The Canadian Real Estate Association (CREA) recently released its latest episode of its REAL TIME podcast, featuring yours truly and CREA CEO, Janice Myers. On it, we discussed the draft business case CREA released earlier this summer that outlines a path forward for REALTOR.ca as a taxable entity and the incredible opportunity that could provide.

Here are two key takeaways of our podcast conversation:

1. I fully acknowledge and understand any concern and hesitation that’s been shared with us about the proposed transition — REALTOR.ca is our most valuable asset. But I firmly believe our biggest risk is inaction. Let’s seize this incredible opportunity to ensure REALTOR.ca continues to be the trusted platform for all things Canadian real estate — with REALTORS® planted firmly at the centre of it all.
2. If you haven’t already, please read the draft business case, which can be found at CREA.ca/REALTORinc.

REALTORS® have seen firsthand how REALTOR.ca has paved the way for how real estate is marketed and consumed in Canada. The platform has become a cornerstone of our industry, providing unparalleled value for both our business and consumers.

REALTOR.ca has evolved from a public-facing website to a comprehensive platform with integrated components, like native apps for iOS and Android for both REALTORS® and consumers, and the REALTOR.ca Data Distribution Facility (REALTOR.ca DDF®), which facilitates the consistent and accurate distribution of real estate listings across 10,000 advertisement, franchisor and member websites.

We are the proud owners of a REALTOR®-centric tool that commands more than 50 per cent market share¹ in Canada because of the trust and appreciation of the consumers who turn to it. As a business tool, there’s really no comparison to the reach and exposure it provides.
How we use the internet has changed dramatically in the last decade. You could even say that about five years ago. To help ensure REALTOR.ca’s future success, we need to change our approach to maintaining such a powerhouse platform.

Year after year, competition in the tech landscape grows, consumers expect more and operational costs increase. The status quo isn’t sustainable.

CREA is proposing it turn REALTOR.ca into a taxable, wholly owned subsidiary as both a financial necessity and a strategic move to secure REALTORS® at the centre of Canadian home buying, selling and renting journeys.

 

Why change is essential

 

Currently, REALTOR.ca is operated by CREA under its not-for-profit status. While this structure has served us well, under this model, REALTOR.ca isn’t able to pursue new revenue streams or engage in certain business-related activities. Transitioning to a business model would give us the ability to unlock that potential, better positioning us to stay ahead in an increasingly competitive market.

PricewaterhouseCoopers (PwC) conducted a comprehensive analysis and presented an overview of the opportunities this transition could offer in the draft business case.
Based on initial revenue and cost projections associated with the transition, operational enhancements and pursuit of revenue opportunities, REALTOR.ca as a taxable entity could generate significant estimated revenues that could help reduce dependence on CREA funding from member dues. In other words, the current allocation of my annual $310 CREA membership dues that goes to REALTOR.ca (43 per cent) could be reduced — allowing CREA to instead allocate those funds to equally impactful priorities like government relations work and enhancing and protecting the REALTOR® reputation.

The dollars and cents are important but shouldn’t be what motivate you to consider this path forward. What’s at stake here is possibility. We can’t do more or be more by staying the same. If we want to remain the go-to choice for consumers, we need to set ourselves up to take advantage of all that’s possible for REALTOR.ca.

 

The benefits of a taxable subsidiary

 

Turning REALTOR.ca into a taxable entity could create other key benefits:

1. Innovation. With the ability to generate new sources of revenue, REALTOR.ca could adopt new technology like artificial intelligence, reach new demographics and introduce new features and tools.
2. Enhanced value for REALTORS®. REALTOR.ca could deliver things like higher-quality leads, better tools for managing client relationships and new features that enhance the overall REALTOR® experience.
3. Long-term viability. Creating opportunities for REALTOR.ca to better compete in today’s fast-paced tech landscape is crucial for maintaining our competitive edge and continuing to provide the high level of service that consumers have come to expect from the platform.
4. Self-sustainability. Reducing REALTOR.ca’s dependence on member dues could enable CREA to allocate more resources to core services like government relations, professionalism and promoting and protecting the value of working with a REALTOR®. This could help better position both entities for greater long-term sustainability and success.

 

The path forward

 

I’ve had the pleasure of connecting with many across the REALTOR® association community on this proposed transition. We know what’s at stake.

As stewards of this powerhouse brand, we have a duty to ensure its future success. The proposed transformation is a responsible and forward-thinking step towards securing REALTOR.ca’s market leadership in an increasingly competitive environment while also keeping REALTORS® firmly at the heart of that future.

Once again, I encourage you to visit CREA.ca/REALTORinc to read the draft business case, check out the other resources and share your feedback. We’re excited about what’s possible and look forward to bringing this to a membership vote at CREA’s 2024 Special General Meeting on Wednesday, October 23.

James Mabey
CREA Chair

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¹ Comscore

While there were early signs of renewed momentum in June following the Bank of Canada’s first interest rate cut since 2020, activity in Canada’s housing market took a pause in July, according to data released earlier this month by the Canadian Real Estate Association (CREA).

“With another rate cut announced on July 24, we’ve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year,” Shaun Cathcart, CREA’s senior economist, says in a statement.

“Combine that with a record amount of demand waiting in the wings, and the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk.”

According to CREA, in July:

• National home sales decreased 0.7 per cent month-over-month
• Actual monthly activity was 4.8 per cent above July 2023
• Number of newly listed properties was up 0.9 per cent month-over-month
• MLS Home Price Index was up 0.2 per cent month-over-month but was down 3.9 per cent year-over-year (benchmark price was $718,700)
• Actual national average sale price ($667,317) was down just 0.2 per cent year-over-year

 

Uptick in market interest since interest rate cuts

 

Phil Soper, CEO of Royal LePage, says there has been a material uptick in market interest since the Bank of Canada started cutting interest rates. 

“Our principal portal which is royallepage.ca is the busiest real estate company portal in the country. Not as busy as realtor.ca … Every week I get an update from our IT team on royallepage.ca and we’ve seen a material uptick in viewership and engagement in our planning tools.”

