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Real Estate is Changing - Canada Leads the Way

Posted by: Realestock.Staff in CREA, Canadian Real Estate on Nov , 2010

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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Canadian Real Estate – is it correcting, or slumping?

Posted by: admin in Sales, CREA, CMHC, Canadian Real Estate on Aug , 2010

tuscan slopeIs 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.
A year ago, Canadians marveled at the strength of the property market here. Prices and sales were up, while we noted quite smugly, that Americans were seeing record declines and price erosion in their real estate listings.
What a difference a year makes.
In 2009, Canadian home prices jumped  19% over prices from 2008 – compare that to 2010, when prices have risen a comparatively modest 5%, but sales are way, way down – as much as 40% in some markets. Meanwhile, the Canada Housing and Mortgage Corporation announced that housing starts are down again – falling for a third straight month, more than 10% from their peak in April.
Clearly demand is down, but prices aren’t set to follow suit.  Statistics Canada is anticipating that housing prices will rise by an almost imperceptible 0.3% in June – making that the 13th straight month that housing has gotten more expensive in Canada.  The Canadian Real Estate Association (CREA) is predicting a 7.3% decline in sales for 2011, but still expects housing prices to rise.
So, what’s going on in a formerly red hot market? A slowing economy, rising interest rates, and according to many realtors, the HST in BC and Ontario (two of Canada’s biggest housing markets) have all combined to make people re-asses their decision to buy real estate.
Unfortunately, as these factors aren’t poised to go away any time soon, which means that Canadians might need to get used to a… stable property market.
Over the last ten years, a booming economy and then unprecedentedly low interest rates pushed many people to buy homes and investment properties – statistics from CREA show that the average price of a house more than doubled in the last decade – climbing an incredible 110%.   However, going forward, the housing market might be much closer to the 1990s than the 2000s, if you ask Don Lawby, the Chief Executive of Century 21.
According to Lawby, the 1990s had a steady real estate market:  prices rose every year, due to real factors like inflation and natural market demand, but not factors like impending taxes, mortgage rule adjustments and speculators trying to get huge returns on their investments.
Is a stable property market bad? No – it’s probably better. People selling real estate will need to adjust to the fact that property may not be the get rich quick scheme it once was, but more buyers may be lured out of the woodwork, enticed by the safety of a stable market which promises no big gains, but no threat of huge equity destroying corrections either.  For years, everyone wanted to buy real estate to see how big they could win – those with a lust for gambling might just have to go back to the stock market.
Image: Canadians might just have to get to a market that rises slowly and steadily.
Credit: Robert Crum, Flickr

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