The past year has taken a severe toll on Canadian real estate markets, especially in vital areas such as the GTA. A new mortgage stress test, introduced in January, coupled with steadily rising mortgage rates, have put the brakes on sales volumes and prices, giving many sellers pause to consider the timing of when they will put their homes on the market, while making it difficult for buyers to upgrade to their dream home. A bit of good news arrived in August, which should empower both sellers and buyers by making it easier for them to access the recent selling prices of homes in their current neighbourhoods and areas they have eyes on moving into… if the price is right of course.
On August 23, 2018, The Supreme Court of Canada announced that it was refusing to hear an appeal by the Toronto Real Estate Board (TREB) regarding a ruling by the Federal Court of Appeal against TREB in favour of the Competition Bureau. The announcement marks the end of a lengthy legal battle, dating back to 2011, at which time the Competition Bureau ruled that TREB was in violation of the Competition Act by not allowing its members to publish home sales data on their websites. The Tribunal contends that TREB is abusing their dominant position in the markets in which they operate, by only allowing Toronto area real estate agents to provide home sales date via outdated and cumbersome methods such as by fax, email or in person. TREB argued that making such data more easily available would infringe on the privacy rights of anyone who recently bought or sold a home in the GTA. The Tribunal and the courts disagreed, ruling that TREB’s current practices stifle competition and innovation within the industry. This decision will impact access to key real estate information, not only in the GTA, but will likely have wider implications in housing markets across Canada:
“A lot of these local real estate boards were waiting to see what happened with this decision,” said John Andrew, a real estate professor at Queen’s University. “That’s going to spread to other boards across Canada. They are no longer going to try to resist this kind of demand from their own members who would like to release this kind of information and other kinds.” – CTV News
Why Did TREB Fight So Hard to Prevent Greater Public Access to Home Sales Data?
The Toronto Real Estate Board’s ostensible reason for fighting back against the Competition Bureau’s initial ruling in 2011, first to the Federal Court of Appeal and ultimately with a petition to the Supreme Court of Canada, was to protect the privacy rights of its members’ clients. TREB argued that it had not previously sought permission from home buyers and sellers, in the GTA, to publish the selling price and sales history of their homes, even on password protected virtual office websites, known as VOWs, controlled by real estate brokers. In practice, this meant that homebuyers and sellers had to go through their real estate agents to get access to current selling prices of homes in their selected neighbourhoods, as well as the sales history regarding any home they had an interest in.
This TREB protocol ensured that some of the most important data when considering buying or selling a home was kept in the hands of real estate agents, only to be doled out to their clients when they saw fit, thus adding perceived value to their services. TREB’s concern was that making this important data more readily available to the public would diminish the demand for the services of real estate agents. However, this hasn’t panned out in places like the U.S. where this data has been accessible for the past decade, and yet the demand for the professional services of licensed real estate agents to guide clients through what is for most people the biggest financial decision of their lives, the process of buying and/or selling a home.
According to Joseph Zeng, who operates HouseSigma, which uses artificial intelligence technology to estimate home values for all available listings in the GTA, this change in policy for home sales data distribution is long overdue and will not significantly diminish demand for quality real estate agents in the GTA:
Zeng said TREB’s concern was not about privacy, but about control of the market, so that only real estate agents with access to the MLS system would know the full picture of home sale prices. But he said Toronto agents have little reason to be concerned. In the U.S., where house price data have been available for 10 years, there has been no retreat from use of real estate agents, he said. – CBC
Benefits to Home Buyers in the GTA
Under the current system, any home buyer wanting to know what homes actually sold for in their target neighbourhood in the Greater Toronto Area, rather than simply what homes are listed for (which can often be misleading), will need to access the Multiple Listing Service (MLS) database, through a real estate agent or broker, where sales data for closed deals are compiled. Buyers can also access this data through local land registry offices, or their online equivalents, but these options require fees and a few hoops to jump through.
Many reputable real estate firms operating in the GTA have been in favour of opening access to information so that buyers can be better informed when making a purchase decision and welcome the change in policy that TREB will have to follow as a result the earlier Federal Court of Appeal decision. For example, Toronto real estate brokerage Realosophy has been building its online information system to include data not just about properties, but also about the neighbourhoods and local schools to provide buyers a fuller picture of where they would be living. Realosophy President, John Pasalis, was a witness before the Competition Bureau arguing that easier access to relevant information such as actual sales prices, sales history and whether a home had been flipped, pulled off the market, or re-listed would help buyers make more informed purchase decisions:
Not only will buyers be able to see what a house sold for, they’ll also see if a house just isn’t selling. “Buyers will be now able to see the entire sales history for a house—the buying history and the listing history,” Pasalis says.
“One tactic real estate agents use is if a house is taking too long to sell, they take if off the market and re-list it. What that does is it resets the ‘days on market’ so it doesn’t look like it’s been on the market that long.” If a prospective buyer’s real estate agent wasn’t diligent, they might think a house has been on the market for a week or two, when it’s really been up for sale for many months. – Maclean’s
Benefits to Toronto Area Home Sellers
Many Canadians looking to sell their home currently depend on the advice of real estate agents, who have access to all the sales data regarding what homes are selling for in their locality, to determine what price they should list their home for. Due to the Supreme Court’s refusal to hear TREB’s appeal, websites will soon be making this information much more readily available to the public, providing sellers a real working gauge to help determine their listing price. More accurate pricing, that the market will bear, will facilitate quicker sales and will empower some sellers to more easily go the route of “for sale by owner,” with less fear of misreading the market, in terms of pricing.
Full compliance, following the Supreme Court’s decision, should come into effect during the week of Oct. 22, 2018:
TREB chief executive officer John DiMichele said he “respects the decision” and noted that the board will be studying “the required next steps to ensure such information will be protected in compliance with the tribunal order,” which he noted will come into effect in 60 days if it is not modified. – CTV News
The Supreme Court’s decision will benefit both sellers and buyers by providing more accessible and accurate data, especially when folks are merely contemplating a move and want to do a quick check on what their current home might be worth and what it might cost for the dream home they want to move into.
Lauren Haw, CEO of Zoocasa, a former subsidiary of Rogers Communications and now a full-service real estate brokerage with a strong online presence that makes accessing MLS listings easier for the public, says the real value of this decision will be to help consumers better understand the market, especially at the early stages:
“People are looking at this to be some large shakeup in the industry but once consumers are at the negotiating table, they already have this information through their agents,” she said. “What this really does is ensure that Canadian consumers are better informed and educated in that early research stage when they are trying to decide if they’re ready to make a move.” – Financial Post
Hatch Supports Empowering Home Buyers and Sellers with More Information
This decision aligns with Hatch’s philosophy of putting information and savings directly into the hands and pockets of consumers, especially when it comes to buying or selling your biggest asset – your home. We know it’s been a tough year in the GTA housing market, and in the mortgage market across the country. That is why we search for the lowest mortgage rates, through our established network of lenders, and provide personalized service so that you also get mortgage terms ideally suited to your specific needs. Simply apply online with Hatch, and we’ll get cracking on your mortgage right away!