Soper notes that a leading indicator is the increasing number of people using the site is unusual for August: “August is typically a very slow month. Things pick up at the end of August and into September. It’s indicative of re-ignited interest.”

He says the final leading indicator is the brand’s showings system, which clients use to book property showings with their realtors: “We saw an uptick in that in July. There’s clearly more interest and I believe it’s related to three principal things.

One, variable rate mortgages are cheaper given that the bank rate has come down. Two, fixed-rate mortgages are cheaper given the state of the bond market and the slowing economy — we’ve seen a real material drop in the popular five-year fixed. The third is building demand. We had this very large influx of new Canadians in 2022 (and) 2023 — a record. That’s going to put pressure on the entire housing ecosystem.”

Soper says demand is building and it will be released at some time. There will be an uptick in sales volume triggered by cheaper borrowing and pent-up demand should result in a busy fall. 

He believes those most impacted by higher interest rates, the overall lack of consumer confidence in the economy and the housing market in general are predominantly renters or first-time homebuyers. “That’s a big piece of the puzzle.”

 

Alberta, Nova Scotia, New Brunswick strong while Ontario struggles

 

Listings are going up because existing homeowners are seeing some positive indicators. However, Christopher Alexander, president of Re/Max Canada, says province by province is a different story.

“The year started off with a bang. Lots of anticipation that the Bank of Canada was going to start a series of rate cuts in the spring. That never materialized so you had this kind of malaise and slowness for several months, and then a strong majority of economists were insisting there would be rate cuts in June, so the market almost stopped in May. Then we got the rate cut and it really did nothing, but after the second rate cut we’re seeing renewed activity,” he notes.

“Alberta has been strong. New Brunswick and Nova Scotia have been pretty strong. Ontario has really struggled with slower market conditions.”

Alexander expects the market will see a renewed sense of urgency from buyers. 

“We’ve got a lot of inventory, so that should keep prices in check for the foreseeable future. We’re expecting more rate cuts and I think once the overnight rate gets to around four per cent, we’ll see sustained activity. All the indicators are showing we’re entering healthy territory again which is a good thing,” he says. 

 

‘End of the slump in most of Canada by end of this year’ but deeper rate cuts needed

 

Robert Hogue, assistant chief economist with RBC Economics, described the Canadian real estate market as slow, generally speaking, with obviously some variances across the country. Prices are mostly flat and some condominium prices are under pressure.

“We’ll need more interest rate cuts to get the market going,” he notes. “It’s a fairly slow grind this summer but it remains our view that as we get more rate cuts it’s going to translate more into lower mortgage rates, and that should get the market going a little faster.

We’re not expecting a big boom or anything like that but it will be the end of the slump in most of Canada by the end of this year.”

Hogue says the Bank of Canada’s interest rate cuts in June and July likely marked a turning point for struggling housing markets across the country, but so far the impact has been mixed. He says it will take deeper rate cuts to meaningfully reduce ownership costs and stimulate homebuyer demand more broadly.

“Supply, on the other hand, continues to grow. In some cases, such as in Toronto, it reflects the completion of many newly built units (mainly condominiums) that owners (mainly investors) are looking to offload. In other cases, it could be sellers betting lower rates will spur buyer interest and improve sale outcomes. In some, it may be a sign of homeowner distress arising from high rates,” notes Hogue.

He goes on to say that the balance between supply and demand varies considerably from market to market. “Conditions in Calgary, Edmonton and, to a lesser extent, Montreal favour sellers. It’s the opposite in the Toronto area where buyers have the upper hand — albeit just barely. A tenuous equilibrium holds in Vancouver.”

However, Hogue also points out that home prices have generally levelled off since spring. “Calgary — Canada’s housing hotspot — remains an exception, though gains have moderated recently. We see flat price trends persisting until larger rate cuts heat up demand more materially.”

 

Total listings up nearly 23%, sales-to-new listings below long-term average but balanced

 

According to CREA, at the end of July, there were about 183,450 properties listed for sale across Canada, up 22.7 per cent from the prior year but still about 10 per cent below historical averages (more than 200,000 for this time of the year). New listings were up slightly by 0.9 per cent month-over-month. 

The national sales-to-new listings ratio went down 0.8 per cent from June to 52.7 per cent last month. CREA notes the long-term average for the national sales-to-new listings ratio is 55 per cent, with a ratio between 45 per cent and 65 per cent generally consistent with balanced housing market conditions.

 

Despite gaining momentum in June, after the Bank of Canada’s rate cut that month, activity in Canada’s housing market paused in July.

Last month, home sales dipped 0.7 per cent on a month-over-month basis, reversing a small portion of June’s post-first rate cut gains. There’s a likelihood of further rate cuts in the next interest rate decision with the pace of future policy likely easing.

 

Expectations of further policy easing and more rate cuts to come

 

It’s clear that we may take a while to return to the COVID era when home sales peaked in January 2021 — their highest peak since January 2009, reaching approximately 64,000 sales. Despite the 0.7 per cent drop in sales, there’s a positive side to this as sales remain close to the recorded level from June.

But after the Bank of Canada announced a second rate cut of 4.5 per cent on July 24, there have been growing expectations of further policy easing with markets anticipating additional cuts as we head into fall.

It’s good news that despite the slight dip in July, our actual monthly activity was still 4.8 per cent higher than in July 2023. As well, the number of newly listed properties increased by 0.9 per cent month-over-month with Calgary seeing a notable boost in supply.

The Home Price Index rose by 0.2 per cent from June to July, although prices remained 3.9 per cent lower than in June 2023. The national average sale price was virtually unchanged — dipping just 0.2 per cent year-over-year to $1,667,317.

 

A balanced market with potential for continued downward price pressure — fall will be oversupplied

 

Canada’s market is pretty much balanced at this point, steadily at just over four months of inventory and just over 50 per cent sales-to-new-listing ratios. This can result in continued downward pressure on prices.

