The end of 6% real estate commissions could result in 'numerous and significant' repercussions, expert warns - Yahoo Finance | Canada News Media
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The end of 6% real estate commissions could result in 'numerous and significant' repercussions, expert warns – Yahoo Finance

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The end of 6% real estate commissions could result in ‘numerous and significant’ repercussions, expert warns

Navigating the real estate market can feel overwhelming, especially in a climate marked by elevated interest rates and persistently high property values. Real estate veteran Katrina Campins believes that recent legal developments involving the National Association of Realtors (NAR) do little to alleviate these concerns.

“Homeownership is poised to become even more challenging in an already tough market as a result of this. The repercussions of this lawsuit are numerous and significant,” she told Fox Business.

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In a significant turn of events for the real estate industry, the NAR reached a proposed $418 million settlement agreement in a class-action antitrust lawsuit. The lawsuit, brought on by a group of home sellers, accused the NAR and major brokerages of colluding to artificially inflate commission rates, challenging long-standing practices within the U.S. real estate market.

If approved, a major change resulting from the settlement would be the elimination of the NAR’s requirement for brokers listing homes on its Multiple Listing Services (MLS) to also list compensation rates for buyer’s agents. Additionally, MLS would remove fields indicating broker compensation. This change effectively decentralizes negotiations for compensation, shifting them outside of the MLS platform and into direct negotiations between home sellers, brokers and agents.

A change in the landscape

The proposed settlement is expected to reshape how real estate transactions are conducted, potentially leading to more competitive commission rates and giving buyers and sellers greater flexibility and control over transaction costs. For buyers, this could mean navigating a more complex landscape where agent services and costs become more varied and negotiable. Sellers might benefit from the ability to negotiate commission structures more freely, potentially reducing the cost of selling a home.

Campins is concerned about the settlement, cautioning those who view the changes as a victory against alleged exploitation by agents.

“The progression to the current state originated from individuals actually seeking increased representation in home buying,” she explained.

Read more: Suze Orman says Americans are poorer than they think — but having a dream retirement is so much easier when you know these 3 simple money moves

In particular, Campins sees the situation becoming more difficult for the buyer.

“So, now what’s going to happen is, basically, buyers are going to go directly to the listing agent, right? And think about all the misrepresentation that’s going to occur at that point in time and then think about all of the kickbacks that are going to be given, all the bonuses,” she said.

Good for the housing market?

Campins also warned about the potential for listing agents to pit buyers against each other in order to drive up property prices for the benefit of sellers.

She is not in favor of that prospect, stating: “I think this is extremely unfortunate and while people think that it’s going to be good for the housing market, I completely disagree.”

As part of the proposed settlement, the NAR also agreed to require agents working with buyers to enter into a written agreement with them. This measure is designed to ensure that buyers are fully informed about the service fees their agent will charge, right from the start.

Campins noted that while she isn’t opposed to the idea of a buyer’s agent using a representation form, she anticipates that most buyers would be reluctant to sign such a document due to an unwillingness to directly pay for their agent.

“Homeownership, in my opinion, just got hit again because of this lawsuit,” she remarked.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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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.

The Canadian Press. All rights reserved.

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