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Quarterly Window on the Real Estate Market: Strong Transactional Activity in the Market Despite the Slowdown and Prices Continue to Rise Sharply in Regional Areas – GlobeNewswire

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L’ÎLE-DES-SŒURS, July 11, 2022 (GLOBE NEWSWIRE) — The Quebec Professional Association of Real Estate Brokers (QPAREB) has released its most recent residential real estate market statistics for the province of Quebec, based on the real estate brokers’ Centris provincial database.

The slowdown in transactional activity persisted in the second quarter of 2022, with sales declining to -14 per cent compared to an exceptional and record-breaking second quarter of 2021. Like the first quarter, with 27,150 residential transactions, the second quarter’s sales figure is noticeably higher than the average number of transactions for a second quarter, since the 2014 low, which stands at less than 26,000 transactions across the province.

“Quebec’s residential real estate market stands out from the rapid process of market rebalancing as it has been observed in several Canadian provinces, specifically Ontario and British Columbia. The Quebec market is maintaining a sustained level of activity, but it is limited by the number of active listings, which remain at historically low levels. As a result, prices continue to be pressured, especially outside the Montreal area. In the Montreal CMA, on the other hand, home prices are showing signs of slowing down, clearly affected by the rapid rise in financing costs, putting an end to a frenzied rise in prices and helping to change the mindset of buyers and sellers regarding market developments. This is explained by the first increase in active listings since 2015, across all time periods. This foreshadows a shift in the market’s direction for the metropolis, which is further ahead in the residential real estate cycle than most other regions in Quebec, except for the Gatineau CMA. The process of rebalancing the market seems to be underway,” says Charles Brant, Director of the QPAREB’s Market Analysis Department. “While the areas on the outskirts of the Montreal CMA continue to experience significant overheating, which continues to translate into high overbidding and strong price increases, other areas, such as the Trois-Rivières, the Quebec City and the Saguenay CMAs, are still attracting interest and building trust by offering competitive price-performance ratios and are continuing to make up for lost time in terms of prices.”

Sales

  • Like the first quarter of 2022, transactional activity experienced a comparable decline across all residential categories. Plex sales experienced the largest decrease at 17 per cent compared to the second quarter of 2021, while single-family homes experienced a 14 per cent decline and condominiums a 13 per cent decline.
  • At the metropolitan area level, transactional activity showed relatively significant differentiation in the second quarter of 2022. The Saguenay CMA experienced a 22 per cent drop in sales, followed by the Gatineau CMA at -18 per cent. The Montreal and Sherbrooke areas experienced smaller drops, at -13 per cent and -10 per cent respectively. The Quebec City and Trois-Rivières CMAs experienced much smaller drops (-4 per cent and -2 per cent respectively), in part because their activity levels had accelerated less substantively in the second quarter of 2021.
  • Like the first quarter, sales outside of Quebec’s metropolitan areas experienced a larger decline than the provincial average in the second quarter of 2022. In total, 4,135 transactions took place in these sectors during the quarter, a 21 per cent decrease compared to the second quarter of 2021. All categories experienced significant declines, but condominiums (-26 per cent) and single-family homes (-21 per cent) were more affected than plexes (-13 per cent).
  • Despite the general slowdown, a small number of communities registered an increase in residential sales: sales in Saint-Georges-de-Beauce rose by 18 per cent during the period, while they increased by 14 per cent in Cowansville and by 9 per cent in Saint-Hyacinthe. The Rouyn-Noranda market also maintained its level of activity from the second quarter of 2021, despite the less favourable provincial context.
  • Some localities also stood out for the intensity of the decline in sales in their residential market. Charlevoix experienced a 45 per cent decline in the second quarter, followed by Mont-Tremblant (-42 per cent), Alma (-40 per cent), and Lachute and Thetford Mines (both registering -35 per cent).

Active listings

  • Active listings were at 24,074 in the second quarter of 2022, a decrease of 9 per cent from the second quarter of 2021, but an increase on a consecutive quarterly basis. Indeed, the number of residential properties for sale in the province stood at 21,563 last quarter, an all-time high for the provincial market. Single-family home listings remained the highest at 13,508. Condominiums and plexes, which continue to show relatively large declines in listings when compared to the second quarter of 2021 (-15 per cent and -12 per cent), stood at 6,175 and 3,859 respectively.