All of this is correlated to the fact that national new listings inventory continued to climb in July, which is typically considered one of the slowest periods for new listings. Looking ahead into fall, there will be an oversupplied market.

 

Alberta and Ontario: Stabilized

 

The biggest price increase was observed in Edmonton and Hamilton-Burlington, whereas Calgary and Toronto both witnessed the largest average price increase, which levelled one another out. This has resulted in Alberta and Ontario stabilizing in terms of the provincial average home sales price trend over the last several months.

Interestingly enough, despite having the biggest decrease in average price, Calgary had the most number of properties listed, which contributed to the increase of 0.9 per cent of the national average. 

Source: Wowa.ca

 

Keeping an eye on these developments will be critical for understanding what’s in store for the industry this fall and beyond, and for helping us advise our clients well.

 

This year, the housing market has experienced slower-than-expected sales levels and a significant increase in property listings. Although this has helped stabilize prices in many markets, some still experienced notable price hikes, as a Zoocasa study of Canadian Real Estate Association (CREA) data found.

 

Single-family home prices in Canada

 

Of the 26 cities analyzed, three had more than a 10 per cent increase in benchmark single-family home prices since January: North Bay, Sault Ste. Marie and Sudbury. All three haven’t had as many new listings as other Canadian markets.

 

CREA reports that new listings in June were below the five-year average in Sault Ste. Marie by 11.2 per cent, in Sudbury by 6.6 per cent and in North Bay by 9.5 per cent. Sault Ste. Marie has seen consistent price growth and affordability. Since January, its benchmark single-family home price has risen by 12.6 per cent to $305,000.

Outside of Ontario, the next largest price gain for single-family homes has been in the Prairies. Since January, prices have increased by 9.8 per cent in Edmonton, 9.0 per cent in Winnipeg and 8.4 per cent in Saskatoon. However, home prices have remained below $500,000 in these markets.

 

Home prices on the rise despite slow spring market

 

Since January, most markets experienced more than a 5.0 per cent jump in single-family home prices, including the GTA and Greater Vancouver. Benchmark condominium prices, however, have not increased as much.

 

Of 23 condominium markets, 12 have seen less than a 2.5 per cent increase in benchmark prices since January. Five markets experienced less than a 1.0 per cent increase: Hamilton-Burlington, Ottawa, Niagara Region, Windsor-Essex and Winnipeg.

 

Condo demand and price growth may be driven by consumer concerns around home prices

 

Canada’s most affordable condominium markets are also experiencing the most price growth. Units in Saint John, Edmonton and Saskatoon saw the largest price gains since January, increasing by 13.9 per cent, 13.1 per cent and 10.8 per cent, respectively. These locations are seeing growing demand for condominiums, with price growth higher than that for single-family homes. The same is true in London and St. Thomas, Calgary and Regina.

Another recent Zoocasa survey found that 42.3 per cent of respondents cited rising home prices as their primary concern in the current market — something that could be driving demand for more affordable property types like condominiums and contributing to their rising prices.

 

Yesterday, the Bank of Canada lowered its overnight lending rate by 25 basis points to 4.5 per cent, the second consecutive rate cut this year.

The Bank says that growth in the Canadian economy has picked up but is still below long-term potential and that our economy’s weakness is across both household consumption and the housing market, with the labour market softening.

Although the Bank expects growth to increase later this year and into 2025, it notes that excess supply will continue to put downward pressure on inflation.

 

Sidelined buyers may return to many options, activity should pick up in the fall

 

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., weighs in: “Our research shows that many buyer hopefuls have been waiting for a concrete signal from the Bank of Canada that the economy is moving in the right direction. A second cut to the overnight lending rate indicates just that, and with mortgage qualification thresholds continuing to come down, sidelined buyers may have the confidence they need to make their return to the housing market.

We expect this will prompt a slight boost in activity in the short term, followed by more robust buyer demand in the fall. In the meantime, some much-needed inventory has been building in major markets over the last few months, giving buyers more options to choose from. In addition to lower rates, this may also encourage more buyers to re-enter the market in the near future.”

 

More than rate cuts needed for sales recovery

 

Zoocasa points out that following June’s rate cut, home sales didn’t recover as many expected — with non-seasonally-adjusted national sales down by 10.9 per cent from May to June and GTA and Metro Vancouver sales down by more than 10 per cent.

As well, the Canadian Real Estate Association adjusted its annual housing market forecast to 6.2 per cent growth from its original 10.5 per cent in April. This is reflected in excess inventory levels the Toronto Regional Real Estate Board reports, with active listings up 67.4 per cent year-over-year in June.

This may not be surprising, given that a recent survey reports 42.3 per cent of respondents note home prices being their main concern about buying in today’s market, with interest rates (25.6 per cent) and economic uncertainty (14.9 per cent) following.

Christopher Alexander, president, Re/Max Canada, seems to agree: “The Bank of Canada’s decision to decrease its key interest rate by a quarter of a percentage point is welcome news for Canadian homebuyers who are still contending with a high cost of living and higher interest rates than we’ve seen in a long time.

We’ll likely need to see interest rates come down further for the housing market to kick into high gear again, but if they continue trending downward, there’s a possibility of a more active fall market.”

 

Good news for commercial real estate

 

Avison Young’s Mark Fieder, principal and president, Canada, notes that the rate drop will positively impact investor sentiment.

“Commercial real estate (CRE) return metrics are improving compared to other asset classes, and we expect this will further fuel investor appetite and capital allocation into CRE,” he says.

“We have been in a very uncertain interest rate environment over the last two years. This second rate drop certainly shows the Bank’s confidence in the inflation data and reinforces the fact that we are finally shifting into a different interest rate regime.”

 

Canada’s housing market finds itself, as of June, poised for a comeback after a challenging year. The trigger? A strategic interest rate cut by the Bank of Canada, leading to a 3.7 per cent rise in national home sales compared to May. After months of declining activity, the market is showing signs of life, but the road ahead is filled with uncertainties and hardship for both industry professionals and buyers and sellers alike.

