Symmetry

Circle Game

Here we go again! There is nothing more predictable or more assuring that the Vancouver real estate market is about to tumble as the number of Realtors® in the business.

The Real Estate Board of Greater Vancouver today proudly published that it is about to break its own membership record which on June 10th of this year surpassed 10,000.

Gold Rush

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When ever the market seems to be an easy ride everybody and their uncle gets into this gold rush business. What seems to be forgotten in the head long rush to wealth and riches is that it is fleeting. Your first sale is often your Aunt Nell’s house. You’ve made a few thousand in commission and you think it will never end.

I was once a new kid on the block. I was lucky. Within a matter of days I was on my way to the first sale and a first listing. You got to know that I really thought the sun was shining and like many new kids, I too thought it would never end.

Reality

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Oh sure the broker trainers who often took 40% of your commission were quick to point out that you should stay real, keep digging as you completed your daily chores which included knocking on doors, getting barked at by dogs, screamed at by shift workers awoken from their sleep and making those never ending ‘Dialing for Dollars’ phone calls during the supper hour.

Real estate is great! All you have to do was put on a tie, a jacket, and hand out calendars, pens or note pads at every door – all 1000 of them, 2000 if you were keen. After all, how hard can that be in Vancouver’s rainy winter. The brokers said it would build character – real gold miners know different.

After those first glorious sales the days and weeks worn on as the cost of being in the business continued to climb. There were the monthly bill of $1,000 for postage and another $1100 for the ‘Please Choose Me’ cards so that I can give you a ‘Free Evaluation.’ These cards claims American Direct Mail Association generate a 1/4 of 1% ROI, which translated, means that if you got a phone call – you were doing good. Problem is that the real estate consumer often called three Realtors®. It doesn’t take a lot of math to understand that the return on the $2100 investment dropped quickly. The message, more work longer hours. In today’s real estate career not only do you maintain the tried and true formulas but it also now includes the new commitment maintaining a high degree of Web 2.0 presence via daily postings to a blog, twitter, facebook, answering emails on your iphone and responding to Skype calls.

The Price

The price paid when you start in the business of real estate can be overwhelming for many and even with serious budgeting, is one that builds. To quote a well established broker competitor – “everybody is welcome to become a Realtor® and go broke.”

Sadly, many of the new kids who see the riches without the work will soon disappear never to be remembered. If 2002 is an example, that number will translate into 4000 broken dreams of never having found the mother load.

Coincidence or a Sign?

Courtesy REBGV

The symmetry in the increased number of Realtors relative to the market is clear. If history serves the lesson, we can expect that the market prices will continue to drop.

Presented for your reflection are the graphs representing the number of Realtors® and the Average Price. The comparison highlights are 1981, 1994-95 and 1999-2002. In 1981 we see a substantial bump. Soon after the Realtor® numbers began to climb on an ever increasing level to 1994-95. In parallel, the average price matched the climb till 1994-95.

Together, both the number of Realtors® and the average prices began their long, slow decline until 2002.

If historical symmetry prevails then, very soon, we might expect the number of Realtors® to begin to decline as the average price begins its slow drop to more affordable levels.