Prices

  • Despite weakening sales, the median price of single-family homes still saw an increase to $448,694 for the second quarter of 2022, a 20 per cent increase over the same period in 2021 and over $30,000 higher than the first quarter of 2022.
  • Condominiums have also experienced significant price growth. The median price in the province rose to $381,000 in the second quarter, up $16,000 from the first quarter of 2022 and 14 per cent higher than the same period last year.
  • Small income properties (two to five units) recorded a median price of $541,000, 15 per cent higher than the same period last year and just over $30,000 higher than in the first quarter of 2022.
  • Despite these gains in the second quarter of 2022, price growth is likely to moderate sharply in the second half of the year as interest rates continue to rise and the number of buyers who prequalified with their financial institutions at lower rates runs out in late 2021.

Market conditions and selling times

  • Despite the ongoing slowdown, residential property inventory remains at a historically low level in the province. The moderation in transactional activity allowed for a very slight rebound in inventories in the second quarter, but the number of months required to clear the inventory of properties available on the market remains below the 3-month mark in the provincial market, a level that is extremely favourable to sellers since it would take 8 months of inventory to return to market balance. The quantity of properties available for sale, however, has remained below the threshold reached in the second quarter of 2021, with 24,074 listings, a decrease of 9 per cent.
  • A sign of the ongoing tensions in the Quebec residential market, the average time to sell in days fell to 37 in the second quarter of 2022, an all-time low and 11 days less than the low reached in 2021, which stood at 48 days.

Key Regional Trends

Montreal CMA

  • The trend in residential sales was like that of the rest of the provincial market for the Montreal CMA in the second quarter, with a 13 per cent decrease in sales for all categories combined. As is the case for most sectors, this level of transactional activity remained higher than the historical average for the second quarter, which stood at just under 14,000 sales in the CMA.
  • Active listings, which are still experiencing a slight decline in the rest of the provincial market, moved into positive territory for the first time since 2015 in the Montreal CMA in the second quarter, with a 1 per cent increase compared to the second quarter of 2021. The number of months of inventory required to empty the inventory remained below the 3-month mark during the analyzed period, at 2.5 months. This level represents a slight recovery from the record levels of 2.3 months in the second and fourth quarters of 2021 but remains particularly unbalanced.
  • Despite the rise in interest rates that began in recent months, prices continued to rise in the second quarter, with single-family homes up 15 per cent from the second quarter of 2021, and up $20,000 quarter over quarter. Condominiums were up 14 per cent, while plexes were up 10 per cent.

Quebec City CMA

  • The Quebec City CMA maintained a relatively strong level of transactional activity in the second quarter of 2022, avoiding the larger declines seen in some of the province’s southern CMAs. Residential sales totalled 2,590 transactions during the period, a 4 per cent decline from the exceptional level of the second quarter of 2021. The number of recorded transactions remains much higher than the historical average from 2014, which stands at just under 2,200 transactions.
  • This transactional activity is causing a larger drop in active listings in the region, which have recorded a 28 per cent decline from the second quarter of 2021. This transactional activity is causing a larger drop in active listings in the region, which have recorded a 28 per cent decline from the second quarter of 2021.
    This drop in properties for sale was affected by the single-family market (-21 per cent), but even more so by condominiums, which declined by 43 per cent for the period, going from 1,188 listings during the same period last year to 674 in the most recent data. Condominium inventory is now at 3.5 months of inventory, having reached 4 in the first quarter of 2021.
  • Given the continued tight market conditions, the pressure on prices in the CMA continued in the second quarter. The median price for single-family homes was up 11 per cent from the same period last year to $349,000, $9,000 more than in the first quarter of 2022. Condominiums saw a 13 per cent gain to $235,000, up over $12,000 on a consecutive quarterly basis. Small income properties saw smaller increases, at a 4 per cent gain over the second quarter of 2021 and even seeing the median price ($380,000) at $10,000 less than the first quarter of 2022.

Gatineau CMA

  • The Gatineau CMA registered an 18 per cent decline in sales in the second quarter of 2022, with a total of 1,541 residential transactions. While the magnitude of the decline appears significant, an important factor remains the exceptional level of activity in the second quarter of 2021. The most recent results represent a gain over the historical average of 1,400 transactions in the CMA over the past 10 years.
  • Despite a 6 per cent increase in active listings over the second quarter of 2021, a first since 2015, market conditions remained historically tight, with residential inventory levels reaching 1.6 months of inventory for the quarter. The increase in listings was produced by a surge in single-family homes, which saw a 15 per cent increase in properties available for sale. Condominiums and plexes, on the other hand, experienced a decline in listings, at -10 per cent and -14 per cent respectively.
  • Continued tight market conditions, despite a slight increase in listings and the beginning of an upward cycle in interest rates, led to an increase in median prices in the CMA. The median price of single-family homes rose to $475,000, a gain of $15,000 on a consecutive quarterly basis and 17 per cent over the second quarter of 2021. Condominiums and plexes saw their median price increase even more substantially compared to the same period last year, with growth rates of 25 per cent and 29 per cent respectively.