But will this interest rate cut be enough? Is it the start of a cutting cycle? Will it get worse before it gets better? We look into the story behind the numbers, examining how economic policy, consumer sentiment and regional differences are shaping the recovery of Canada’s real estate landscape.

 

Dialed back expectations around interest rate cuts — cuts that would draw in buyers

 

Since the last forecast in April, expectations surrounding interest rate cuts this year have been dialed back as the market has seen an influx of properties with many sellers listing their homes in the spring. However, buyer activity and consumer sentiment have remained low. 

It’s anticipated that gradually lowering interest rates will eventually draw buyers back into the market. Nonetheless, the sluggish spring market and increasing supply levels have led to a downward revision in sales and average home price projections.

 

26% more listings than last June but below historical average

 

In 2024, approximately 472,395 residential properties are expected to be sold, marking a 6.1 per cent increase from 2023, whereas the total average home price is projected to rise by 2.5 per cent to $694,393.

Looking ahead to 2025, home sales are forecasted to increase by 6.2 per cent to 501,902 units, supported by continued declines in interest rates and returning demand. The national average home price is anticipated to climb by 5 per cent to $729,319.

But what really happened is by the end of June, there were about 180,000 properties listed for sale, which is a 26 per cent improvement from the previous year but remains below the historical average of approximately 200,000 sales by this month.

 

Possible slowdown in inventory buildup, approaching balanced market conditions

 

The number of new listings increased modestly by 1.5 per cent month-over-month, while the MLS Home Price Index (HPI) edged up by 0.1 per cent from May 2024. Despite these slight gains, the HPI was down 3.4 per cent year-over-year, and the national average sale price decreased by 1.6 per cent compared to June 2023.

The end-of-June supply of properties was up by 26 per cent from the previous year but remained below the historical average, suggesting a possible slowdown in inventory buildup. The national sales-to-new listings ratio improved to 53.9 per cent in June from 52.8 per cent in May, approaching the long-term average of 55 per cent and indicative of balanced market conditions.

 

Housing prices fluctuating

 

Regionally, housing prices continue to fluctuate. Calgary, Edmonton, Saskatoon, Montreal and Quebec City’s prices have been on an upward trajectory since early last year, while Ontario and Nova Scotia have also seen recent price increases starting late last year.

However, the non-seasonally adjusted National Composite MLS HPI remains 3.4 per cent below June 2023 levels, reflecting the sharp price increases that occurred in the spring and early summer of 2023. The national average home price in June was $696,179, down 1.6 per cent from the same month the previous year.

 

Our takeaways: the story of Canada’s housing market in June 2024 is one of cautious optimism and evolving dynamics. The early signs of revival triggered by the Bank of Canada’s interest rate strategy have laid the groundwork for continued cuts and expected (hopeful) growth in the coming years.

With a projected 6.1 per cent increase in property sales this year and continued growth into 2025, there’s a sense of nervous anticipation as buyers’ and sellers’ expectations have more ground to cover. However, the story is far from over.

The market’s future depends on overcoming challenges like rebuilding buyer confidence and managing the complex relationship of supply and demand. Looking ahead, the ongoing story of Canada’s housing market promises a mix of resilience, adaptation and hopeful progression.

 

Editor’s note: REM reached out to MREB for more information on the SGM and outcome. We’ll update this article as we hear back and learn more.

 

On January 31 this year, Mississauga Real Estate Board (MREB) members voted to amalgamate with the Realtors Association of Hamilton-Burlington (RAHB), the Waterloo Region Association of Realtors (WRAR) and the Simcoe & District Real Estate Board (SDREB) to become Cornerstone Association of Realtors on July 1, 2024.

However, due to large concerns, last month, some MREB members, with the support of several past presidents of MREB, requested the board call a members-only special general meeting (SGM) to rescind the vote to amalgamate.

The request was granted, and a meeting was held on June 26.

 

‘Consensus was unanimous … It’s all about MLS data and access. That’s what we need as working realtors’

 

“An overwhelming majority of the membership was in the room, and the membership’s consensus was unanimous,” Tehreem Kamal, broker with Royal LePage Real Estate Services Ltd., Brokerage, reports about rescinding the vote to amalgamate.

Kamal notes there were more members present than at the earlier SGM in January, where the amalgamation was voted in favour. “However,” she points out, “As cited before, the landscape was different and things have changed rapidly.”

Kamal also highlights that a key factor swaying the vote transpired over the past two weeks: “The Oakville, Milton and District Real Estate Board (OMDREB) decided they would be leaving ITSO (Information Technology Systems Ontario) once their contract comes to an end, and joining Cornerstone wouldn’t be an option.

Basically, it’s all about MLS data and access to data, because that’s what we need as working realtors.”

 

OMDREB’s decision

 

Initially, the proposed amalgamation had MREB and other Ontario boards being part of one board and one MLS system: ITSO’s Matrix. MREB, OMDREB, London and St. Thomas Association of Realtors (LSTAR), Niagara Association of Realtors (NAR) and WRAR all use this system.

Kamal explains that OMDREB’s decision plays a key role as there’s a lot of business crossover from Mississauga to Oakville and vice versa, and that Canadian Real Estate Association (CREA) statistics support this.

About the upcoming change for OMDREB, Anthony Danko, OMDREB president, says:

“Realtors can see for themselves how fast things are changing in organized real estate. Local boards are amalgamating, how we access and receive our MLS data is changing and, perhaps most importantly, the push for province-wide data is becoming stronger than ever.

OMDREB’s goal has always been to ensure our members have access to the most comprehensive data set possible, culminating in one province-wide MLS. Additionally, reviewing and considering your options when contracts approach renewal is good business practice. Knowing that the ITSO contract was approaching renewal, OMDREB’s board of directors did its due diligence by exploring all avenues to provide our members with the best data set possible.

