Tag Archives: Canadian Real Estate Association

Websites to fill vacuum for Canadian real estate listings

Canadian real estate agents will give up their lock on listings data by the end of the year, paving the way for a proliferation of U.S.-style websites that allow users to browse enhanced listings before buying a home.

The Canadian Real Estate Association has long guarded the data it generates with each sale its 100,000 members close, preferring to drive consumers toward its realtor.ca Web portal to look for listings.

Read the story in the Globe and Mail

But now, as sites such asZillow.com and Redfin.comrevolutionize the home-buying process in the United States, CREA is aiming to do the same thing in Canada. The organization is in the final stages of developing a program that will allow agents and outsiders the ability to build feature-heavy sites using its data, director Gary Zalepa Jr. said.

Realtor.ca only shows data such as price and room size. The system that powers the site contains other information such as days on market and previous sale prices, but that is not provided to a browser unless they have a real estate agent.

The loosened approach to listings is in response to growing market pressure. But the new program also comes as the Toronto Real Estate Board – the largest board in the country – is engaged an increasingly bitter battle with country’s Competition Bureau about the way it prevents its agents from creating password websites where clients can browse more comprehensive listings without help.

“The Canadian real estate industry has spent a lot of effort on keeping that data to itself,” said Butch Langlois, chief executive officer of zoocasa.com. “But I think everyone now sees how powerful it can be as a lead channel for the agents who are trying to sell the houses.”

Giving consumers more access to data means they can do more of the initial legwork on a home purchase themselves, and opens the door to lower real estate commissions. In the United States, sites that were once feared by the industry have been embraced because they drive traffic toward traditional agents.

The move could also win the association favour with the country’s Competition Bureau, which has been critical of the way some of CREA’s member boards restrict access to data.

“It’s a pretty amazing thing that will be happening,” said Zalepa Jr., an agent from Niagara-on-the-Lake who is a CREA director and the chairman of the association’s MLS Technology Council. “Whoever receives the feed will be able to layer features on top of it, which is pretty revolutionary.”

He said the listings will be opened up in three stages – large brokerages such as Royal LePage and Century 21 will be the first allowed access. Months later, the data will be directed to smaller brokers and ultimately to third parties by early next year.

While almost everyone who looks for a house in Canada uses the realtor.ca hub – it’s estimated 90 per cent of the country’s sales are originated on the system – American sites such as Zillow have exploded in popularity and have been credited with improving the home buying process by putting more information in the hands of buyers.

When Zillow burst onto the U.S. real estate scene in 2004, it was hyped as a disruptive force that would render real estate agents redundant as consumers used the site’s rich data to find and sell their own homes.

But it never had the effect some feared – commissions in the United States are about the same as when the site launched, and Zillow has changed its business model over the years to include real estate agents, who now pay a monthly subscription charge for access and also pay to have their listings featured more prominently on the site.

Investors welcomed the company to Wall Street on Wednesday, with an initial public offering that saw the company’s shares rise an unexpected 79 per cent in their first day of trading.

It’s all about getting their listings in front of buyers – millions of users browse the site’s listings every day. It maintains data on more than 100 million U.S. properties, and also provides estimated sales prices for those curious about their home’s value.

The estimation functions have generated the most buzz, and Canadian sites that have tried to replicate the feature have found it too difficult to do without resale data.

“Any Canadian website offering this feature would be flooded with traffic overnight,” said Cliff Peskin, a cofounder at buzzbuzzhome.com.

CREA has been quietly working on its plans since its members gave it the go-ahead at its annual general meeting in April. By the end of the summer, the country’s big real estate brokerages such as Royal LePage and Century 21 will be allowed to pull data from the Multiple Listing System and place it on their own websites.

Agents aren’t completely giving up control – while they will be required to push their listings to the national database, they can opt out of any distribution system. CREA will also be able to decide which sites have access to the feed.

“As a company we already have a treasure trove of residential data,” said Phil Soper, president of Brookfield Residential Real Estate Services, which operates Royal LePage. “But with more data we will be able to roll out an enhanced offering to consumers, that’s certainly true.”

The brokerages already enhance their own listings, making it relatively easy for them to absorb more listings. Century 21, for example, allows everything on its sites to be translated into several languages to make it easier for international buyers to browse the houses its agents are trying to sell.

While some of the country’s 101 real estate boards allow brokers access to the data generated by MLS, lack of consistency across the country has dissuaded any large players from trying to create an enhanced listings site to rival the real estate industry’s hub. Even under the new plan, brokers can opt out of having their listings appear on any syndicated feeds.

However, there are several companies in various stages of development that hope to fill that niche as the data becomes available. But they face one key challenge – making a profit. Zillow may be hugely popular, but it hasn’t found a way to make a consistent profit since launching in 2004. It earned $30-million last year, it indicated in its prospectus, but didn’t make any money.

“What you’re seeing now is all the smaller sites trying to position themselves to take advantage of the data that will be shared,” said Butch Langlois, chief executive officer of zoocasa.com, which has already struck deals to display data from four of the country’s biggest boards on its site. “It may be a while before everything is settled, but you’re really seeing some interesting changes in Canadian real estate.”

 

Realtors launch spring ad campaign

The Old Woman Who Lives In A Shoe had so many children, she didn’t know what to do – so she called a real estate agent to help her find a new place to live.