Sherbrooke CMA

  • The Sherbrooke CMA experienced a slowdown like that of the provincial market in the second quarter, with a 10 per cent decline compared to the exceptional level of activity during the same period in 2021. The total number of residential transactions, at 589, remained above the average since 2013 for the second quarter (529). The CMA’s transactional level tracked the single-family market, which also experienced a 10 per cent decline compared to the second quarter of 2021. Condominiums, however, saw a gain of 6 per cent, while plexes saw a larger decline at -21 per cent.
  • Active listings were down across all residential categories, with a CMA total of -16 per cent for the second quarter. Single-family homes saw the number of properties for sale in the CMA drop by 8 per cent, while condominiums and plexes registered much larger declines (-35 per cent and -42 per cent respectively). Inventory levels remained at historic lows, with single-family homes and condominiums falling below the two-month mark and plexes continuing to decline, falling below the two-month mark during the quarter.
  • In this particularly tight market, median prices increased by a similar amount in all residential categories, with a 23 per cent gain in single-family homes, 25 per cent in plexes and 26 per cent in condominiums. The median price for single-family homes was $369,000 for the second quarter, up more than $20,000 from the first quarter of 2022.

Trois-Rivières CMA

  • Following the example of the Quebec City CMA, the Trois-Rivières CMA experienced a relatively sustained level of activity for the provincial market context in the second quarter of 2022. The number of sales reached 429 transactions, a 2 per cent decrease compared to the same period last year, but a much higher level than the average number of sales since 2013 (351). Transactional activity was relatively varied by residential category, with single-family homes experiencing a 5 per cent decline, plexes a 10 per cent decline, and condominiums a 43 per cent increase over the same period last year.
  • The trend in active listings was like that of the provincial market, with a 10 per cent decrease compared to the second quarter of 2022. Plexes, however, saw a very significant decline in listings (41) a 62 per cent decline from the 110 properties on the market at the same time last year. This significant decrease in active listings in the small income property category pushed inventory in this category below the 2-month mark in June for the first time since Centris data was first compiled.
  • Market conditions continued to pressure prices in the CMA compared to the same period last year. The median price of single-family homes rose to $305,000 in the second quarter, an increase of around $40,000 on a consecutive quarterly basis and a 36 per cent gain compared to the same period in 2022. Condominiums saw a 29 per cent increase, bringing them to a median price of $232,000, just under $10,000 more than last quarter. On the plex side, the median price was $266,500, more than $30,000 higher than the first quarter and a 30 per cent gain over the second quarter of 2022.

Saguenay CMA

  • The relative decline in sales in the Saguenay CMA increased slightly in the second quarter of 2022, falling to -22 per cent. The Chicoutimi area maintained a relatively strong level of activity, with a decline of only 6 per cent. The more peripheral areas of the CMA recorded the majority of the declines, all exceeding a 20 per cent drop in transactional activity, possibly attributable to recent landslide issues in the La Baie area.
  • Active listings remained pressured in the second quarter, with a 30 per cent decline from the second quarter of 2021. Despite the relative slowdown in sales, market conditions remained tight in the regional areas, particularly in the single-family market, where the months of inventory continued to decline in the second quarter, remaining below the 3-month mark at approximately 2.8.
  • The continued imbalance in the regional market continued to generate pressure on median prices in the region in 2022 in the second quarter, despite rising interest rates. The median price for single-family homes was $248,500, a 16 per cent gain over the same period last year, and a $17,000 increase on a consecutive quarterly basis.

Abitibi

  • Transactional activity declined more significantly in the second quarter in Val-d’Or, with a 28 per cent decline compared to the same period last year. Rouyn-Noranda, however, avoided the same trends, with sales levels remaining stable compared to the second quarter of 2021. The median price of single-family homes remained substantially higher than it was during the same period last year in the region, with a gain of 29 per cent in Rouyn-Noranda and 20 per cent in Val-d’Or.