Based on our extensive consultations and the feedback we received from members, along with the fact that it holds nearly all of the data within our jurisdiction, OMDREB decided to move forward with using PropTx as our MLS services provider, which will happen later this year.”

 

The MREB membership directed its board of directors to immediately stop the process, terminate the amalgamation and, if there’s any need, seek an injunction.

 

National home sales in Canada edged down 0.6 per cent month-over-month last month, with actual monthly activity coming in 5.9 per cent below May 2023 levels.

On the other hand, sales activity remained below the 10-year average, as the number of newly listed properties increased by 0.5 per cent month-over-month in May.

 

More homes for sale across Canada thanks to new listings and slow sales

 

More new listings amid slower sales have led to an increasing number of homes for sale across most Canadian markets. About 175,000 properties were listed for sale nationally at the end of May 2024, representing a 28.4 per cent increase from a year earlier, but remaining below historical averages. There were 4.4 months of inventory nationally, up from 4.2 months in April, the highest level for this measure since the fall of 2019.

The MLS Home Price Index dipped 0.2 per cent month-over-month in May. The non-seasonally adjusted national average sale price was down 4.0 per cent year-over-year at $699,117.

 

Largely flat prices with a few anomalies

 

Home prices are largely flat across most markets, except for steady increases in Calgary, Edmonton and Saskatoon.

The national sales-to-new listings ratio eased to 52.8 per cent, still within the 45-65 per cent range for balanced market conditions. The non-seasonally adjusted national average sale price was down 4.0 per cent year-over-year.

 

Lower interest rates & the psychological effect on homebuyers

 

The Bank of Canada’s recent 25 basis point rate cut is expected to have a significant psychological effect on potential homebuyers who have been sitting on the sidelines, bringing pent-up demand back into the market.

However, the pace and extent of further rate cuts will determine the impact on the housing market.

 

Canadian housing activity saw another quiet month in May, with sales edging slightly lower and new listings moving only a little higher. We’ll see what happens in the coming months, when the Bank of Canada’s rate cut is expected to create a revival.

 

On May 23, 2024, Information Technology Systems Ontario (ITSO) provided a memo to the boards of its member associations about new exclusive listing functionality it planned to implement as early as this month within its Matrix system.

ITSO sought feedback from its CEO Advisory Group on whether the functionality should be made available system-wide or on an opt-in basis as a non-basic service. However, the organization halted its efforts less than two weeks later.

 

Issues with adding exclusives to an MLS system

 

REM obtained ITSO’s memo, which discusses the issues of adding exclusive listings to the Matrix system after those listings have sold (which is often done for tracking statistics, financing purposes or use in comparative market analyses).

It notes, “The practice raises concerns under Rule 2.08, which provides that a listing is not acceptable if it is not available for showings and the registration of offers. If a listing is already sold before it is entered into the ITSO system, then it is not available for other realtors to cooperate on and therefore is a violation of Rule 2.08.

It is extremely frustrating for realtors to see a new listing, or have their clients see one in an auto-email, only to find out that the property is already sold when they contact the listing realtor for a showing. Adding these listings as MLS listings diminishes confidence in what is supposed to be a cooperative system. Further, the sale price for an exclusive listing is not necessarily reflective of what would be obtained for an MLS listing, so entering these listings into the ITSO system can skew statistics.”

 

How the functionality would help the industry

 

The memo goes on to note there are legitimate reasons for entering these listings into ITSO’s system: “Historically there was no easy way to capture this data for sales records or for financing purposes. The ITSO board of directors wants to respond to the needs of our users so that they will not be forced to breach the MLS rules or, alternatively, find a workaround to avoid compliance issues.”

It then explains this is why ITSO created the Alternative Listing Task Force (ALTF) in 2022, which determined the following, and unanimously agreed to recommend proceeding with the closed exclusive listing functionality:

1. “Augmenting the ITSO system with exclusive listings would be beneficial for statistical and financing purposes.
2. Enabling realtors to put exclusive listings into the ITSO system directly to a pending or closed status will likely increase compliance with Rule 2.08 for MLS listings, as there will no longer be a need to add exclusive listings to system inaccurately as MLS listings.
3. Adding this functionality to the ITSO system could also potentially entice more commercial realtors to put listings into the ITSO system, as MLS rules are often seen as a constraint for commercial listings.
4. Augmenting the ITSO system with exclusive listings could also provide an avenue for assignment listings to get exposure to realtors without being publicly advertised.”

 

The process and journey

 

The memo continues to describe the process and journey ITSO took in developing the exclusive listing functionality.

ITSO’s board of directors approved the ALTF’s recommendation in September 2022 along with its finalized rules for sold exclusive listings in March 2023, which the CEO Advisory Group discussed in April 2023. After some delays in development work and the Trust in Real Estate Services Act (TRESA) coming into effect on December 1, 2023, ITSO changed the rules for exclusive listings to include TRESA terminology changes before meeting with the CEO Advisory Group in December 2023. The intent was to consult about active exclusive listings, but this was put on hold (due to member associations’ work being done with the Ontario Realtor Wellness Plan).

The ALTF met this year to discuss and finalize changes to the exclusive listing rules to accommodate active listings. This caused a delay in launching the functionality for sold exclusives.

In the end, ITSO’s board approved the exclusive listing rules at its May 2024 meeting. The board found the proposed system enhancement would be welcomed by realtors “to fill a void they have been working around” along with association staff “who should see a reduction in listings violating the MLS rules as a result of providing a legitimate method of adding sold exclusive listings to the system for internal use.”

The memo encourages member associations and realtors to familiarize themselves with the exclusive listing rules and notes that Rule 9.01 requires realtors to obtain consent from their clients to collect, use and disclose the exclusive listing in the ITSO system (with sample language provided).

 

Response from CREA

 

After the memo was sent, ITSO had planned to consult with its members on the new functionality and determine how the service could be implemented. However, this was stopped on June 4, when the organization received an email from James Mabey, chair of the Canadian Real Estate Association (CREA).