The Canadian Real Estate Association is relying on humour in its latest advertising campaign, opting to conscript a fairy tale character to its cause rather than hammer consumers with another set of television spots earnestly espousing the benefits of real estate agents.

Read the story at the Globe and Mail

The ads come as the industry enters its critical spring market, a time when the majority of homes in Canada are usually bought and sold. This spring, however, the country’s 100,000 professional agents are facing new threats to their business because of a deal with the Competition Bureau that has made it easier for homeowners to conduct their own sales.

In previous years, sellers needed to hire an agent to handle the whole sale process if they wanted a listing on the Multiple Listing Service, which is owned by CREA and is the main source of home sales in Canada. After the October settlement with the bureau, a seller can now have her house listed by an agent for a fee and then handle the rest of the sale themselves. For-sale-by-owner companies such as Property Guys and Grapevine have sprung up to offer assistance to home sellers who want to save money on fees.

The stakes are high: Sellers paid billions of dollars in commissions to agents last year. There were 447,010 sales on the MLS system in 2010, at an average price of $339,030. Commission rates tend to hover around 5 per cent, which implies nearly $9-billion in real estate commissions paid last year, though each agent is able to charge whatever she can command, and many consumers try to negotiate a lower rate.

There are signs that the spring season could be slower than has been seen in the past two years, as many first-time buyers have already made their move and the threat of higher interest rates – coupled with Ottawa’s elimination of 35-year insured mortgages – keeps marginal buyers out of the market.

CREA’s fall campaign focused on how agents help their clients through the sale process. The new campaign is intended to be light hearted, while still pushing the message that real estate agents provide value in a transaction.

“My old house was a little bit small, but here, lots of space,” The Old Woman Who Lives In A Shoe says in a thick accent. “My realtor a-listened to a-whatta was important to me – like schools in the area – and then he found us this place. I love it here, and so do my kids.”

Viewers are then encouraged to go online to howrealtorshelp.ca to watch a series of spots featuring the experiences of those who have bought and sold their home with the help of agents. There’s Amy and Thom, who needed to bid quickly for their dream home. Chris and Philana “tried to play the property game by themselves … [but] finally decided to enlist the help of a realtor.”

“I like their use of comedy, especially considering they are up against what has essentially been a public relations disaster over the last year,” said John Andrew, a professor at Queen’s University who specializes in real estate.

“That said, I’m not sure anyone will have any clue what the commercial is about unless they follow the Web link. I have young kids, and even I haven’t heard that nursery rhyme referenced in the last 40 years.”

CREA has launched seasonal ad campaigns twice a year since 2006, one in the fall and one in the spring. The intent of this campaign – which was put together by agency CP+B Canada – was to show how agents can help buyers and sellers through a transaction.

“We try to talk about the unique needs of consumers with a consumer-focused ad,” said Randall McCauley, CREA’s vice-president of public and government relations. “The idea is to put them in the centre of an equation – whatever their needs, there is a realtor who can meet those needs.”

NOTE: I can’t get a Youtube link to the commercial yet, but it can be found here. Meanwhile, here are a few of their other commercials.


Merrill on Canadian housing

The Canadian housing market is showing several serious signs of stress, but Bank of America Merrill Lynch says there’s no reason to believe values are set for a sharp dive.

“Valuation metrics are clearly stretched, but the usual symptoms of a tipping point are simply not there,” according to a report authored by economists Sheryl King and Ryan Bohren.

Read the full story and comments in the Globe and Mail

“Speculation is low, price expectations are cautious, home building is not excessive and most importantly the economy continues to expand steadily.”

The resale housing market has been strong through the first half of the year.

The Canadian Real Estate Association will release its national resale numbers for February Tuesday, and is expected to show stronger than usual activity as buyers continued to take advantage of record low interest rates.

(There are also some who believe buyers bought in February to secure 35-year amortizations on their mortgages, which are no longer available as of mid-March.)

The report said the structure of the Canadian mortgage market makes a U.S.-style crash unlikely, and listed four key reasons the market is unlikely to tank:

  • Mortgage insurance is explicitly guaranteed in Canada, limiting bank exposure to higher risk borrowers.
  • Recourse laws mean fewer borrowers walk away from mortgages.
  • Thirty per cent of mortgage funding is government backed, providing a stable and liquid source of financing.
  • Canadians are “relatively conservative, with leverage ratios only just matching the levels of a significantly deleveraged U.S. household.”

The report also outlined reasons Canadians should be concerned about rising prices (don’t worry, a list of reasons why not to worry follows):

  • Canadian home valuations look stretched, with “the average estimated asking rental yield at all time lows. Housing affordability looks relatively good, but will likely to decline as mortgage rates are set to rise and lending rules are tightening.”
  • Canadian home ownership rates are near record highs of close to 70 per cent, and real estate assets are near a record 38 per cent of household assets.
  • Canadian mortgage-debt-to-disposable-income reached a record high of 93 per cent (similar to the U.S.).

As promised there are three reasons to believe the market won’t crash:

Canadian home sales as a percentage of housing stock remains below the 10-year average, “suggesting the turnover is not excessively speculative.”

Housing starts in 2009 and 2010 have averaged around 160,000, “just below the natural formation rate of around 170,000.”

“Most importantly – economic conditions in Canada continue to improve. The employment levels are above pre-recession levels, wages are growing and financial conditions remain very easy.”