Centre-du-Quebec

  • The Centre-du-Québec agglomerations experienced a relatively counter-trending level of activity in the second quarter. Transactional activity in Victoriaville decreased slightly, at -5 per cent compared to the second quarter of 2021. Drummondville, on the other hand, registered a 22 per cent increase in sales, with 19 per cent growth in single-family homes and 46 per cent in plexes. As is the case in several other agglomerations, median prices remained substantially higher in Drummondville than they were in the same period of 2021, with a 19 per cent gain for single-family homes and a 23 per cent increase for plexes.

Haute-Yamaska

  • The slowdown continued in the Granby area in the second quarter, with a 22 per cent decline in sales compared to the same period in 2021. All residential categories experienced declines of more than 17 per cent, but condominiums were particularly hard hit during the quarter, at -27 per cent. Despite this decline, the median condominium price in the area gained 37 per cent since the second quarter of 2021. For single-family homes, the gain was 23 per cent.

Lanaudière

  • The transactional activity in the Joliette agglomeration remained comparable to that of the provincial market in the second quarter, with a 13 per cent decrease in sales compared to the second quarter of 2021. However, the extremely tight market conditions boosted the median price of single-family homes by 19 per cent compared to the same period last year.

Laurentides

  • The magnitude of the slowdown in transactional activity in the Laurentians was greater than in the rest of the province in the second quarter of 2022, with sales declining by 19 per cent in the region’s main markets due to a lack of listings on the market. The agglomerations of Mont-Tremblant and Saint-Sauveur experienced particularly large declines, at -42 per cent and -31 per cent, respectively. These areas registered an increase in the median price of single-family homes of 17 per cent and 25 per cent. Mont-Laurier, a small market more susceptible to price volatility, saw a decrease in residential sales of 21 per cent, but an increase in the median price of single-family homes of 53 per cent compared to the second quarter of 2021.

Saint-Hyacinthe

  • The St. Hyacinthe area saw an uptick in activity in the second quarter of 2022. After a 13 per cent decline in sales in the first quarter, there was a 9 per cent increase from April to June for all categories. As a result, market conditions remained particularly tight in the region. Prices have therefore come under significant pressure, with gains of 31 per cent of the median price for single-family homes, 17 per cent for condominiums and 11 per cent for plexes compared to the second quarter of 2021.

Additional information:

To view the previous quarterly Window on the Real Estate Market, click here.

If you would like additional information from the Market Analysis Department, such as specific data or regional details on the real estate market, please write to us.

About the Quebec Professional Association of Real Estate Brokers

The Quebec Professional Association of Real Estate Brokers (QPAREB) is a non-profit association that brings together more than 14,000 real estate brokers and agencies. It is responsible for promoting and defending their interests while taking into account the issues facing the profession and the various professional and regional realities of its members. The QPAREB is also an important player in many real estate dossiers, including the implementation of measures that promote homeownership. The Association reports on Quebec’s residential real estate market statistics, provides training, tools and services relating to real estate, and facilitates the collection, dissemination and exchange of information. The QPAREB has its head office in Quebec City, administrative offices in Montreal and a regional office in Saguenay. It has two subsidiaries: Société Centris inc. and the Collège de l’immobilier du Québec. Follow its activities at qpareb.ca or via its social media pages: Facebook, LinkedIn, Twitter and Instagram.

About Centris

Centris is a dynamic and innovative technology company in the real estate sector. It collects data and offers solutions that are highly adapted to the needs of professionals. Among these solutions is Centris.ca, the most visited real estate website in Quebec.

For more information:

Marie-Rose Desautels
Morin Relations Publiques
media@qpareb.ca

Image bank (credit QPAREB) available free of charge.

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GTA real estate prices could continue to fall amid large housing correction, RBC says – CP24

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A housing correction which has already led to four consecutive months of price declines in the previously overheated Greater Toronto Area market could end up becoming “one of the deepest of the past half a century,” a new report from RBC warns.

New data released by the Toronto Regional Real Estate Board (TRREB) last week revealed that the average benchmark price for a home in the GTA fell six per cent month-over-month in July to $1,074,754.

Sales were also down a staggering 47 per cent from July, 2021.

In a report published on Aug. 4, RBC Senior Economist Robert Hogue said recent data from real estate boards underlines that higher interest rates are beginning to take a “huge toll” on the market.

Hogue said that with further hikes to come, prices will likely continue to slide in the coming months.

That prediction, it should be noted, goes against a report from Royal LePage last month which painted a rosier forecast for sellers in which values would more or less holding for the rest of the year following some declines in the second quarter.

