At the height of the COVID-19 pandemic, when many of her peers were binge watching Netflix shows, Toronto’s Sewit Tamene decided she would finish getting her real estate licence, a process she had started almost a decade earlier.
Real eState
The spring housing market could bring a reckoning for realtors in Canada
Realtors’ fate depends on whether buyers and sellers return in force and how that will affect prices
But by the time she completed the program in September 2022, the booming pandemic housing market had started to turn cold, with sales and new listings on the decline and prices rolling over, too. For Tamene, the timing was bad, but at least she still had a full-time job elsewhere. For her friends trying to launch careers in the industry, the transition has been more difficult.
“Maybe if they already had a history and they already had a client base and they were already sort of successful, it wouldn’t be hitting them as hard — but if you’re a newer agent, I definitely think that it’s a little bit more difficult to get going,” Tamene said. “Some realtors are definitely taking a pause or leaving the industry because there’s just not enough cake for everyone.”
The pressure on a swelling real estate profession — membership at the Canadian Real Estate Association (CREA) has risen 17 per since the end of 2020 to 160,000 while the number of brokers and salespeople represented by the Toronto Regional Real Estate Board is up 25 per cent since March 2020 — is just one of the storylines making this spring’s real estate market a make-or-break affair.
There’s just not enough cake for everyone
Sewit Tamene
The big questions, the ones that will decide realtors’ fates, are whether buyers and sellers return in force and how that will affect prices.
The Bank of Canada’s dramatic interest rate hikes over the past year have reshaped lending markets, making homes even less affordable and pushing many would-be homebuyers to the sidelines.
Figures released by CREA on March 15 show that actual (non-seasonally adjusted) transactions in February 2023 came in 40 per cent below a strong February 2022. New listings also continued to fall in February 2023, decreasing by 7.9 per cent month over month and hitting record lows in some cities, including Calgary.
Industry observers have suggested the usually busy spring market might be the turning point that lures buyers and sellers back into the game, but that is hardly assured, and just where the balance of supply and demand lands will have significant consequences for the industry and the economy.
John Pasalis, president and broker of record at Toronto real estate brokerage, Realosophy, thinks demand has the upper hand. He said his brokerage has had lots of showings recently and that sales are growing faster than inventory. That is keeping the bidding process competitive and maintaining price levels, something he doesn’t see changing.
Pritesh Parekh, a Toronto realtor, said that while the lack of listings may be supporting prices, it is limiting the options for buyers.
“If a realtor is representing a buyer in this market, they’re definitely feeling the pressure of even finding homes that are suitable,” Parekh said. “And when they finally do find a property — and I’m talking more so houses than condos in this specific example — there are so many other buyers that are looking at that same home.”
“It was a market where properties were selling quickly and selling for high prices,” he said. “Part-timers doing lower volume sales or staying afloat based on the reality that there was a lot of business to go around, were selling properties relatively easily.”
Then, the market was buzzing from the Bank of Canada’s emergency interest rate cuts, sparked by the COVID-19 pandemic. The overnight rate sat at 0.25 per cent for all of 2021. A previously hot market seemingly got hotter that year.
“Properties were selling without being staged, without having repairs — even properties that had negative attributes were still selling at prices people couldn’t believe,” Parekh said.
Parekh thinks this spring will show that buyers and sellers are tired of playing the waiting game.
“There were so many people who were looking to buy last year,” Parekh said. “And once prices started going down, they held off to see what happens next. There are still people in the market who have been waiting since last year, and at this point there’s going to be a segment of them who are tired of waiting and say, ‘You know what, I’m ready to pull the trigger.’”
Adil Dinani, a realtor with Royal LePage West in Vancouver, has been selling real estate for 17 years and has seen three major market corrections. He said he is optimistic about the spring market and believes that “the worst is behind us.”
But he thinks a reckoning may be ahead for the industry, with less-established agents being winnowed out over the next few years.
“I think real estate practitioners need to work to provide value, to display market knowledge and really understand what’s happening out there (in real estate) because it’s a confusing time,” Dinani said. “If you’re a first-time buyer and rates are five and a half, six per cent, and prices have come down but not that much — you want to know where the opportunities in the market are.”
In spite of the uncertainty, Tamene is optimistic the market will bounce back.
“Things have been slower these past few months which can be discouraging,” she said. “I’m not a gambler but if I were placing a bet on Toronto and its real estate market, I’m going all in because that’s how confident I am that things will turn around.”
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The Competition Bureau says it’s obtained a court order as part of an investigation into potential anti-competitive conduct by the Canadian Real Estate Association.
The bureau says its investigation is looking into whether CREA’s commission rules discourage buyers’ realtors fromoffering lower commission rates or whether they affect competition in other ways.
It’s also looking into whether CREA’s realtor co-operation policy makes it harder for alternative listing services to compete with the major listing services, or gives larger brokerages an unfair advantage over smaller ones.
The court order requires CREA to produce records and information relevant to the investigation, the bureau said, adding the investigation is ongoing and there is no conclusion of wrongdoing at this time.