Mabey tells REM that CREA became aware of the new functionality towards the end of May. “When it came to our attention, we took the opportunity to meet with them and make sure we had a really good sense of what they were trying to accomplish and why. Once we started looking at it, we came to the conclusion quite quickly that it was fundamentally, in our opinion, offside with Article 30 of the Realtor Code and also the Cooperation Policy.”

His email notes that CREA learned of ITSO’s proposal on May 27 in a memo entitled New Matrix Functionality. It says that the functionality appears to be non-compliant with the requirements of Article 30 of the Realtor Code (Duty of Cooperation) and the Realtor Cooperation Policy (the “Policy”) because the proposed functionality “appears to segregate “exclusive listings” from MLS listings “when a client is looking to limit marketing of the property” (as stated in (ITSO’s) memo).”

Mabey writes that placing listings in ITSO’s system this way falls under the definition of “public marketing” under the Realtor Cooperation Policy, as follows:

““Public marketing” means the representation or marketing of a listing to the public or anyone not directly affiliated with the listing brokerage/office in a business capacity. For clarity, public marketing does not include one-to-one direct communication with a realtor unaffiliated with the listing brokerage/office. Public marketing includes any representation regarding the sale of a property, including but not limited to, flyers, yard signs, digital marketing on public-facing websites, brokerage website displays (including IDX and VOW) and onsite brokerage promotion, digital communications marketing (i.e. email blasts, newsletters, social media posts), multi-brokerage listing sharing networks and applications available to the general public.”

So, he concludes, a listing appearing as an “exclusive listing” would trigger the requirement to also place that listing on an MLS system within three days as set out in paragraph 2 of the Policy: “Within three (3) days of public marketing, realtors must place the listing on an MLS system for cooperation with other realtors.”

Mabey highlights that a listing appearing only in the “exclusive listing” portion of ITSO’s system and not on the MLS system doesn’t satisfy the Policy (regardless of the fact that MLS listings are searchable in Matrix).

 

Request to immediately suspend functionality implementation

 

He then makes some other related points and states it’s CREA’s view that ITSO’s proposal “may expose ITSO member boards, associations and realtors to disciplinary action under CREA’s bylaws and rules for failing to comply with CREA’s policies and the Realtor Code.”

The email concludes with CREA’s request that ITSO “immediately suspend all implementation of its proposal and notify CREA member boards and associations that are members of ITSO that it has done so,” along with, “We respect ITSO’s attempts to provide innovative solutions for its members and if ITSO Boards and Associations believe there is an opportunity for improvements to the Realtor Cooperation Policy our door remains open to that feedback.”

During his interview with REM, Mabey points out that the Realtor Cooperation Policy was put together with a lot of consultation from CREA members, and it was passed with a very large majority. “Anytime a policy comes into place, we look to make sure our members are well served. We have a Realtor Code committee that reviews policies on a regular basis. We’re always happy to collaborate. We value our relationship with ITSO and our collaborative efforts to work well with them,” he explains.

Mabey suggests that anytime a board or association is working on something like this, the sooner they reach out and engage with CREA to confirm everyone’s on the same page and that any barriers or differences in interpretation are established, the easier it will be to collaborate and ensure that joint members are served as well as possible.

 

ITSO’s response

 

On June 6, Blair Campbell, president of ITSO, responded to Mabey’s email, confirming that ITSO agrees to suspend the new exclusive listing functionality implementation in Matrix. 

 

Authority to interpret and apply Realtor Code as deemed appropriate

 

Campbell goes on to explain why ITSO is disappointed that CREA feels the new functionality breaches the Realtor Cooperation Policy, particularly since CREA’s rules state that boards and associations have exclusive authority to interpret and apply the Realtor Code as they deem appropriate. He points out that ITSO enforces the Realtor Code for 11 real estate boards, pursuant to CREA’s bylaws and rules, and therefore feels ITSO should have this same authority.

He then explains that ITSO has been actively enforcing Article 30 of the Realtor Code since it came into force and is well versed in the requirements of the Realtor Cooperation Policy, plus the organization’s staff have talked to every realtor named as a respondent in these “PSC (professional standards committee) incidents” — which is how they know that realtors want the functionality.

In response, Mabey tells REM, “Our boards and associations have some latitude in interpreting the code. In this case, we believe the interpretation is fundamentally different. It’s not just a grey area. (The code) was evaluated by our legal team and the people who had developed the policies with us and (the interpretation) is just fundamentally inconsistent — it’s not a degree of latitude difference.“

 

Realtors can’t always meet MLS listing standards only with additional effort

 

Campbell also writes, “Our end users want a way to comply with the Realtor Cooperation Policy while still respecting their clients’ wishes and the nature of exclusive listings. At the same time, ITSO wants to maintain the integrity of the MLS data in our system. We respectfully disagree with your assertion that realtors are always able to meet the standards of MLS listings simply by incurring additional effort.”

The examples Campbell cites include properties that can’t be shown because there’s no access during the winter or where tenants will not allow anyone to enter the property, including properties the listing realtor can’t enter to verify basic details like the number of bedrooms or measurements, whether due to a power of sale or uncooperative tenants.

“These listings cannot meet the standards of an MLS listing and must be taken exclusively,” he writes. “Permitting these listings to be entered on our system as MLS listings with remarks saying ‘no showings’, that ‘the listing brokerage takes no responsibility for the accuracy of the information’ or ‘buyer to verify all details’ goes against CREA’s three pillars and interpretations of the MLS marks and will deteriorate the quality of the MLS data on ITSO’s MLS system.”

Mabey tells REM that MLS systems across the country have different rules and different barriers to entry into the system in terms of the number of fields, the amount of data that must be put in, restrictions on showings, etc.

“If those pieces of MLS rules need to be reevaluated in context of the Realtor Cooperation Policy, then those boards and associations could definitely review the rules in that context to ensure they’re still best serving their members (and) maybe prohibit some of those listings going into the MLS,” he suggests. “I would encourage (them) to review the MLS policies they feel might not be working well with the new cooperation policy and figure out what’s best for them.”

