Ever since Garry Marr published his article in the Financial Post titled “Canada’s next housing bubble: real estate agents” there has been quite a bit of discussion both online and on the radio about the boom in the number of real estate agents.
The GTA has nearly 40,000 real estate agents, twice as many as 10 years ago and 1 agent for every 140 people.
So what’s driving this boom? It’s no surprise that part of the boom is driven by the perception that, as one recent applicant told me, “it’s really easy and I can make a lot of money”.
But more important than the dream of easy money is the fact that the barriers to become a real estate agent are extremely low in Ontario. To become a real estate agent one needs to successfully complete three courses, two of which can be completed online with the third requiring 40 hours of in-class training. If a student decided to take all three courses in class, the coursework totals 175 hours of in-class training, or roughly 4.5 weeks.
Successful graduates then enter what is called their articling phase. During the articling phase agents can sell as many or as few houses as they like without any direct supervision. There are no requirements in this regard. The only requirement during the articling phase is the completion of three additional courses which combined total 3 weeks of in-class training (two of the courses can be taken online which would reduce the in-class requirement to just 1 week).
A few weeks ago while talking business with a friend who owns a hair salon, I was surprised to hear about the difference in the training requirements the province has for hairstylists compared to the requirements for the real estate industry.
Hairstylists must first complete a Ministry approved 1,500 hour Hairstylist program which translates into roughly 10 months of in-class training. Following that they must complete 2,000 hours of on-the-job training under the direct supervision of a registered hairstylist.
The chart below compares how the two professions stack up both in terms of upfront educational requirements and the requirements during the articling/apprenticeship phase.
Because of these lax educational requirements, the real estate industry is increasingly being dominated by part-time agents. Mark McLean, TREB’s President Elect and a Broker Manager at Bosley wrote a great post a couple of years ago where he estimated that roughly 71% of real estate agents were part-time. Since then, the percentage of part-time agents has increased to 78%.
Why are the educational requirements for real estate so low? There are two main reasons for this.