VanIsle is in the middle of an affordability crisis. The whole country is. The average selling price of a Canadian home hit $713,500 at the end of last year. That’s a 26.6% jump from 2020.
It’s also a Canadian record. House prices have never increased by that much in such a short period of time.
Who are the winners in Canada’s crazy real estate market?
Certainly not first-time homeowners. Lots of folks with good jobs and savings accounts are being priced out of the market. Renters are watching their savings get gobbled up by the rent, if they can even find a place to live. Families are relocating to find a place to live.
Even if you can scrape together a down payment, many people find themselves in bidding wars with other buyers.
In Cumberland last year, some houses went for more than $200,000 above the asking price. If you’re the seller, that might feel like winning the lottery—but only if you can find someplace cheaper.
The Canadian Real Estate Association (CREA) is probably pretty happy with the massive hike in prices. Real estate agents are making out like bandits. The 100,000 realtors that the CREA represents across Canada are likely popping the champagne.
So isn’t it time to take a good hard look at the real estate sales industry?
You can become a licensed realtor after taking a six-month course. And in this market, that’s basically a ticket to ride. From the realtor’s perspective, the commissions are great.
In BC, agents usually charge between 3% and 4% on the first $100,000 of the selling price. After that, they charge between 1% and 2% for everything over that.
Let’s do the math. Based on last December’s average home price of $713,500, a realtor could be banking between $9,135 and $16,270 on a single sale.
And in this market, all you need to do is pound a sign into a front lawn and watch your cell phone light up.
An agent doesn’t need to know anything more about a house than what you can read on the listing. Why would they waste time learning about the product when buyers will be lining up to bid on the house either way.
When the market wasn’t as hot as it is now, selling houses for a living could be a tough slog. Only the top-tier realtors made a really good living. But in this market, let’s get real. The only other folks making commissions like this are dealing drugs or weapons.
So let’s imagine something for a second. Imagine a world without real estate agents. What would it look like?
Unlike a world without doctors, mechanics, scientists, artists, carpenters, farmers, and so on and so on, would things be much different? In fact, they might even be better.
Taking realtors out of the process could knock 10s of thousands of dollars off the price of a house. But, sure, we’d have to do our own paperwork. And we’d still have to pay a lawyer or notary public to handle the high-level property details.
Would it solve all of our housing problems? No.
There are lots of other pieces that need fixing.
But it might solve one big one.