“Our expectations for further hikes by the Bank of Canada—another 75 basis points to go in the overnight rate by the fall— will keep chilling the market in the months ahead,” Hogue said. “We expect the downturn to intensify and spread further as buyers take a wait-and-see approach while ascertaining the impact of higher lending rates. Canada’s least affordable markets Vancouver and Toronto, and their surrounding regions, are most at risk in light of their excessively stretched affordability and outsized price gains during the pandemic.”

The Bank of Canada has hiked the overnight lending rate by 225 basis points since March and has warned that further hikes will be necessary given that inflation remains at a near 40-year high.

In his report, Hogue pointed out that the housing correction “now runs far and wide across Canada” but he said that it is particularly pronounced in the costlier markets of Toronto and Vancouver.

In fact, Hogue said that housing resale activity in Toronto is at its slowest pace in 13 years, outside of the early days of the COVID-19 pandemic.

The stockpile of available homes is also up 58 per cent from a year ago, he noted.

“With more options to choose from and higher interest rates shrinking their purchasing budgets, buyers are able to extract meaningful price concessions from sellers,” he said, pointing out that the average price of a home in the GTA is down 13 per cent from March. “We expect buyers to remain on the defensive in the months ahead as they deal with rising interest rates and poor affordability.”

While Hogue did say that condos in the City of Toronto are likely to remain “relatively more resilient” he said that prices elsewhere will continue to fall for the time being, especially in the 905 belt “where property values soared during the pandemic.”

The July data from TRREB suggested that the average price of a home in the GTA was still up one per cent from July, 2021.

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'The craziness is over': Ottawa's real estate market inches toward stability, but home prices still increasing – Ottawa Citizen

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Thursday, the Ottawa Real Estate Board released its analysis of July listings and sales and declared a “profound slowdown” in the local home resale market.

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Realtor Yvan Rhéaume says Ottawa is still a hot real estate market, but buyers have a better chance of competing for homes now compared with last winter.

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“The craziness is over,” Rhéaume said on Sunday, but that doesn’t mean it’s less expensive to buy a home in the nation’s capital.

“What you see on the news is the prices are dropping and sellers are panicking. That may be the thing in other places across the country, but in Ottawa, we still see a price increase between 2021 and 2022,” Rhéaume said.

Thursday, the Ottawa Real Estate Board released its analysis of July listings and sales and declared a “profound slowdown” in the local home resale market.

“July’s numbers reveal that buyers are indeed putting on the brakes more heavily than what is typically expected during the mid-summer sales dip,” board president Penny Torontow said in releasing the latest statistics.

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According to the board, its member realtors sold 1,100 residential properties in July 2022, compared with 1,718 in July 2021. The stats come from listings on the Multiple Listing Service (MLS).

The July 2022 sales were well below July’s five-year monthly average of 1,691.

Prices are still increasing, but just not at the same steep trajectory seen earlier in the pandemic.

According to the board’s figures, the average sale price for a residential property was $716,354 in July, an increase of five per cent from a year ago. For condos, the average sale price went up one per cent to $425,694 in July 2022, compared to the same month in 2021.

When it comes to year-to-date average sale prices as of July, the board has the first seven months of 2022 at $805,238 for residential properties, which is an 11-per-cent increase over the same period in 2021, while condos were at $461,557, a nine-per-cent increase.

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Rhéaume said the return of one not-long-ago standard shows a change in the market: conditions are once again being put on offers.

He had one buyer recently purchase a townhouse with conditions on financing and a home inspection. “That was the first time in probably three years, at least,” Rhéaume said of the conditions. On top of that, he was able to negotiate the price.

Wendy Bell, the broker of record in an office of 250 agents, said news about higher interest rates and inflation had an impact on the market starting in the spring.

“That kind of put the brakes on things,” Bell said, opining that another interest rate increase would be “devastating.”

Broker Wendy Bell said the months ahead will provide better indicators for the local real estate market.
Broker Wendy Bell said the months ahead will provide better indicators for the local real estate market. Photo by Ashley Fraser /Postmedia

Bell said she finds herself trying to educate buyers and sellers about what’s happening in the local market.

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Sellers have watched properties go for sums well beyond asking prices during the pandemic, while buyers recently have been reading about the market quickly returning to normal conditions. Both scenarios aren’t necessarily playing out in Ottawa.

