely on the rise because they are seen as easy money, especially when agents at the top of their game are earning millions of dollars.
"A lot of people are attracted to the industry because of the perception that there is a lot of money to be made, and of course there has been for those who are very successful, an extraordinary amount of money," he says.
"It's quite astonishing, the commission sales model in the real estate industry. It has seemingly been impervious to technological change and innovation that in so many other industries has driven out the extra costs around transactions.
"Think of the securities business, where commissions on stock trading have fallen astronomically in North America in the past 20 or 25 years … I have a discount broker account at TD Waterhouse, I can trade $100,000 worth of shares for $7 or whatever.
"We've seen this taking out of the middle person in so many industries, but residential real estate has been slow to see the change, and in a strong market environment like what we have now, the successful agents are reaping extraordinary incomes and that's attracting all kinds of people to the industry."
It helps that it can be a high-paying profession that doesn't require a lot of education or training.
"This surge of people into the real estate sales field reflects very low barriers to entry, which I would emphasize," he says. "If you want to be a doctor or a lawyer or an engineer or architect, or even an economist for that matter, it takes years."
However, relatively few people are going to become millionaires selling real estate, even in Vancouver, he cautions.
"What I hear from people and I do know a number in the industry, is that 15 to 20 per cent of the agents are the ones reaping the lion's share of the commissions, in good times and bad. So there are a lot of people drawn in as a 'get rich quick' kind of dream, and most will not succeed in that.
"And if the market softens and transactions diminish, which I think they will … then you will see people exiting the industry for sure."
When people enter real estate sales, they think of realtors such as Jerome Deis. He had been at Telus for more than 26 years and was a mid-level manager having a "mid-life crisis" at age 45. He decided to make his real estate hobby a full-time job. Two weeks after getting his license he sold his first property. It helped that he had a wide network of friends and acquaintances. People who get started later in life have that advantage, he says.
A dozen years later, he's in the top 10 per cent of realtors in Vancouver, which is an exclusive club.
"Some of these west side realtors are selling $3-million or $4-million houses, and do 12 or 15 sales a year. Do the math.
"It's fair to say some top realtors in my office that make over $750,000 or $1 million a year, year after year. But they work like dogs."
That would be gross commissions, not including taxes and the expense of running a business or support staff.
Realtors can charge whatever commission they choose, but realtor Ian Watt says generally it's around 7 per cent on the first $100,000 and 2.5 per cent on the remainder. The buyer's realtor gets 3.255 per cent on the first $100,000 and 1.1625 per cent on the remainder.
Mr. Deis is also a teacher for the Real Estate Board of Greater Vancouver, teaching orientation courses to people who've already completed the real estate trading services licencing course offered by the Sauder School of Business at University of B.C. The course can be taken part time or full time. Mr. Deis completed the course in about eight weeks, he says.
In order to access the Multiple Listings Service, licenced realtors must join the real estate board and take two orientation classes. Realtors are required to take a refresher course every two years to retain their license.
Mr. Deis says about 1,200 new realtors are taking the orientation classes. And a lot of people do real estate transactions on a part-time basis while working at another job. Some builders will get their licenses in order to sell the houses they construct.
"You get a real mix, yes you get the young, you get the people changing careers mid life, and also the people finished their careers at a corporation and want to do something different, like myself."
In the last five years, while the housing market has been peaking, he's seen a consistently high number or students, and some definitely think it's a lucrative career.
"They think, 'I see that realtor he shows a few houses, drives a nice car, I think it's easy I think I can do that too.' They don't understand and realize it's not one or two hours a day and you make all this money. It's 10 or 12 hours a day, seven days a week and your running your own business," he says. "If you're young and wanting to make a fast buck, it's probably not the business for you long term. You might sell your mom's house for $5-million and your cousin's house, and then, that will be it."
Mr. Finlayson doesn't see the spike in real estate transaction related jobs as healthy, or even viable, in the long term.
"I'm one of many people who've benefited from it I suppose, but it's not healthy for the economy to have so much activity, and so much capital and so much entrepreneurial talent channeled into what I call the residential real estate complex, which is housing construction, home renovation and real estate transactions," says Mr. Finlayson.
"I say that because those are not the activities that build the foundations of a productive, competitive, innovative economy … It seems billions are being spent on renovation and home building. I think if those resources, both financial resources and also the human resources, were put to other uses, like building tech companies, or developing software, or investing in early childhood development, the payoff to our society long-term would be so much greater than it's going to be from what we're seeing.
"The last thing we need is more people going into real estate sales."
Vic Jang became a realtor in 1985 and is now president and co-owner of Sutton West Coast, with 25 offices throughout the Lower Mainland and Vancouver Island.
With the increase in house prices, he's also seen an increase in hopeful new realtors the last decade.
"People think, 'If I just sell three houses it is the same amount of work as working full-time all year. But this is the reality, and it's probably pretty close: 50 per cent of the realtors make $50,000 a year or less, before expenses and taxes. Another 20 per cent will make somewhere in the $100,000 to $150,000 mark."
Expenses are high, with leased car payments, gas, marketing, and staff, if you want them.
And top earners will work around 80 hours a week, he says.
As for the market slowing due to new government taxes aimed at speculation, as well as mortgage stress-test rules, Mr. Jang doesn't seen it slowing enough to return housing to a local income-earner market.
"It's probably safe to say the average price of a west side home is $2.5-million. We would need it to go from $2.5[-million] to $1.2 million [to be more affordable for local incomes].
"And most homeowners on the east side or west side don't need to sell their homes, so we see less inventory. Why would I sell? Where would I go? There's nothing to buy.
"I cannot see the market making a shift enough that it will make a significant difference."