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Ontario real estate regulator needs overhaul

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With hundreds of billions of dollars invested in housing transactions, consumers and others should expect effective and robust regulation of the real estate sector, but a recent Auditor General of Ontario (AGO) report concluded quite the opposite.

The AGO report said the Real Estate Council of Ontario (RECO), the agency responsible for regulating the provincial industry, is not fulfilling its mandate to protect the consumers’ interests. “The activities RECO performs … are not always effective and timely,” it concluded.

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RECO was established in 1997 to promote a “fair, safe, and informed real estate market for consumers in Ontario through effective, innovative regulation of those who trade in real estate.” More than 78,000 salespersons and 20,038 brokers ply their trade with the 3,876 brokerages in Ontario, numbers that should make regulating them all a top priority for RECO.

RECO’s duties are supposed to include regular inspections of brokerages and thorough investigations of complaints against salespersons and brokers, but the AGO found severe gaps in the performance of both those duties. For example, RECO did not conduct an on-site inspection of 62 per cent of the brokerages in the five-year period from 2017 to 2021. Some brokerages have never been inspected.

The AGO’s audit of RECO’s data also showed that 88 per cent of the 2,643 complaints of alleged violations during the same period were summarily closed without a follow-up or an escalation to the investigation department. Similarly, RECO did not conduct a follow-up on 599 non-compliance notices sent to 491 brokerages issued for not remitting unclaimed consumer deposits to RECO.

RECO imposes fines for those found guilty of fraudulent behaviour, but they appear to be an insufficient deterrent. The average fine was $8,273, which is significantly less than the average commission earned on a residential transaction in large cities. It is estimated that 67 per cent of the violators that were fined were not required to take any remedial measures, such as further training or education.

The primary reason for the mismatch between penalties and commissions is that RECO cannot determine what salespersons earn from any fraudulent behaviour.

And what about RECO’s responsibilities to prevent criminals from entering the real estate brokerage business? Surprisingly, RECO does not refuse to register individuals with past criminal convictions.

Similarly, Humber College, the institution that administers mandatory training and courses for aspiring realtors, reported 356 cases of large-scale deliberate and organized academic misconduct during examinations conducted in 2021, but not much was done by RECO to investigate them.

The AGO report is thorough in most instances, except for its concerns about money laundering in the real estate industry. The report speculates money laundering might be taking place and recommends actions to curb it, but a better approach would be to investigate any incidences of money laundering rather than speculating about it.

As a regulator, RECO should also be proactive in protecting consumer rights, such as buyers being forced into blind bidding when multiple bids are placed for the same property. Many buyers end up paying tens of thousands of dollars, if not more, over the second-best offer, which has contributed to house-price inflation. Yet not much has been done by RECO to strike a balance between the rights of buyers and sellers.

RECO’s mandate is to regulate Ontario’s real estate sector, but it lacks the processes to deliver. For example, even though a 2014 regulation requires brokerages to keep all copies of written offers (bids) for a year, RECO does not collect data from brokerages to identify any fake bids, nor how much a homebuyer paid above the second-highest bid.

As a regulator, RECO should collect all transaction-related data, including the contents of multiple bids, from brokerages for independent analysis to investigate accusations of irregularities and misconduct. If it did, RECO could share data-driven insights with the province to help improve legislation safeguarding the interests of buyers and sellers alike.

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Nanaimo Real Estate Market Report: January 2023

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NANAIMO – Calm start to the year indicates a great time to buy

In January, 46 single-family homes sold in Nanaimo, down 33 per cent from December and 26 per cent from the previous year.

Active listings of single-family homes on the Mid-Island rose 108 per cent year-over-year, but dropped by 4 per cent from December.

The average price for a single-family home in Nanaimo was $795,527 in January, a 23 per cent drop from last year.

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In a competitive market, it is key to obtain the advice of a REALTOR®, especially in a rapidly changing environment.

These are the benchmark numbers for Nanaimo in January 2022, as well as central and northern Vancouver Island:

  • Nanaimo’s benchmark price decreased to $755,300, a 7 per cent decrease from last year.
  • Campbell River’s benchmark price for single-family homes was $647,600, a 4 per cent decrease from the previous year.
  • Comox Valley’s benchmark price decreased by 4 per cent from last year to $784,700.
  • Cowichan Valley reported a benchmark price of $745,700, an decrease of 4 per cent compared to January 2022.
  • The Parksville-Qualicum area decreased 6 per cent from the last year to $856,100.
  • Port Alberni’s benchmark decreased to $518,300, a 8 per cent decrease from last year, the largest decrease on the island.

