Sales activity in the third quarter of 2010 began on a weak footing, but gained traction as the quarter progressed. Improving momentum for home sales activity suggests the resale housing market is stabilizing, but weaker than expected third quarter activity has reduced CREA’s annual forecast.

National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent. While monthly levels for sales activity are stabilizing, year-over-year comparisons are likely to remain stretched well into 2011 due to the record-level activity reported in late 2009 and early 2010.

Lackluster economic and job growth, muted consumer confidence, and the resumption of interest rate increases are expected in 2011. Against this economic backdrop, national home sales activity is forecast to decline by nine per cent to 402,500 units. “Interest rates are expected to resume their return to more normal levels next year, but will still be at levels that are friendly to the housing market,” said Georges Pahud, CREA’s President. “For the tenth year in a row, more than 400,000 homes are expected to change hands over the MLS® Systems of Canadian real estate Boards and Associations next year.”

Levels for sales activity and new listings have swung widely until recent months. Despite their volatility, movements in sales activity and new listings have remained in synch and have kept the resale housing market balanced since early 2010. The overall supply of homes for sale has also been trending lower in recent months. The resale housing market has remained balanced on a national basis and in most provinces, resulting in stable average price trends.

The national average home price is forecast to rise 3.1 per cent in 2010 to $330,200, with increases in all provinces. The small revision to CREA’s average price forecast reflects changes to the forecast for provincial sales activity and corresponding provincial contributions to the national average price calculation. The balance between supply and demand is forecast to remain stable, resulting in stable price trends.

Modest average price gains are forecast in 2011 in all provinces except British Columbia, Alberta, and Ontario. Lower sales activity in British Columbiaand Ontario are expected to result in a 1.3 per cent decline in the national average price to $326,000.

“Housing demand and supply is stabilizing,” said Gregory Klump, CREA’s Chief Economist. “That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.”

“Interest rates are widely expected to remain low for some time due to recent downward revisions by the Bank of Canada to its outlooks for economic growth and inflation. Consumer sentiment will likely remain under pressure until economic prospects improve meaningfully,” said Klump.

“In the meantime, many households will be focused on paying down their debts before the Bank of Canada  resumes hiking interest rates next year,” Klump added. Economic uncertainty is likely to keep potential homebuyers in a cautious mood, so the continuation of low and stable interest rates is unlikely to cause housing demand or prices to swell.”

For more information, please contact:
Linda Kristal
Director of Communications
The Canadian Real Estate Association
 Email: lkristal@crea.ca

Reprinted from http://creanews.ca/

Note: these are my personal thoughts and have absolutely no connection to any volunteer positions that I hold.

At the end of the month the Canadian Real Estate Association will be voting to resolve a battle with the Competition Bureau. The big question that everyone wants to know is how this will change the landscape of Real Estate in Canada.

The answer is not very much…there have always been options for sellers whether it has been to sell privately, or to list with REALTORS® or Brokers who provide a multitude of services. I think that a lot of Sellers who would have previously chosen the “private for Sale” option will now be placing their properties on the MLS system with brokerage models who only offer that option.

The misconceptions are out there: some consumers think that full service companies will now be forced to list properties on the MLS with little or no service or a schedule of services. This is not the case. It is up to the Owner/Broker to decide what offerings they will make as part of their business model.

The BIGGEST misconception is that the Seller is the one paying the commission…think about the transaction. It is the Seller who writes the cheque but the price of the house is paid by the Buyer and the commission is deducted from that price. The Seller wrongly thinks that they are benefiting, but the benefit really goes to the Buyer….it is the Buyer who gets the lesser price to be paid and the Seller may be disadvantaged by not having a full marketing program.

As a REALTOR®, I see myself as a marketer and negotiator providing services for a fee. If some Sellers feel that they can manage that part on their own, then I wish them all the best. It has taken years to develop a successful marketing plan. Good REALTORS® make it look easy, we act as a buffer and try to keep a very difficult process as calm as possible. 

Like any service well done it has lead consumers to think that the process is easy. Some consumers see the transaction as the only time we work; They don’t see the hours of preparing the house for sale, research to get the proper asking price, months of showings with buyers to educate them, licensing, ongoing education and insurance; one of our biggest jobs these days is to make sure that Bona Fide clients are exposed to the property and that clients do not lose proper perspective when negotiating.

Unrepresentated Sellers would be well advised to hire a lawyer and use their services.  However they should be prepared that Lawyers charge whether the Property sells or not whereas REALTORS® fees, for the most part, are charged on a successful completion of the transaction.

