Canadian Real Estate Trends (And What the USA Can Learn)
Takeaways from the ICLV19 panel discussion.
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Our team has just come back from a great work trip to Vegas! Touching down in the 42 degree heat of the Mojave desert, we were ready to hustle at ICLV19 (Inman Connect Las Vegas 2019).
As we walked through the noisy streetscapes of consumption, we arrived at the hotel, which was appropriately named Aria. It’s as if the space was singing a solo to us, hinting at the long days ahead of conferencing.
There were quite a few fellow Canucks down in Las Vegas for the convention. So many that it justified a lecture series on “What is Driving the Canadian Real Estate Industry Today?”
The talk started off with all panel members agreeing that they have learned from the wild west of the Zillow roll out in the States, including online buying and regulations. Not to mention the housing crisis that happened in 2008. Though lessons have been learned, there is still a long way to go. The panel looked at changes happening in Canadian real estate and how an American audience might learn from those.
I decided to take some quick notes: check out the synopsis below.
Speakers
- Conrad Zurini — Broker/ Owner, Re/Max Escarpment (Hamilton/ Burlington Area)
- Paul Baron — Broker/ Owner, Century 21 Leading Edge (#1 Century 21 brokerage in the country)
- Sarah MacLennan — Director of Marketing, Liv Real Estate (Edmonton)
- Todd Shyiak — VP of Operations, Century 21 Canada (Vancouver)
Moderator:
Laura Gillespie —Director of Broker Relations at Zillow
1. Sold Data is Now Available
Data organization is on top of mind The Canadian Real Estate Association (CREA) Board of Directors has voted to add previous sold and historical data to listings.
Brokerages will be responsible for supplying this data. In an industry that has been slow to adopt technology, those who have adopted technology from the get-go are able to provide all their stats because they have systems in place; they aren’t dependant on one individual or archaic spreadsheets.
The challenge a lot of realtors were facing was that historically they felt having the price hidden was a value add for them. With this change, the cream will rise to the top as realtors engage on the same playing field.
According to the panel sold data cannot be put on public sites, but only supplied through the brokerage; which in turn will be a value add. Numbers will show who sells the most and what price point, making more information readily available on a granular level, and making it easier to know your competition.
2. Foreign Buyer Tax of 2016
Summer of 2016 saw an exponentially hot market in Vancouver. To curb this, the government decided to implement a 15% foreign buyer tax, which significantly cooled the market.
Much of the industry felt the new tax was a tad too harsh on presales. This was especially because it did not grandfather in previous contracts, where completion would land after the tax implementation.
As the tax got extended to surrounding areas in the following months, many cities saw an immediately impact. “Kelowna overnight saw a huge drop from their clients in neighbouring Alberta, whom would buy vacation rentals in the lakeside town,” Tod Shyaik explained. Coupled with the Canadian Mortgage Stress Test, people are having a harder time qualifying for a mortgage.
The impact of the foreign buyer tax on the Canadian economy has been significant. Blogger Garth Turner reported that 3% of the national economy was made up of the buying/selling of homes and commissions associated. In comparison in the US it only makes up .5% of their GDP. Though the taxation helped cool the market, general consensus was that people are still taking on debt to live in Canada, and the tax only pushed people into other markets. Smaller communities such as Hamilton even saw a drop in foreign students, as the taxation in place pushed people to purchase homes in other areas.
3. Artificial Intelligence
In an age of instant gratification, what are you doing to adapt to consumer demands?
The panel agreed that, if your digital resources such as your website is not changing and adapting to the needs of your clients, you will be left behind. Especially because repeat business makes up over half of a realtor’s overall business, it’s crucial that buyers are able to find your company from the start.
The industry is hesitant to use AI, but many are operating without information. To grow as an industry, it will be more and more important to embrace technologies such as AI.
4. Consumer Expectations
In Canada, 40% of homebuyers are under 35 — developers need to adapt to what the younger generations want in a home. Quick response time is a big one, but so is setting expectations.
LIV out of Edmonton uses live statistics, keeping ahead of the curve with instant messaging and software that makes move-in day smoother. This helps create good buyer experiences throughout.
However, be aware that many younger buyers grew up in a data-rich context. Statistics without proper backing will be dangerous; people look up reviews, check referrals, and do their due diligence, so companies need to have a strong digital presence and a clean footprint.
5. Banning of Dual Agency
Unlike in the US, Canada banned “dual agency” in 2019: realtors cannot represent both the seller and the buyer.
This has impacted how realtors do business; brokerage sizes have dwindled down to 3 or so, from the 8–10 member brokerages of before. Unfortunately for clients, this also means that brokers aren’t able to collaborate as easily.
While the new regulation is meant to help clients with transparency, it has also made it more difficult for brokers and buyers to work together. Agents are no longer allowed to work with someone you might know, as this is a grey area in the guidelines: the client needs to find another realtor.
Vancouver’s real estate market has changed a lot in recent years. An affordable 2 bedroom rent is roughly $3,100, and 40% of the buyer market is under 35. Younger generations are doing their homework and are opting to rent more, and are not always buying into the home-ownership FOMO that we saw previously.
With new restrictions in place, the changing of regulations has brought not-so-apologetic challenges to our apologetic country.
It will be interesting to see what we can continue to learn from our brothers in the South and how we can harness the power of new data to better understand our current trends to help predict future ones.
This blog was written by Kelly Hager, Spark’s Lead Account Executive. She and the team pulled off an amazing week at Inman Las Vegas and brought back some incredible takeaways.