Bell said homes didn’t have to be staged at the height of the buying frenzy over the pandemic, but now she’s urging sellers to make sure their homes are in order — like painting and removing clutter — to attract prospective buyers.

Bell said the months ahead will provide better indicators for the local real estate market as people come back from their summer vacations.

“Things will come back to normal in a more balanced market in the fall,” Bell predicted.

Broker Dawna Erskine said some sellers have been confused about why their homes aren’t attracting the same large offers that some neighbours received just months ago.

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“That’s how drastic things have changed,” Erskine said, and she believes “we are going back to the pre-COVID days” when it comes to home prices.

Erskine said the pandemic has been a “nightmare” while trying to evaluate true values of properties for her eager buyer clients and trying to bid on homes against others willing to pay sky-high prices.

“I can’t tell you how often I’ve worked to guide buyers (and advised) not to buy this,” Erskine said.

“Is the winner really the winner? Or are you the loser?”

Erskine’s optimistic stability will return to the real estate market in the coming months.

“It’s going to become more balanced and I’m really looking forward to it.”

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Turf war heats up between real estate disruptor and industry establishment – CBC.ca

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An Ottawa entrepreneur who pleaded guilty to fraud charges over fudged car loans in 2009 is back in court — this time as a plaintiff accusing three trade associations of trying to damage the reputation of his latest venture and exile the self-styled disruptor from the real estate industry’s established turf.

Michael Ryan O’Connor, who’d previously run into legal trouble as the owner of a chain of used car dealerships in Ontario and Quebec, is currently the founder and CEO of Unreserved, an online real estate auction platform that allows people to buy and sell homes like an outsized eBay. 

In a civil suit filed mid-July, O’Connor’s company alleges the Ottawa Real Estate Board (OREB), Ontario Real Estate Association (OREA) and Canadian Real Estate Association (CREA) made defamatory statements about Unreserved in an attempt to scare consumers away from the outfit’s novel approach to selling homes.

It also alleges the three organizations — which together represent and oversee every registered real estate agent and broker in the nation’s capital and run the exclusive central listing network for properties known as the Multiple Listing Service (MLS) — unfairly lobbied regulators to close a decades-old legal exemption essential to Unreserved’s operations.

OREB, OREA, and CREA have all stated they believe Unreserved’s claim is without merit. 

None of the allegations have been proven in court.

Real estate for sale signs are shown in Oakville, Ont., in 2018. Together, CREA, OREA and OREB represent all real estate agents and brokers, operate the Multiple Listing Service (MLS) and maintain an effective monopoly over the real estate industry. (Richard Buchan/Canadian Press)

Meanwhile, CBC has uncovered court documents dating back more than a decade, detailing how the province once revoked O’Connor’s licence as a motor vehicle salesperson, after he pleaded guilty to two counts of fraud related to inflating buyers’ incomes to help them qualify for used car loans they couldn’t afford. The RCMP raided one of O’Connor’s Find-A-Car dealerships and built a case against him after hundreds of customers complained about unmanageable debt in 2007. 

“I paid the price. I lost everything,” said O’Connor, who performed community service and served six months’ house arrest as part of his conditional sentence. 

O’Connor said he believes he has since rebuilt his credibility — first by pivoting to an online dealer-to-dealer vehicle auction platform, and now a similar model for real estate. 

As the new legal battle brews, real estate law experts say the current case reveals several competing interests — consumers’ desire for greater price transparency in an era of sky-high home prices and blind bidding; the billions of dollars of commissions and fees at stake for real estate agents; and the limits of regulation when it comes to protecting consumers and enforcing a code of ethics within the industry.

As a result, observers say the legal fight could be pricey and protracted.

Unreserved, an Ottawa-based tech startup, purports to offer greater transparency to home buyers through transparent bidding, but operates outside the laws and code of ethics that govern traditional brokers. (Alexander Behne/CBC)

Online real estate bidding draws industry ire

Founded in 2021, Unreserved bills itself as a disruptor in the real estate industry.

The tech startup raked in nearly $34 million in venture capital in early 2022, and has purportedly auctioned more than 250 properties in Ottawa and a handful of other cities in Ontario using an unconventional method that has sparked a backlash from the traditional real estate establishment.   

On the company’s website, listings ranging from $250,000 condos to million-dollar detached homes are bid on and bought in real-time auctions “with the click of a mouse,” O’Connor explained.

Prospective buyers can register bids in increments as low as $2,500, after submitting a mortgage pre-approval from a bank.