There will be some confusion for a while as Sellers, REALTORS® and Buyers get used to some of these changes and some behaviours will have to change. Buyer Representation which involves a service contract between the Buyer and their agent, will become more and more important as it solidifies the fiduciary duty of the agent to the Buyer. 

Good agents will continue to offer many services to their sellers and Buyers. At the end of the day, competition allows great service providers to shine and this discussion is all about service.

Teranet  and the National Bank of Canada   joined together about one year ago to produce this House Price Index  of major centres across Canada. Please remember that it only reflects the large centres and is comprehensive for those living in those centres but would not reflect a vision of Canada as a whole. I get these newsletters monthly and you can subscribe to them at

Teranet’s data is from Land Registry systems across Canada so also reflects all transactions, not just those on MLS…

NEWSLETTER – AUGUST 25, 2010

Monthly price rise of 1.5% in June

Canadian home prices in June were up 13.6% from a year earlier, according to the Teranet-National Bank National Composite House Price Index™. The 12-month gain, identical to that of May, was strongly influenced by Vancouver, up 16.3%, and Toronto, up 16.2%. In the other four markets surveyed, the 12-month rise ranged from 7.1% in Halifax to 12.0% in Ottawa. In Calgary it was 8.3% and in Montreal 8.7%.

June was the third consecutive month in which prices were up from the month before in all six metropolitan areas surveyed. The monthly rise of the composite index, 1.5%, was the largest since last August. The monthly rise was 2.7% in Ottawa, 2.4% in Toronto, 1.4% in Montreal, 1.3% in Halifax, 0.8% in Vancouver and 0.2% in Calgary. For the composite index it was the 14th straight monthly increase, the longest such run since October 2006.

Since the resale market has been slackening across Canada – from April to July of this year, more existing homes came on the market than were sold – it is too early to conclude that the relatively vigorous prices rises of April, May and June launched a trend. The prospect of harmonized sales taxes coming into effect July 1 in Ontario and B.C. may have stimulated sales in Vancouver, Toronto and Ottawa in the preceding months.

CREA’s previous national forecast was heavily influenced by British Columbia and Ontario forecast trends, and this remains the case in the revised forecast. While sales activity is unfolding as expected in Ontario, the decline in affordability in British Columbia impacted sales in the province during the first quarter.

Additionally, changes to mortgage regulations announced in February are expected to marginally impact activity. The changes prompted some homebuyers to finance their home purchase before the new regulations took effect in April, which pulled forward a number of sales that would have otherwise taken place at a later date.

April also saw the Bank of Canada drop its conditional commitment to keep interest rates on hold until at least July, opening the door to an interest rate hike before then. Indeed, on June 1st, the Bank announced its decision to raise its trendsetting overnight lending rate by 25 basis points to a ½ a per cent, and indicated it expects the rate of growth to slow for consumer spending.

“Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers,” said CREA President Georges Pahud.

CREA had previously forecasted sales would remain at elevated levels through the first half of 2010 before easing in the second half of the year and over 2011. While the forecasted trend for activity has not changed in CREA’s revised forecast, it has been pulled forward, with the fourth quarter of 2009 marking the peak of national activity. This has had the effect of lowering the forecast for national activity over the rest of the year and in 2011.

National activity is forecast to reach 490,600 units in 2010, up 5.5 per cent from 2009 and the second highest annual level on record. Lower expected activity in British Columbia accounts for more than half of the downward revision in national sales activity. Annual activity in Alberta was also revised downward due to weaker than expected activity in the first quarter. Ontario is still expected to see a record number of sales in 2010, but by a smaller margin than previously forecast.

Interest rate increases will contribute to weaker national sales activity in 2011. Transactions via the MLS® Systems of Canadian real estate Boards are forecast to decline 8.5 per cent to 448,700 units in 2011. Although this is a similar percentage decline compared to CREA’s previous forecast (-7.1 per cent), the downward revision in national activity levels for 2010 means that the forecast level for sales activity in 2011 has also been revised downward.

The national average home price is forecast to climb 1.6 per cent in 2010, reaching a record $325,400, with average price gains forecast in all provinces. The downward revision from the previously forecast 5.4 per cent gain reflects lower forecast sales activity in British Columbia, where most transactions are priced well above the national average.

All provinces are forecast to post modest average price gains in 2011, except British Columbia and Ontario. The forecast decline in activity is sharpest in these two provinces, with higher-priced transactions weakening most. Average prices are forecast to sag in these two provinces in the second half of 2010 before stabilizing next year. As the Ontario and British Columbia shares of national activity edge lower, there will be fewer higher priced properties in the calculation of the national average price. The national average price is forecast to decline by 2.2 per cent in 2011 as a result.

