Realestock Blog

Ah January – a time for prognostication. Everyone channels their inner Nostradamus and attempts to make sense of the swirl of information around them – trying to figure out what’s relevant and what’s not. Sure there are tons of prediction lists that come out at this time of year, but we at Realestock are going to try something a little different with ours - we’re actually going to hold ourselves accountable. In December of 2011, we’re going to look back and try to determine which of our predictions were right, which were so-so, and which were so very, very wrong.

So what do we think will happen in real estate this year? We’ve boiled it down to 6 firm predictions:

1. The market will stay flat, but people will still look towards a recovery, and every small rise and fluctuation will start people talking all over again. The markets are looking up, and stocks are rising, but job growth is still looking slow and that means we don’t think the market is going to leap up towards previous levels. The CREA is predicting Canadian home sales to fall by 7.3% overall in 2011 and we agree with them.
2. Low prices means affordable prices – those who can buy houses will continue to do so, driving modest sales and making starter homes attractive. Due the excesses of previous years, people will be a lot more conservative in their choices – looking to stay well within their means and choosing more affordable homes.
3. Renting will be cool again. Yes, really. Even with low rates and affordable prices, many will opt to rent for longer to save up bigger down payments to keep their mortgages low and affordable in the long term. People have learned the lessons from the disasters of Adjustable Rate Mortgages in the US, and we think people will wait longer to avoid being caught by sudden rate hikes.
4. Governments will continue to keep interest rates low and mortgages attractive – even in places with hot real estate markets like British Columbia – we think rates will stay right where they are in some places and very gently rise in others to avoid unbalancing a slow economic recovery.
5. It’s tough out there for mortgage brokers and real estate agents. And it will continue to be. Sorry guys.
6. Realtors and developers and brokers will get smarter – not work harder to stick it out. In order to differentiate themselves in a tough market, real estate experts will continue to blog, tweet and socialize themselves into a market position. Social media aggregation will be a big trend this year, with more and more companies using neat tools like these social media hubs to collect all their content together and make their lives easier.

Sources: Top 10 Real Estate Predictions for 2011, Elizabeth Weintraub; BCREA Housing Forecast; 2011Real Estate Outlook, Jerry Barker; 2011Canadian Real Estate Market Forecast and Prediction, Kurt Hemmerling

Picture: KayVee.Inc

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Since October 25, homeowners looking to sell in Canada have a lot more options under their belt. The Canadian Real Estate Association (CREA) has approved a sweeping change to the MLS system that they’ve so tightly controlled since its inception.

Under a new agreement between the CREA and the Federal Competition Bureau, Canadian realtors can now place properties on the MLS for a flat fee – and leave all the other work of actually selling a property to homeowners. This allows for much more consumer choice than the previous commission model. Homeowners will be able to pick and choose what they want realtors to do for them – instead of ordering the set dinner, you can order your realty services from the a la carte menu.

"By allowing [a realtor] to just post and not have to represent, then you inherently give your consent for them not to be full-service. It opens up the possibility for consumers to have a clear choice of services for different prices," said Tsar Somerville, Director of the Centre of Urban Economics and Real Estate at the University of British Columbia. 

What’s the incentive to go a la carte, or just have a realtor post a listing on the MLS for you? Big savings – buyers agents fees average at 2.5% of the property, and seller’s agents fees range from anywhere between 4 and 6%. Paying a flat rate up front can save many thousands of dollars down the line and allow homeowners to undercut their competition, knowing they’ll be keeping all the profit for themselves according to Garry Marr, Financial Post Columnist. 

Whatever the outcome, not everyone believes that the real estate game will change – some people are betting most homeowners will go with the expertise of full service realtors instead of picking and choosing their services. “Quite honestly, I think [the impact] is going to be quite minimal,” said Jake Moldowan, President of the Greater Vancouver Real Estate Board.

Sources: 

Real Estate Listing Deal Opens Doors for Sellers, Sympatico.ca; Sellers Skip Realtors for Flat MLS Fee, The Province; Real Estate Renovated, The Calgary Herald

Image: TheTruthAbout

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Is it the HST? Creeping interest rates? High prices? Something is killing the Canadian real estate market - Canadian real estate sales have dipped sharply – and expectations should be following suit.

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