CREA’s membership includes more than 160,000 real estate brokers, agents and salespeople.
The association said it’s co-operating with the bureau’s investigation.
In a statement, CREA chair James Mabey said the organization believes its rules and policies are “pro-competitive and pro-consumer” and help increase transparency.
Court documents show the bureau’s inquiry began in June, as the competition commissioner said he had reason to believe CREA engaged in conduct impeding the ability of real estate agents to compete.
The documents note CREA owns the MLS and Multiple Listing Service trademarks and owns and operates realtor.ca, which real estate groups use to list homes for sale.
Websites like realtor.ca are where the public can view home listings, while MLS systems contain data that’s only accessible to agents such as additional information on listings, sales activity in the area and neighbourhood descriptions. Some of this data is not publicly available for privacy reasons.
Access to the MLS system is a perk offered to members by real estate boards and associations.
The Competition Bureau in recent years has been reviewing whether the limited public access to these systems stunts competition or innovation in the real estate sector.
Property listings on an MLS system must include a commission offer to the buyers’ agent, and when a listing is sold, often the agent for the buyer is paid by theseller’s agent, according to the court documents.
They allege these rules reduce incentives for buyers’ agents to offer lower commissions because if buyers aren’t directly paying their agent, they may be less likely to select an agent based on their commission rate.
The bureau alleges the rules also incentivize buyers’ agents to steer their clients away from listings with lower-than-average commissions.
The documents also say CREA’s co-operation policy, which came into force at the beginning of 2024, favours larger brokerages because of their ability to advertise to bigger networks of agents.
The policy requires residential real estate listings to be added to an MLS system within three days of them being publicly marketed, such as through flyers, yard signs or online promotions.
The documents also allege the co-operation policy disadvantages alternative listing services as it’s harder for them to compete on things like privacy or inventory.
Last year, the Competition Bureau said it was investigating whether the Quebec Professional Association for Real Estate Brokers’ data-sharing restrictions were stifling competition in the housing market.
It obtained a court order in February 2023 related to the ongoing investigation, looking into whether QPAREB and its subsidiary, Société Centris, engaged in practices that harm competition or prevent the development of innovative online brokerage services in the province.
Much of the data-sharing activity in question was linked to an MLS for Quebec real estate.
— With files from Tara Deschamps
This report by The Canadian Press was first published Oct. 3, 2024.
The Canadian Press. All rights reserved.
TORONTO – The Toronto Regional Real Estate Board says home sales in September rose as buyers began taking advantage of interest rate cuts and lower home prices.
The board says 4,996 homes were sold last month in the Greater Toronto Area, up 8.5 per cent compared with 4,606 in the same month last year. Sales were up from August on a seasonally adjusted basis.
The average selling price was down one per cent compared with a year earlier at $1,107,291.
The composite benchmark price, meant to represent the typical home, was down 4.6 per cent year-over-year.
The board’s CEO John DiMichele says recently introduced mortgage rules, including longer amortization periods, will give home buyers more options and flexibility as the housing market recovers.
New listings last month totalled 18,089, up 10.5 per cent from a year earlier.
This report by The Canadian Press was first published Oct. 3, 2024.
The Canadian Press. All rights reserved.
Vancouver-area home sales dropped 3.8 per cent in September compared with the same month last year, while listings grew to put modest pressure on pricing, said Greater Vancouver Realtors on Wednesday.
There were 1,852 sales of existing residential homes last month, which is 26 per cent below the 10-year average, and down 2.7 per cent, not seasonally adjusted, from August.
The board says the results show recent interest rate cuts haven’t yet led to the expected rebound in activity, and that sales are still coming in below its forecast.
“September figures don’t offer the signal that many are watching for,” said Andrew Lis, the board’s director of economics and data analytics, in a statement.
The Bank of Canada has already delivered three interest rate cuts this year to bring its policy rate to 4.25 per cent. With further cuts expected at its next two decisions, including what some banks say could be a half-percentage-point cut, there’s still room for an upward swing in the market, said Lis.
“With two more policy rate decisions to go this year, and all signs pointing to further reductions, it’s not inconceivable that demand may still pick up later this fall should buyers step off the sidelines.”
For now though, there are many more sellers entering the market than buyers.
There were 6,144 newly listed properties in September, up 12.8 per cent from last year, to bring the total number of listings to 14,932. The total number of listings makes for a 31 per cent jump from last year, and is sitting 24 per cent above the 10-year seasonal average.
The combination of fewer sales and more listings left the composite benchmark price at $1,179,700, which is down 1.8 per cent from September 2023 and down 1.4 per cent from August.
The benchmark price for detached homes stood at $2.02 million, up 0.5 per cent from last year but down 1.3 per cent from August. The benchmark for apartment homes came in at $762,000, a 0.8 per cent decrease from both last year and August 2024.
The board says the sales-to-active listings ratio across residential property types was at 12.8 per cent in September, including 9.1 per cent for detached homes, while historical data indicates downward price pressure happens when the ratio dips below 12.
This report by The Canadian Press was first published Oct. 2, 2024.
The Canadian Press. All rights reserved.
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