“With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent prices increases and rising interest rates,” said Chief Economist Gregory Klump. “A downward trend in national sales activity combined with an increase in listings will result in a more balanced market.”

“In keeping with the return of a balanced housing market and typical demand-driven housing market cycle dynamics, prices will remain stable,” he said. “Canada’s solid mortgage market trends, conservative lending practices, and prudent borrowing by homebuyers means that Canada will avoid the massive realignment in housing supply and demand being experienced in the United States. Accordingly, Canada will avoid a U.S.-style housing price correction.”

Home sales — can’t we get along?: Editorial, Wednesday, March 24, 2010

A fair deal for consumers in the residential real estate market starts with the realization not everyone needs the full services of a real estate agent to buy or sell a house.

That’s why Monday’s decision by the Canadian Real Estate Association  to open up its super-popular Multiple Listing Service  to homesellers for a few hundred dollars, rather than by having to employ the full services of a real estate agent, is welcome.

The best thing for consumers is increased choice and competition.

Obviously, some people are perfectly capable of buying or selling a house themselves, just as some are perfectly capable of buying and selling stocks without a broker.

They don’t need agents taking 2.5% off the top, or $10,000 on the cost of a $400,000 home, from both the buyer and seller.

By contrast, other consumers may want an agent doing all the work for them, or providing some services and not others.

Again, that’s the beauty, or should be, of choice and competition in the market.

We understand the concerns of the CREA  — whose members voted in favour of opening up their MLS service Monday under threat from the federal Competition Bureau .

It immediately dismissed the move as inadequate, arguing the real estate industry doesn’t allow enough competition in the market.

On the other hand, running the MLS like the Wild West, with anyone being able to make any claim in selling a house, wouldn’t be good for consumers, either.

It’s also understandable the real estate industry wants to maintain some exclusivity to the MLS, which it created.

Rather than having this dispute decided by the Competition Tribunal  — which is where it appears headed — the best outcome for consumers would be a negotiated settlement.

Surely there’s a happy medium between the industry holding a virtual monopoly on home sales (of course people can sell their homes privately, but the best deals generally come through using MLS) and a free-for-all, where potential buyers won’t be able to trust the listings.

We’d encourage the CREA and the competition bureaucrats to find it, because imposed solutions are never best for consumers, the industry or our economy.

The Toronto Sun Editorial.

There is a lot of discussion going on led by the Competition Bureau  and forces that want to “open up” the MLS  and the Real Estate industry. Along with that discussion comes a lot of vitriol and misinformation about what it is that REALTORS do. We seem to have become the target for some who are not being totally clear about their agenda and who jump on sound bite after sound bite. If there is to be a discussion then it should be an honest one.

The sound bites tell you that CREA  has had a hand in stopping Competition. There are a variety of models out there at present, have been for many years and they offer lots of choice to the consumer. Organized Real Estate has never restricted consumer’s options to MLS as long as these use a licensed REALTOR. The reality is that some of those models were not attractive to the consumer and it is the consumer that did not adopt them. That happens in any marketplace…sometimes the best widget does not sell because the marketplace is not ready or there is no perceived need.

The sound bites tell you it is all about bringing down commission but the Competition Bureau’s findings did not touch the rules dealing with commission, they only talk about CREA rules around “representation”.  In other words, the Bureau wants unrepresented listings to be able to be put on the MLS system. Listings where the Buyer will have to satisfy himself that the information is correct and not misrepresented. At present and with all the due diligence that the listing agent is to do there are still properties that slip through the cracks….wouldn’t this only make it worse. Is the lawyer led Competition Bureau really concerned about the consumer or looking to move the transaction to the Lawyer’s office rather than the Realtor’s office?

The sound bites tell you about the massive amounts of money that REALTORS make so easily. We only get paid on the closing of the transaction yet there is an outlay (for myself) of anywhere from $1,000 to $5,000 of costs before the property comes to the market, and sometimes those properties do not sell because it is the Seller who pays if the offer is acceptable to them. Numerous listings come to the market overpriced, sit while agents try every option out there to market the house, get moved to another Company and finally sell or come off the market. How come we are not hearing from those sellers? How come we are not hearing from the Buyers who ask for information, have us show them multiple properties and buy from a friend with not even a thank you? How come we are not hearing from those Buyers?

We are told of Multiple Offers however in the best of markets they have been the exception and not the rule. Sellers and REALTORS not involved in multiple offers don’t have the war stories that generate the media and news hype. There are no records of  Multiple Offers but I would think they have occurred in less than 20% of the transactions over the last few years.

