I tend to spend money on things I don’t know how or want to do myself – car repairs, IT problems, occasional catering or housekeeping, etc. I kind of feel the same way about buying real estate.
People may kvetch that real estate agents are expensive, but for most of us, a professional realtor saves a world of headache, frees you up from details of which you’d rather not have to keep track, and smooths the way on what can otherwise be a rocky road. I’m not knocking good real estate agents.
But, I’m not sure I agree with the recent TREB announcement. After revealing a couple weeks ago that GTA sales dropped 18% to a little more than 92,000 in 2017 over a record-setting 2016, TREB decided it’s the government’s fault. “Much of the sales volatility was brought about government policy decisions,” said president Tim Syrianos in a statement.
While simultaneously stipulating that foreign buyers aren’t a significant factor in the Toronto market, they’re blaming the foreign buyers’ tax for creating a fearful buying environment: “…the Ontario Fair Housing Plan, which included a foreign buyer tax, had a marked psychological impact on the marketplace.”
The 15% tax was introduced last April. By the middle of the year, home prices had declined down to an average of about a million. But condo prices haven’t since been affected, with an average December price of over a half a million, up 14.4%.
It’s likely the new stress test regulations, which require buyers to qualify for their mortgages even if there’s a rate hike of up to 2%, may well be having an effect. As much as I am not a fan of government regulations in general, it’s hard to quibble too much with this one.
Sometimes we do need saving from ourselves, and if you can’t handle a 2% increase, you’re probably buying too much house. The Bank of Canada estimates about 10% of buyers will be disqualified; the Canadian Real Estate Association (CREA) last month forecasted a 2.2% decline in home prices in Ontario this year.
I think TREB is making a PR mistake. With homes virtually selling themselves in the last few years, many people have been cultivating the opinion that real estate agents are overpaid for all the tough marketing work they no longer have to do.
Relegated to the role of deal-administrator and increasingly demanding of clients that their homes be professionally cleaned, polished and staged, they’ve begun to feel a backlash. The Competition Tribunal ruling that TREB was guilty of anti-competitive acts didn’t do them any favours, and the decision was recently upheld in the Federal Court of Appeal.
The growth of online for-sale-by-owner sites continues to challenge the old school ways. All you have to do is look at Lyft and Airbnb to know who’s going to win that one.
It seems unlikely to me that the federal regulations are responsible for a drop in single-family home prices but haven’t affected condo sales, where foreign buyers are likely as big if not an even bigger factor. They may be a factor in the super-luxury market as well, but that isn’t what affects the general buying public, those responsible for the 18% drop.
I might even be able to muster an argument that the surge of new listings contributed to the price decline. What seems more likely is that we were simply experiencing market fatigue. Year after year of headlines screaming at us, we just needed a break from the frenzy.
TREB’s statement doesn’t give people enough credit. Anyone interested in the housing market is reading the news, and in these hyper-competitive times of free online content, nothing is strictly news.
Everything comes with an analysis and a back story. We’re very well informed. Maybe the 2016 Toronto real estate market was less eventful than in 2016, but there was still lots to read. People are quite capable of forming their own opinions, and I don’t think likely to panic over a 15% tax that doesn’t affect them.
TREB’s statement comes off as self-interested. I think the board needs to look inward now, and work towards creating a new image for their members that is collaborative and less profit-focused.
As “peak millennials” hit the marketplace, they’re going to have to appeal to a demographic that cares more about work-life balance than extravagance. They’re savvy, and they’re not going to respond to old school tactics that, like the homes they’re selling, are too polished or too staged.
Real estate agents have value, there’s no question. A home purchase has a steep learning curve with lots of room for costly mistakes. Without a professional guide, it can be a nervous breakdown in the making. But the board that represents them needs to get with the times.