Who’s losing in the housing slump? Real estate agents

Home sales continue to plummet in most parts of the country, and with the decline has come a new reality for organized real estate: a drop in how much money everybody is making.

Like many others, Toronto public relations manager Megan Vickell is sitting on the real estate sidelines dreaming of bargains to come.

The 28-year-old has never owned a property and is hoping to scoop up a discounted Toronto condo when prices fall off today’s frothy record highs.

There are no official statistics on revenue the industry takes in, but December transactions from the Canadian Real Estate Association show the dollar volume for the month was down almost $1.379-billion from a year ago. Using a 5% commission rate, the industry standard, you get almost $70-million in lost revenue for realtors in December alone.

The housing market may not have crashed in terms of prices, but for the agents there is little doubt it’s getting tougher out there.

“It all really depends on where,” said Gregory Klump, chief economist at Ottawa-based CREA, about how agents are being affected by the slowdown. “If you are in Victoria, sales are down 5% for the year. You can be sure their members are hungrier. In Vancouver, it’s not the heady times in 2012 they were in 2011 because activity was down 23%. If you are looking at Calgary, realtors are having a real good time.”

The numbers don’t lie. December was tougher in Vancouver. There was $800.8-million in sales, a 31.6% drop from the $1.17-billion in sales a year earlier. In Toronto, sales dropped to $1.77-billion from $2.13-billion, a 17.1% decline. Compare that to Calgary, which had $563.8-billion in activity in December, a 14.6% increase from the $492-million a year earlier.

The sharp drop in dollar value comes as prices continue to hold relatively firm in the face of a major sales decline, something that has many calling for a market crash. The average price of a home sold in December was $352,787, a 1.6% jump from a year ago, but sales activity dropped 17.4% during the period.

It’s not just realtors feeling the pinch. Lawyers, renovators and even the government can expect to feel some sort of impact from a decline in sales. “You are going to have less money going into the coffers of the city,” said Mr. Klump, in reference to land transfer taxes.

The real estate industry is estimated to have almost 100,000 agents but it’s unclear if its ranks have begun to shrink yet.

Slow times and everybody panics. It becomes more of a concern for agents to drum up leads as their business starts to otherwise shrink

“It takes time for that. There are a lot of people in the industry you would be surprised [by] how few sales they make,” Mr. Klump said. “A lot of them, this is not the only thing they do. A lot of people hang onto their licence to keep an oar in the water in case they want to get active again.”

Real estate veteran Lawrence Dale, who founded Realtysellers, says one of issue for agents is they get used to a certain sales level so any pullback seems catastrophic even if it just puts them back to where they were in 2010 — when, at the time, many would have been satisfied with their sales volume.