In all sales there seems to be an 80-20 rule and there are a lot of Realtors who are not able to pay their bills because they do not make enough money. I am one of two people left  from a class of over 60 that began when I did. Every year more people get licensed and every year many leave the business disheartened. 

What they thought would be an easy job, turns out is not. There is no security, there is no retirement plan, there is a general rule that one third of your gross income will go to expenses, one third will go to taxes and you will have one third to live on. That is made up, not from the 5% or 6 % that is quoted all the time, but MLS is a cooperative that gives half to the cooperating agent and then splits that balance between you and your Broker. However the sound bites tell you of the agent who made $30,000 on a sale…which becomes $15,000 with the co-operating agent, which becomes $7500 with the Broker and at the end of the day becomes $2500 in the Realtors pocket (once expenses and the Government have their share). However, that does not make the same sound bite does it? 

Choosing to be a REALTOR means that you will not have a 40 hour week, not have privacy in your community (people think nothing of stopping you and asking your advice with no intention of ever paying you for it), and will only be as successful as your last transaction. We live by the rule that if you do something nice for someone, chances are they will tell no one, however, should you do something they consider bad, they will tell everyone. Reputation is everything and God forbid if you become too successful at what you do…

All Realtors are mandated to have continuing Education Courses and cannot be re-licensed without 24 credits every two year period, 6 credits deal with updates from the Provincial Regulator. This is not even required of our teachers in the Province of Ontario. What will we require of education for unrepresented Sellers?

MLS  has been something like a “Good Housekeeping Seal of Approval”. It means that there has been due diligence in bringing the property into the system and that there is a third party who not only warrants the quality of the listing but if there are issues, there is a party that has errors and omissions insurance as mandated by the Provincial Regulator. What potential landmines will we face under this new direction? Will money saved inREALTORS  fees be paid to Lawyers instead? Please note that Lawyers get paid whether the transaction is successful or not, unlike REALTORS.

I am someone who is all ready for a discussion and to embrace change but let’s see if we can get some honest discussion happening and deal with the real issues instead of the vitriol and hidden agendas of those saying that they are out to help the consumer.

Competition Bureau and CREA

I suppose there will be wide spread panic amongst some in our industry – haven’t you heard? The Competition Bureau has come out with their long anticipated report about our industry. Read about it here in an article from today’s Star. In the report, the Bureau presents that CREA is acting in bad faith when, because of certain rules and regulations, it doesn’t permit certain models of business to flourish. At the heart of the finding is the regulation which requires the listing brokerage to be engaged or part of the selling process if the property is listed with a realtor.

As I understand it, the Bureau wants the consumer to be able to handle their own sale of their property, without having to have a realtor negotiate the deal for them, but they want the consumer to be able to have the opportunity of using a realtor (for a fee) to list their property on MLS.

“Mr and Mrs. Homeowner, I will process your listing on the MLS for a fee, all calls, appointments and offers will go directly to you and you will negotiate your own deal with the coop realtor.” Seems simple enough for me. In all of my real estate years, the consumer or homeowner has always had a choice. A choice of who to pick to sell and market their home, a choice of what commission will be charged, and a choice to either list exclusively, through the MLS, or privately. Now the Bureau wants the consumer to have the choice to deal directly with professional negotiators, without the help of a listing realtor.

The MLS is a service owned by CREA. Realtors across Canada own CREA. We have put together a cooperative, organized to self regulate our industry. By and large the cooperate works very well. We have high standards, look after the needs of the public and provide historical data and exceptional service for the most part. Is there a need to allow the public to be better served by “allowing” brokerages to just act as a processing service to the MLS? The Bureau thinks so, I am sure CREA doesn’t agree.

What has happened to “Free Enterprise” What is wrong with various models developing their own collective to serve their needs? If I want to develop a real estate company which offers a service of listing properties for a fee, with the proviso that the co op brokers must deal directly with the sellers, why don’t I just do it, and let the economy buy or not buy into it.

The problem seems to be that the current collective must allow this model and any other model in by taking away the rule of representation for sellers. There lies the problem. I wonder if I will be permitted to develop my own model, outside of CREA. Will the Bureau come to my defense when I say I have no choice but to be a member of CREA if I want to work in this industry? I doubt it.

For the record, any model works for me. Any real estate brokerage can charge, develop, promote and exists side by side with our firm. The consumer has always had choices, will continue to have choices and will make decisions based on value.

This is a long process and ultimately will develop into what needs to be. Some realtors see their service as a fee, lowest fee wins. Other realtors look at it differently.

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Canadian Real Estate Association Releases New Update