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Pulling back the curtain on Ottawa's real estate market – Ottawa Business Journal



Before the internet was a thing, real estate agents had access to a wealth of information to which consumers weren’t privy. They knew the players, they knew the game – and most importantly, they knew the market. And that knowledge came at a price, an average commission price of five per cent, which consumers have been charged for decades. The system in place for buying and selling a home is confusing – so hiring someone who knows how these things work just makes sense, right?

Maybe it did in a time not so long ago. But the world has changed, and Unreserved is here to help real estate change with it. 

Since launching in Ottawa in July of 2021, Unreserved has sold just shy of 200 homes, with complete transparency. That means that anyone and everyone involved, with access to an internet connection, could see the inspection reports, market comparables, and every other offer in real-time. Consumers have been begging for an end to blind bidding, and operating as an online auction house let’s Unreserved do just that. 

Transparency helps empower buyers. With Unreserved’s online auction platform, they have all the transparency they need to make an informed decision – right at their fingertips. This wealth of ungated information has led to an influx of buyers choosing to buy directly through Unreserved’s online platform – without the help of an agent. 

But, it gets better. Have you ever wondered how real estate agents make their commission? For argument’s sake, sellers pay five per cent when selling their home – a commission that gets split two ways between both the buying and selling agent. That’s 2.5 per cent apiece. This posed an interesting question for Unreserved. With so many buyers confidently choosing to buy unrepresented directly through the platform, wouldn’t it make sense to offer a similar commission fee to the actual home buyers themselves? 

As it stands, Unreserved offers a two per cent commission to cooperating agents. So is it really crazy to take that two per cent and give it directly to buyers who do all the legwork themselves? It’s long been debated whether or not buyers shoulder the burden of their own agent’s commission fee (even though it’s clearly stated in their buyer’s agreement). Many agents will argue that it’s exclusively the seller paying those fees, making the service for buyers completely free. Whichever side of the argument you fall on, buyers can now see the true value of working with Unreserved when they receive their cheque for two per cent cash back on the purchase price of their new home. Buyers can decide for themselves whether the expense of an agent is worth forgoing two per cent cash back—or, say, $15,000 on the average home in Ottawa. 

Many buyers will continue to work with an agent, and that’s completely understandable. In fact, they encourage it. “For some buyers, operating with the help of an agent provides the peace of mind they need to close,” says CEO Ryan O’Connor. 

But, at the end of the day, “It’s the buyer’s money,” he explains. “Up until now, the only option was to give it to a real estate agent. Our research shows that this is something a majority of Canadians would like to see.”

That two per cent adds up fast. We’re not talking a few dollars here. We’re talking about millions of dollars being paid out annually to buyers and agents. For a property bought for $1,000,000, that’s $20,000 coming right back to you. Unreserved brings a brand new choice to the industry and provides users with real control over their money. As interest rates continue to rise, this could be the push that many buyers need to enter the market. 

“We’ve given a tremendous amount of confidence to the home buyer,” adds O’Connor. “The home inspections, the offers, the comparables… when we make all the data transparent and available beforehand, buyers start engaging directly.”

Targeting 50 to 60 sales a month, Unreserved sold 12 homes last week, proving home sellers are excited and flocking to the new, transparent system. All this increased confidence has the whole industry taking notice, including OREB, which is currently lobbying to restrict auction-style home purchasing.

“I take it as a compliment,” says O’Connor. “It means we’re doing something right if we’re making this much noise in an industry that seems to be frozen in time.”

And he’s right. Because giving consumers what they want? That’s just good business. 

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Real estate: 27 per cent of homeowners accessed credit, survey finds – CTV News



A new survey exposes balance sheet vulnerabilities for some Canadian homeowners amidst rising interest rates.

Released by BNN Bloomberg and RATESDOTCA, the survey found that 27 per cent of homeowners who participated have accessed a home equity line of credit (HELOC). Almost 80 per cent of those participants have used it, and half of them said they have done so in the last two years.

Aside from the pressure of increased interest rates, HELOCs are complicated by new real estate loan guidelines announced by the Office of the Superintendent of Financial Institutions on Tuesday. In late 2023, borrowers will be required to pay principal and interest on combined loans above 65 per cent of the property value.

Prior to these guidelines, HELOCs were an ideal way for homeowners to tap into their home equity during the prior decade’s low interest rates and high home prices, but the survey findings suggest that the Bank of Canada’s recent interest rate increases might have changed the way older Canadians leverage their home value. With HELOCs being based on variable-rate interest, borrowers will be hooked to higher payments.

Since HELOC lenders are able to demand full payment at any time, this can raise concerns for consumers who have not set aside extra money to pay down their HELOC amidst the pressure of rising interest rates.

According to the survey, 58 per cent of respondents said they have an outstanding balance on their HELOC.

Although the majority said they borrowed less than $50,000, 10 per cent said they borrowed more than $100,000. Balances of at least $50,000 were more common for Canadians aged 55 and older.

Of the 1,507 Canadians surveyed, 65 per cent said they were homeowners.

With files from BNN Bloomberg and RATESDOTCA

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In Ontario, real estate buyers are holding out for a price cut – The Globe and Mail



A house for sale in the Riverdale area of Toronto on Sept. 29, 2021.Evan Buhler/The Canadian Press

The stalemate that is taking hold in the Ontario real estate market right now arises from a belief that is becoming more entrenched each month: buyers reckon prices have farther to fall.

House hunters see properties in some areas selling at 15 per cent or so below the high-water mark set in the first quarter and decide to hold off for an even steeper discount. Sellers either refuse to budge or feel the landscape shifting under them and rush to complete a transaction before more ground crumbles away.