While Mabey notes that if a realtor can’t provide the sufficient level of detail, maybe public marketing the property isn’t the best choice, he points out that CREA isn’t aware of any situation where the barrier is so high that the decision shouldn’t be made to publicly market a listing. “In (that) case, they have other opportunities because the policy doesn’t (forbid) taking an exclusive listing.”

 

A matter of enforcement

 

Campbell also points out that CREA’s stance assumes all listings entered into ITSO’s MLS system as active exclusives would fall under the Realtor Cooperation Policy, but how listings are entered (as MLS or exclusive) is actually a matter of enforcement.

“ITSO and its member associations could still require all listings falling under the Realtor Cooperation Policy to go on the system as MLS listings. Then, the exclusive functionality could be used for the legitimate purposes it was created for — capturing sold exclusives, commercial listings, new builds, assignment sales with clauses that disallow advertising as an MLS listing, etc.”

 

‘Enforcing (the) Realtor Cooperation Policy within current MLS system limitations puts ITSO and its members at risk’

 

Campbell notes that ITSO feels enforcing CREA’s Realtor Cooperation Policy within the current MLS system limitations put both ITSO and its members at risk in light of:

• the United States Department of Justice’s position on the National Association of Realtors’ Clear Cooperation Policy,
• recent press suggesting CREA’s policy may be anti-competitive and
• the Ontario TRESA regulations that require registrants to abide by the lawful instructions of their clients.

He concludes by urging CREA to reconsider its position, stating: “The Realtor Cooperation Policy does not specify that listings must be entered on an MLS system as MLS listings — it says the listings must be placed on an MLS system for cooperation with other realtors.

It is open to CREA to interpret the policy to allow listings on the MLS system as exclusive listings provided the listing realtor is willing to cooperate with other realtors. This would achieve the purpose of the Realtor Cooperation Policy while maintaining the exclusive nature of the listing, respecting sellers’ wishes, enabling Ontario realtors to comply with their regulatory obligations and allowing ITSO to maintain the integrity of the MLS system data that we have worked so hard to achieve.”

 

‘We do not want any of our members to be in breach of their obligations in organized real estate’

 

Campbell shares this statement about the situation and ITSO’s reason for suspending the functionality’s implementation:

“It is ITSO’s position alone that listings falling under the Realtor Cooperation Policy should be able to go on the MLS system as exclusive listings with cooperation. We did not have a chance to discuss all aspects of this functionality with our members prior to CREA sending us a letter requesting that we suspend its implementation.  

We are disappointed that CREA has reached this conclusion and prevented us from implementing functionality that would be of great benefit to the realtor users of our system.

ITSO views MLS listings as the preferred method for selling and buying properties. However, the value of an MLS system is determined not only by the integrity and accuracy of the data but also by the completeness of the database. We’ve all been in a meeting where a client asked about an exclusive listing, and we didn’t have access to the information the client wanted. Being able to capture exclusive listing data would increase the value of the MLS system while maintaining the integrity of MLS listing data. At the same time, capturing exclusive listings would enable realtors to appear more professional and to better serve their clients.

That said, the interests of our members are ITSO’s priority and we do not want any of our members to be in breach of their obligations in organized real estate. That is why we agreed to suspend the implementation of this functionality.”

 

 

“First and foremost, let me be clear: there is no privatization happening with Realtor.ca. Realtor.ca will remain completely owned by CREA, and realtors will continue to own it through their membership in CREA.”

This is something Janice Myers, the new CEO of the Canadian Real Estate Association (CREA), stressed during our recent time together in Ottawa.

Aside from pressing issues — like the “privatization” of Realtor.ca, the Realtor Cooperation Policy and the commission lawsuits — we had the opportunity to discuss her career trajectory, her first 100 days in the role and her vision for the future.

The full video interview is available to watch. For transparency, only minor edits were made to ensure you can see the complete conversation and form your own judgments.

 

An industry veteran

 

Myers comes highly qualified for her role. Her background in association management and experience working with a real estate team in Vernon, British Columbia, paved the way for her position at the Okanagan Mainline Real Estate Board in 2001.

In 2014, a new opportunity arose: “My husband and I decided it was time for a change, and literally the next day, I got a call about the CEO position in Ottawa.” So they relocated, and for the next decade, Myers served as the CEO of the Ottawa Real Estate Board.

Prior to this interview, I talked to people who have worked with her in the past to get their perspective on her leadership.

Without exception, every single person had nothing but effusive praise. It’s a feeling of excitement for what she can do in her new role and trust in her ability to do it well.

At a time in our industry where it seems many are divided on leadership at different levels and trust in the organized side of the industry, Myers seems to buck that trend.

 

The focus as CEO

 

“My first 100 days have been focused on listening and learning,” she shares. “I’ve embarked on a listening tour, meeting with colleagues across the country, both virtually and in person, to understand their challenges and opportunities.”

While she does come with a wealth of experience, Myers has spent the last 10 years at the local board level. Now, she has to get up to speed on how it changes when it comes to the national level. For the CEO of CREA, there are three critical components of the role.

The first is advocacy.

There was no time to go slowly. Out of the gate, the team at CREA had policy recommendations in the government’s 2024 housing plan. When The Hill Times put out its list of The Top 100 Lobbyists for 2024, Myers made the list. She was very quick to point out that the team at CREA, not her, is the reason for inclusion on the list.

Enhancing and protecting the reputation of realtors is another key focus for Myers. “Reputation is vital in this environment, especially as consumers continue to press for transparency,” she states.

The third pillar of Myers’ focus is realtor and consumer technology, with Realtor.ca being a primary asset.

 

New structure for Realtor.ca 

 

“First and foremost, let me be clear: there is no privatization happening with Realtor.ca,” Janice states unequivocally. “Realtor.ca will remain completely owned by CREA, and realtors will continue to own it through their membership in CREA.”

This clarification addresses fears that Realtor.ca might be sold off or opened to outside investors.