The monthly Nanaimo Real Estate report analyzes the Vancouver Island Real Estate market north of the Malahat and more precisely, the Nanaimo and greater area. The information included here does not reflect the actual value of any particular property. You can find out what your home is worth by contacting a RE/MAX of Nanaimo’s agents here.

Looking for listings? Start browsing Nanaimo’s Real Estate listings here

Want to know more? Find more Nanaimo Real Estate Market Reports here https://nanaimonewsnow.com/nanaimo-real-estate-market-report

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Montreal home sales down 36% from January 2022: Quebec real estate association

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MONTREAL — The Quebec Professional Association of Real Estate Brokers says Montreal’s January home sales fell to a level not seen since 2009 as the market slowdown continued.
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The Quebec Professional Association of Real Estate Brokers says Montreal’s January home sales fell to a level not seen since 2009 as the market slowdown continued. A woman walks by a house for sale in Montreal, Friday, March 4, 2022. THE CANADIAN PRESS/Graham Hughes

MONTREAL — The Quebec Professional Association of Real Estate Brokers says Montreal’s January home sales fell to a level not seen since 2009 as the market slowdown continued.

The association says last month’s sales totalled 1,791, down 36 per cent from 2,816 in January 2022.

Charles Brant, the association’s market analysis director, says these numbers mean activity is approaching a historic low for the month of January and come as rising interest rates are weighing on homebuyers.

He says first-time homebuyers in particular are taking a cautious wait-and-see attitude despite recent drops in prices.

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The median price of a single-family home edged down seven per cent to $500,000 year over year, while condos dipped three per cent to $370,000 and plexes dropped six per cent to $675,000.

As median prices fell so did new listings, which hit 4,598 compared with 4,808 a year ago.

This report by The Canadian Press was first published Feb. 7, 2023.

The Canadian Press

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B.C. residential real estate investors unfairly ‘painted as speculators’: BCREA

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Statistics Canada released data last week revealing 23.3 per cent of B.C. homeowners are also investors in the market. The Vancouver census metropolitan area (CMA) had an overall investment rate in condominiums and houses of 21.3 per cent.

“Investors often get kind of painted as speculators who are out to buy up housing and do nothing with it, or flippers or any other kind of pejorative terms that we add to investors. But what this data shows, and what’s good to understand, is that they’ve really invested a lot in a primary rental in Canada,” said Brendon Ogmundson. “A lot of the rental units that are being provided are smaller investors who own one unit and are renting it out.”

Statistics Canada defines an investor as an “owner who owns at least one residential property that is not used as their primary place of residence.” 

In B.C., 73 per cent of properties with multiple dwellings were owner-occupied investment properties. Investor-occupants are more common in the province, making up 9.6 per cent of owners.

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This is due to a higher proportion of properties with multiple residential units – 11.7 per cent – such as laneway units or basement suites, according Statistics Canada. The national statistics agency said these types of units are more likely to be owner-occupied.

“So many owners in B.C. have chosen to also be landlords by renting out their basement suites or laneway houses and it’s way, way different than any other province in this dataset,” Ogmundson said. 

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Statistics Canada data breaking down homeowners by investor-type. 
The region of Greater Vancouver A or Electoral Area A, which includes the University Endowment Lands, Barnston Island, Howe Sound communities, Indian Arm and Pitt Lake communities, had a higher proportion of houses and condominium apartments used as an investment at 42.1 per cent compared with the rest of the region. 

The City of Vancouver had a lower proportion at 32.5 per cent.

This difference is attributed to students attending the University of British Columbia, who are more likely to be renters or live in a second property owned by a family member, according to Statistics Canada. 

The proportion of condominium apartments owned for investment purposes by non-resident investors was the highest in B.C. among the provinces – seven per cent.

The rate of condominium apartments used as investment was lower in the Vancouver CMA (34 per cent) than the rest of the province.

Across B.C., non-residents and out-of-province investors owned 43,890 houses used as an investment. This number was typically higher in areas near the Alberta border. 

Out-of-province investors owned 1.6 per cent of homes in B.C., while in-province investors accounted for 9.8 per cent of all investors. 

clwilson@glaciermedia.ca

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