A home listed for auction by Unreserved. The company says it has sold over 250 properties in Ottawa and other cities in Ontario in its first year of operation. (Alexander Behne/CBC)

While traditional realtors are prohibited by law from sharing the contents of competing bids for a home, Unreserved allows participants to see the entire bid history.

The site is able to do this by exploiting an exemption in Ontario’s Real Estate and Business Brokers Act (REBBA) that allows auctioneers to buy and sell real estate outside of typical regulations for brokers. 

The broad exemption dates back to the 1950s and was originally intended to be used to auction family farms.

OREA, one of the largest lobby groups in Canada with more than 90,000 members across dozens of real estate boards, called the auctioneers’ exemption “a loophole with frightening implications for unsuspecting consumers trying to buy a home” on its website in June.

OREA also commissioned a survey, citing “70 per cent of Ontarians support the regulation of auctioneers who would sell homes in an open bidding process.”

The association declined to grant an interview to CBC, but CEO Tim Hudak said in a statement that auctioneers trading in real estate has “serious negative consequences” for consumers.

“OREA won’t be intimidated from standing up to protect Ontario home buyers and sellers,” the statement read. 

Tim Hudak, left, CEO of the Ontario Real Estate Association, appears at a televised news conference in 2018. Hudak wrote that a provincial exemption for real estate auctioneers has ‘frightening implications’ for consumers. (CBC)

The other two groups named in Unreserved’s lawsuit — OREB and CREA — have also warned consumers about using an online auction platform to buy and sell homes.

“We feel it was a collaborative effort on all fronts to pressure the government to get rid of [this exemption],” said O’Connor.

“They’re doing it all in the name of consumer protection … and when you peel the layers back, it’s just false.”

In a video posted on Unreserved’s official social media accounts, O’Connor drives a farm tractor pulling a fertilizer spreader. The video intercuts clips of O’Connor accusing the Ottawa Real Estate Board (OREB) of ‘spreading propaganda’ that has ‘a really bad smell’ about Unreserved’s stance on consumer protection with a video featuring OREB president Penny Torontow. (Instagram/Unreserved)

The civil claim alleges that OREB, OREA, and CREA contacted the Real Estate Council of Ontario (RECO), the province’s real estate regulator, and later the minister of government and consumer services to lobby for Unreserved’s business to be shut down.

OREB and CREA both declined an interview with CBC.

Billions of dollars at stake

Mark Morris, a real estate lawyer and a former instructor at the Ontario Real Estate College who is uninvolved in the case, said a court battle over the auctioneers’ exemption is inevitable because “there’s money in it.” 

“If this starts disrupting the tens of billions of dollars that is real estate,” said Morris, “people will try every avenue because the cost of attempting this pales in comparison to the pot of gold at the end of the rainbow.”

Real estate educator Mark Morris says that with billions in profits at stake, the legal fight over the right to buy and sell real estate could be protracted and pricey. (Submitted/Mark Morris)

Morris added that real estate associations are naturally protective of their control on the industry like any other regulated profession, such as law and medicine.

“In fact that’s kind of their job,” he said. “They are representing a bunch of people who derive great benefit through exclusivity.”

Founder charged with fraud

This latest lawsuit is not O’Connor’s first run-in with consumer protection laws.

In the early 2000s, he ran a small chain of used car dealerships registered under the name Find-A-Car Auto Sales & Brokering Inc.

In 2007, the RCMP obtained a search warrant for the Kingston location of Find-A-Car and seized items from the premises.

O’Connor was later charged with 11 counts of fraud over $5,000, forging documents and global fraud over $5,000 following complaints from hundreds of customers who alleged they faced financial ruin after signing car loans with Find-A-Car.

With billions of dollars at stake, the battle over whether or not to allow auction platforms like Unreserved to challenge the traditional real estate establishment will likely be long and costly, according to one real estate law expert. (Graeme Roy/The Canadian Press)

The charges stated that O’Connor’s business had “knowingly [obtained] credit for people who would not qualify nor be able to repay their liability, using false statements in writing to financial institutions.”

In December 2009, O’Connor pleaded guilty to two counts of fraud over $5,000. He received a conditional sentence of two years less a day, the first six months of which were served under house arrest.

Find-A-Car ceased operations and O’Connor testified that he liquidated his inventory to pay down bank loans related to the business.

In 2011, the License Appeal Tribunal of the Ontario Motor Vehicle Industry Council (OMVIC), which regulates all motor vehicle sales in the province, revoked O’Connor’s registration, effectively stripping him of the right to sell cars.