Myers assured me that this is not the case. Instead, the focus is on maintaining control while enhancing the platform’s capabilities and ensuring it continues to meet the evolving needs of both consumers and realtors.

She emphasized three main points solidified by a special task force and endorsed at a special general meeting:

1. Ownership. Realtor.ca will remain wholly owned by CREA, ensuring that realtors retain ownership through their membership.
2. Governance. The platform will be managed with an independent board and as a taxable entity, allowing for greater operational flexibility.
3. Revenue reinvestment. Any profit generated will be reinvested back into the platform for the benefit of realtors and consumers alike.

“The idea is to provide Realtor.ca with the operational independence it needs to thrive and compete against heavily financed competitors,” Myers explains. “This structure allows us to diversify revenue streams, reducing our reliance on membership dues and ensuring the platform’s long-term viability.”

One of the main concerns among realtors has been how CREA plans to generate revenue from Realtor.ca without compromising its integrity or the interests of its members. Myers was clear that Realtor.ca would not sell leads to realtors. Instead, the focus is on exploring other revenue opportunities.

“We’ve identified about 30 different revenue opportunities and are narrowing down to five key areas,” she says. “These include leveraging our best-in-class data distribution capabilities, always ensuring that any data shared externally maintains the Realtor.ca brand and benefits our members.”

When pressed on whether allowing the data-distribution feed on third-party websites could lead to those websites selling leads to realtors, she emphasized that they’d make it part of the contracts not to allow that. The data-distribution feeds don’t contain member emails or contact information, and all consumer inquiries flow through Realtor.ca. This is the way it works currently, has always worked and will continue to work.

Myers highlighted the importance of maintaining transparency and cooperation with boards and associations across the country. “We want to ensure that everyone understands where these revenue opportunities are coming from and how they will benefit the entire realtor community,” she says. 

While they’re making the case for five specific revenue opportunities, Myers declined to provide them until she’s had the chance to bring them to the boards and associations first.

“We’re listening to our members and ensuring that any steps we take are in their best interest,” she assures. “Our goal is to keep Realtor.ca as the premier consumer portal in Canada, owned and operated by the industry for the industry.”

“Realtor.ca is a crucial asset for our industry,” Janice concludes. “By giving it the independence to innovate and compete, we’re ensuring it continues to serve the needs of consumers and realtors effectively. This is about building a sustainable future where our platform can grow and adapt alongside the industry.”

Keeping Realtor.ca within CREA as it currently stands as a non-profit could jeopardize its not-for-profit status. By removing Relator.ca from the not-for-profit arm of CREA, the association has more flexibility on how to generate revenue — revenue that Myers affirms will be reinvested back into the platform.

 

The Realtor Cooperation Policy

 

In addition to the potential changes with Realtor.ca, the new Realtor Cooperation Policy, which limits the use of exclusive listings, has sparked significant discussion. Few topics at REM generate as much commentary as this policy.

So I wanted to ask her about it.

“The primary driver for the new exclusive listing policy is consumer demand for transparency,” Janice begins. “We’ve seen a growing call from buyers and sellers alike for more openness in the real estate process. This policy is a response to those demands.”

The new rule mandates that any property marketed publicly must be listed on the MLS system within three days. This move aims to ensure that all consumers have fair access to property information, levelling the playing field for buyers and maintaining the integrity of the MLS system.

The policy has sparked a range of reactions from the real estate community. Some agents fear it might drive exclusive listings further underground, while others worry about the impact on marketing strategies. Janice acknowledged these concerns but emphasized the policy’s benefits.

“We understand that there are scenarios where exclusive listings can serve a purpose,” she says. “However, the policy doesn’t eliminate the possibility of exclusives. It simply ensures that once you start publicly marketing a property, it gets the broad exposure that only the MLS can provide.”

Janice highlighted that the policy strikes a balance between transparency and consumer choice. “If a seller has privacy or security concerns, they can still choose to keep their listing exclusive. The key is that once you start public marketing, it should be accessible to all potential buyers through the MLS.”

For realtors navigating this new policy, Janice advised open communication with clients. “It’s crucial to have honest conversations with your clients about their options and the benefits of MLS exposure. Realtors have an ethical duty to act in their clients’ best interests, and this policy supports that by promoting transparency and competition.”

 

Commissions

 

In the United States, there are several high-profile class-action lawsuits challenging the way real estate commissions are structured and disclosed. As a result, the U.S. real estate industry faces significant legal and regulatory challenges that could reshape its commission practices.

Myers pointed out that while the real estate industries in Canada and the U.S. share similarities, there are critical differences. “In Canada, we have a much more transparent environment regarding how buyer agents are compensated,” she explains. “Over 80 per cent of transactions in Canada involve written service agreements that clearly outline how agents are paid, ensuring transparency for all parties involved.”

One of the key distinctions Janice highlighted is the regulatory environment in Canada. “Our regulatory framework is robust and designed to protect consumers,” she says. “This includes clear guidelines on commission disclosure and the roles of buyer and seller agents.” 

The structured regulatory approach in Canada helps mitigate many of the concerns that have fueled the lawsuits in the U.S. In Canada, the existing lawsuits have not been certified as class-action to date either. 

 

Going forward

 

Janice Myers’ first 100 days as CEO of CREA have set a strong foundation for the future. Few could have stepped into this role with her level of qualification and understanding of the industry’s challenges.

Leaving the meeting, I felt confident that CREA and the industry are in capable hands. Even on issues where there might be disagreement, Myers’ openness, transparency and willingness to engage are reassuring.

I understand why those I spoke with before this interview were excited about her becoming the CEO of CREA. I’m excited to see what she can do. She’s got her work cut out for her, but all signs point to success.

 

If we do a follow-up interview with Janice Myers in 12 months, what would you hope she accomplishes in that time? Let us know in the comments.

 

Disclosure: To maintain transparency with our readers, it is important to note that CREA is an advertising partner of Real Estate Magazine. This relationship does not influence our editorial content, and CREA has never requested any specific coverage.