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Real estate commission lawsuit expands across Canada – BNN Bloomberg

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A lawsuit alleging that the real estate brokerage industry inflates commission fees has been expanded to include all of Canada and an expert says it could bring big changes to the housing market.

The class action suit, filed in federal court last month, names 72 different regional real estate boards, 10 real estate franchisors and eight real estate brokerages as defendants.

“The class action is quite substantial and it’s pretty huge,” Walter Melanson, co-founder and market analyst at PropertyGuys.com, told BNN Bloomberg in a Monday interview.

The lawsuit comes after an original suit was filed in federal court in September on behalf of home-sellers in the Greater Toronto Area against the Toronto Regional Real Estate Board (TRREB).

None of the allegations have been proven in court.

The latest price-fixing suit alleges that an unwritten arrangement known as the “buyer brokerage commission rule,” which has become the norm for many residential real estate transactions, violates competition laws.

When a home sale closes, the seller typically pays a broker commission fee, which is a percentage of the entire sale amount. The fee is normally then split between the representatives of the seller and the buyer, and is customarily shared evenly.

This was the case with Milton resident Kevin McFall, the named plaintiff in the class action suit. In the court documents, McFall alleges he sold his home in May and paid a five per cent commission on the sale, half of which went to the buyer brokerage.

The suit claims that this system incentivizes buyer brokerages to direct their clients away from sellers offering lower commission fees, artificially inflating them over time.

“We’re talking about rules that drive policies and policies that drive behaviours and behaviours that drive outcomes,” Melanson explained.

Case follows Missouri court decision

The Canadian class action comes on the heels of a similar case in the U.S.

In a precedent-setting October decision, a Missouri court handed down a guilty verdict in a price-fixing lawsuit brought against major U.S. real estate players including the National Association of Realtors and RE/MAX.

The plaintiffs in that case were awarded US$1.8 billion in damages.

“When it comes to Canada, it’s the same types of allegations,” Melanson said.

“The lawyers behind this class action are saying that certain rules prevent competition in the buyer brokerage industry, which lead to falsely inflating real estate commissions, so that’s really what the focus is.”

Allegations ‘without merit’: CREA

The Canada-wide class action suit claims that the Canadian Real Estate Association (CREA) helped brokerages facilitate the alleged price-fixing scheme.

The organization says the allegations are “without merit.”

“(CREA) will continue to vigorously defend against these claims,” CREA said in a statement to BNN Bloomberg.

The association claims its listing system are “efficient and effective cooperative marketplaces that bring together realtors acting on behalf of Canadian home sellers and buyers, and are both pro-competitive and pro-consumer.”

Potential impacts

After the Missouri court decision, Melanson said “copy cat” class action suits have been filed across 11 U.S. states, with the potential to exceed US$100 billion in damages.

Decisions in U.S. courts will likely influence the behaviour of realtors in Canada, Melanson said, noting that many brokerages are already changing their commission rules to de-risk their businesses in the long term.

“It really depends what the folks that are involved in the American suits want to do here in Canada, but we hope that any change is good for consumers,” Melanson said.

He noted that some analysts have estimated that real estate commissions in Canada could come down as much as 30 per cent as a result of the legal action.

“Those are the types of things we’d love to see in the market,” Melanson said.

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

The Canadian Press. All rights reserved.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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