“His past conduct gives reasonable grounds to believe he will not carry on business in accordance with law and with integrity and honesty,” wrote the tribunal in its decision.

O’Connor now says he “took full ownership of everything that happened in that business.”

“Twenty years ago I made some mistakes,” he said. “I surrounded myself with some of the wrong people.”

In 2016, O’Connor founded EBlock, an online dealer-to-dealer vehicle auction platform, and has since re-registered to sell cars.

“I was able to get a second chance and … pivot towards tech,” he said.

Wholesale auctions are exempt from the Motor Vehicle Dealers Act and do not need to be registered.

The business saw rapid growth and its parent company, E Automotive Inc., launched an initial public offering on the Toronto Stock Exchange in 2021 valued at more than $1 billion.

O’Connor said he sold most of his position in the company and has resigned from its board.

He would not share how much he made from EBlock, but called the profits “life changing.”

His latest business venture, Unreserved, applies a similar online auction philosophy to real estate.

WATCH | Lawsuit puts real estate auctions in the spotlight

Lawsuit puts real estate auctions in the spotlight

1 hour ago

Duration 1:41

Ryan O’Connor, founder of real estate auction company Unreserved, has filed a lawsuit against the Ottawa Real Estate Board, the Ontario Real Estate Association and the Canadian Real Estate Association, alleging they made defamatory statements and unfairly lobbied to close the exemption that allows real estate auctions. All three organizations say the claims are without merit.

Consumer protection core issue for industry

At the centre of the legal fight as disruptors like Unreserved attempt to take a share of the real estate market is consumer protection, observed another industry legal expert.

The Real Estate and Business Brokers Act — which auctioneers can bypass — is fundamentally a consumer protection law, explained David Carter, who teaches at York University’s Osgoode Hall Law School.

Operating as a broker comes with licensing, insurance and training requirements.

“The real purpose here is to make sure anyone purporting to help the public buy and sell real estate knows what they’re doing,” said Carter, “and there’s accountability when they don’t.”

Similar to OMVIC’s role in the world of auto sales, the Real Estate Council of Ontario has the power to levy severe penalties on realtors or brokers that violate its code of ethics or break the law. This can include fines of up to $50,000 and jail time up to two years less a day.

Carter adds that the auctioneer loophole is a “very broad, carte-blanche exemption.”

“So if you can fall under that global exemption, you can almost do whatever you want.”

Unreserved bills itself as a disruptor offering home buyers greater transparency, but the fine print on their website makes it clear ‘they don’t want to be tied into any representations’ about the properties they sell, says one real estate law expert. (Alexander Behne/CBC)

‘At your own risk’

The legal section of Unreserved’s website includes numerous disclaimers.

“Your use of the website is at your own risk,” states the site’s terms and conditions.

Unreserved’s purchase agreement states that properties are sold “as-is” and “with all faults.” The buyer is responsible for verifying property boundaries and for retaining their own lawyer if they are not represented by a real estate agent.

Unreserved advertises its homes as being inspected prior to the auction and includes a brief inspection report as part of each listing on its website. 

In traditional home sales, buyers often include an inspection clause in their purchase offer and pay for an independent inspection themselves. Unreserved’s terms state that buyers must accept any so-called patent defects which would have been discoverable by the buyer during an inspection of the home.

“They don’t want to be tied into any representations, any warranties … anything that they can get sued on in a transaction,” said Carter.

Unreserved offers a one-year, $100,000 limited warranty for the properties sold on its site.

Unreserved’s office space on Baseline Road in Ottawa. O’Connor said the company has scaled to over 100 employees. The business secured nearly $34 million in venture capital in early 2022 to fund its growth. (Alexander Behne/CBC)

When asked about the consumer protection measures Unreserved has in place, O’Connor said that deposits from winning bidders are stored in the trust account of a co-operating brokerage. 

After that, he said, the risk is low because “the lawyers are the ones that do all the work.”

“When that hammer drops, everyone washes our hands and the paperwork’s gone to the lawyers.… The lawyers are the ones that are really protecting the buyer, protecting the seller, making sure the transaction goes smoothly,” O’Connor said.

A townhome listed for sale by Unreserved. Buyers not represented by a realtor must retain their own lawyer to complete a purchase, and the auction site’s terms require they accept the property ‘as-is’ and ‘with all faults’ at the time the winning bid is placed. (Alexander Behne/CBC)

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