The war in Ukraine, stubborn inflation and the rise in interest rates have precipitated a much more tumultuous real estate market than industry watchers were predicting even a few months ago, according to John Lusink, president of Right at Home Realty.

Mr. Lusink says sales for June are set to come in about 26-per-cent below even his conservative projections at the start of the year, continuing a trend that has been on a downward slope since February.

“We can throw that forecast out the window,” he says of his projections for 2022.

The landscape is the same across the Right at Home network, which spans 12 regions of Ontario.

The number of listings, meanwhile, is gradually increasing after a slow spring, he adds.

Mr. Lusink expects the final tally for Right at Home’s sales in June to show a 37-per-cent drop from the same month last year.

“It’s, needless to say, concerning.”

Rishi Sondhi, economist at Toronto-Dominion Bank, points out that sales and prices have fallen disproportionately in Ontario and British Columbia, where prices climbed the most during the pandemic. The retrenchment in activity is especially hard in the Greater Toronto Area, where investors have played a particularly large role in the past year.

The downturn is part of a worsening picture across Canada, as sales and prices continued to decline in May under the weight of higher interest rates, Mr. Sondhi points out. Some sales were likely pulled forward to late 2021 and early 2022 as people braced for higher rates, he adds.

The economist says some GTA buyers also likely purchased new homes before selling existing properties, expecting the market would remain hot, he adds. Those sellers may be forced to accept lower prices now in order to complete the new deal, but he expects that dynamic to run its course before too long.

Mr. Sondhi is forecasting a continuing decline in prices throughout the rest of the year as a reflection of sharply higher interest rates.

Alongside the buyers betting that prices will slide, Mr. Lusink says, stands another cohort ready to buy – but the task has become much harder with the rise in rates. One buyer Mr. Lusink spoke with recently had obtained a fixed-rate mortgage at 4.3 per cent, which is almost double the rates buyers were able to lock in just a couple of years ago.

The mortgage “stress test” requires borrowers to show they can handle mortgage rates approaching seven per cent and above, he points out.

A recent survey commissioned by Right at Home also shows a shift in attitudes: Only 19 per cent of potential first-time homebuyers in Ontario plan to buy in the next two to three years, compared with 30 per cent who planned to buy in 2021, according to the study.

The percentage of homeowners planning to sell who are doing so to take advantage of current market conditions increased to 23 per cent this year from 11 per cent last year, the data shows.

The Maru Public Opinion Survey polled 813 Ontario adults in May and has an estimated margin of error of plus or minus three per cent 19 times out of 20.

In Burlington, Ont., real estate agent Tanya Rocca is already seeing homeowners preparing properties for sale before the fall market arrives.

“It’s very busy right now,” says the agent with Royal LePage Burloak Real Estate Services. “People are panicked.”

Ms. Rocca says prices in the area which have dropped between 12 and 15 per cent from the February peak.

The average price of a freehold property dropped to $1.431-million in May in Burlington, she says, compared with the $1.51-million buyers were paying in April and the $1.6-million in February and March.

Homes on Bessborough Drive in Toronto’s Leaside neighbourhood on May 11.Fred Lum/the Globe and Mail

The affluent city, which sits on Lake Ontario west of Toronto, was one of the many communities that saw a large influx of buyers during the pandemic as people sought more space. Burlington’s historic downtown core and large selection of detached houses with pool-sized lots have made it very popular with families.

Ms. Rocca says many buyers didn’t even have a chance at a house in the midst of ferocious bidding wars; now people have their choice of properties.

Some current sellers have been caught in the market transition, Ms. Rocca adds, because they bought a new property before selling an existing one.

“Buyers, in fairness, are getting the power back – which they love,” she says. “There are great opportunities out there because people need to sell.”

Ms. Rocca was shocked at some homeowners earlier this spring who were disappointed on offer night when they received bids that came in $300,000 or $400,000 above the asking price.

“People were debating whether they should take it.”

She recalls one pair of homeowners with a home backing onto a golf course who listed their property with an asking price of $2.5-million. The sellers were disappointed they didn’t receive a hefty amount above asking.

“They got their asking price literally the week things started to shift,” Ms. Rocca says. “They were so close to not taking it.”

As the summer begins, it’s not uncommon to see listings sitting with 30 to 50 days on market, she adds.

In the current environment, Ms. Rocca recommends setting a price near the realistic market value. She often “sharpens” it a little bit to make it more attractive compared with other competing properties in the area.

To help homeowners come to terms with the new reality, she stresses that first-quarter prices were the result of an overheated market – not an accurate reflection of value.

“This is not money they’ve lost – they never had it.”

Ms. Rocca says some people who purchased properties in Burlington at the beginning of the pandemic are now being called back to offices in Toronto. With more cars on the road and the price of gas skyrocketing, many are reluctant to commute.

“People were making such rash decisions during COVID,” she says, adding that some of those folks are now selling and moving back to the GTA.

With such an extended run-up in real estate prices while rates were low for years, the market in Ontario saw a few blips but no real correction, she points out. A move to restore balance is healthy, in her opinion.

“I think we’re going through a cycle right now which is very much needed.”

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OSFI makes real estate loan changes aimed at reducing lender risk – Investment Executive



IIROC’s Kriegler to lead new SRO

Regulators are also forming a new advisory committee to review SRO consolidation

  • By: IE Staff
  • June 27, 2022
    June 28, 2022
  • 17:46

Ottawa lost average of $22 billion a year in unpaid tax from 2014-2018: CRA

The agency released its first report on Canada’s overall tax gap

Executive moves this week

Industry veterans are taking on new roles, including Andrew Kriegler with the forthcoming new SRO and Morningstar’s Michael Jantzi

CSA lays out priorities under incoming chair

Three-year plan focuses on CFR enforcement, dispute resolution and crypto

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