Home sales are falling fast, but the problem isn’t with record high prices - Macleans.ca
 

Home sales are falling fast, but the problem isn’t with record high prices

Realtors say: blame it on the sunshine


 

AP Photo/Ted S. Warren

Across Canada the housing market took a beating in July, but the only thing more prevalent than the “for sale” signs gathering dust everywhere were excuses for why buyers have suddenly vanished.

In Toronto, July sales fell 34 per cent. They were down by 42 per cent in Calgary. And in Vancouver and the lower mainland sales plunged by around 45 per cent. If those watching the housing market thought sky-high prices were to blame, though, realtors were quick to correct them.

The Fraser Valley Real Estate Board said “beautiful weather” across B.C.’s lower mainland last month kept buyers away. That was apparently also the case in Winnipeg, where sales fell 13 per cent from the year before. “With the weather way better than last July—and maybe people thinking more about some sun, sand and surf rather than listing and selling—the numbers don’t look all that bad,” the city’s real estate board said. It wasn’t just Mother Nature conspiring to cool the market. Many realtors blamed rising interest rates for the slowdown. Meanwhile, realtors in Calgary said sales fell because the province is “lagging” the rest of the country in its recovery, despite the fact Alberta has the third-lowest unemployment rate in Canada.

But in the eyes of realtors in B.C. and Ontario, the biggest culprit by far was the new Harmonized Sales Tax, introduced at the start of July. A Royal LePage survey of 765 realtors in the two provinces found 46.7 per cent had heard comments from buyers and sellers about the tax, leading it to conclude the HST has done the most damage—despite the fact the HST doesn’t apply to resale homes.

Even as the Canadian Real Estate Association is forced to backtrack on its sales predictions for 2010—in February it said Canada would end the year up 13.3 per cent, it now says sales will fall 1.2 per cent—the industry has spun the declines as a return to a more balanced market. But with buyers nowhere to be found, and prices still at record highs, chances are it’s going to get a lot harder for realtors to find excuses in the months to come.


 

Home sales are falling fast, but the problem isn’t with record high prices

  1. Real Estate Boards.
    Realtors.
    They've got it all figured out.
    I gotta say, if and when I sell my house, I will certainly attempt a private sale before I offer up a commission to these carnies.

  2. I don't believe a word that any Real Estate Board says. They will say anything to ensure higher prices for homes, even when they are not warranted.

    I'm with you danby. Private sale for me too.

  3. Great article, I was talking to a friend about the same topic not too long ago, realtors will blame everything but the fact that housing is OVERPRICED. I guess buyers know better.

  4. The market is crashing. RE agents are in total denial.

    • Oh, I'm sure they know exactly what's happening. But it would not be to their advantage to come out and say it.

  5. CREA – a self-serving organization whose sole purpose is to get us to spend more money than we can afford to spend on houses that are worth less than what they are listed for. I'd trust an economist's analysis of the market long before I'd believe the analysis of any real estate board.

    http://viableopposition.blogspot.com/

    • You mean the people that make money by ensuring the highest price are not looking out for the buyer? I don't understand …

  6. Interesting article.

  7. The bubble has burst and prices will continue to decline.
    Smart people are renting now.

  8. When my mortgage broker told me that the average mortgage he was doing 6 months ago was $900,000 I knew it was time to get out. Sold my place with a new listing service that sells classified ads on Realtor.ca (www.homebuyandsell.com – great service!) and saved over $30,000 in commissions to boot. Will rent for a couple of years, then vulch from those living on borrowed time . . .

  9. There exists a RIVER IN EGYPT, full of realtors and real estate investors who in their boat, the M.V. PollyAnna, wear their Rose-Coloured sunglasses, and their expensive suits, while they watch for a REBOUND on RealEstate prices on their CRACKberries!

    So what is the river full of realtors called?

    DE-NILE!

  10. When real estate agents say they are " Brokers of record" are they talking about their criminal record?

  11. I too will sell my house privately, the thought of paying these leeches a dime is more than I can stand.

  12. I'm actually surprised at the level of misinformed bile pointed at the Realtors; I mean I know it's out there, but on a more enlightened blog such as Macleans… I just expected more.

    It's interesting that people will not hesitate to have a mechanic fix their car, a dentist their teeth, of a lawyer for legal issues, but when it comes to your largest single asset — somehow Realtors are doing a job that ANYONE can do. The stats are clearly otherwise. On the average (and yes, I realize some people do better than others), a private sale takes far longer to sell, and sells for less NET money in your pocket had you paid a Realtor to sell it for you. I wish I could find the stats, they must be available on the web but I cannot find them quickly (and I'm running out the door, sorry).

    I wish you the best of luck in your private home sale, but the reality is a top Realtor is worth every dollar. Find me the facts on a reputable website that say otherwise.

    • Ummm I'm thinking that with a name like 'Realist' your a realtor? In my experience I have done quite well selling privately and with a realtor. The only time I use one is when I am too busy with work to sell one personally and their fees are exorbitant to say the least.

  13. true, the HST is not on the resale home but it is on your lawyer's fees re all the work they do getting you the home or helping you sell it and the title searches, land transfer taxes, etc.. The HST is also on the realtor's commission AND the HST is also on the moving company fees, etc. It's a whole new bunch of taxes that makes buying or selling a home more prohibitive.

  14. With all the bad news coming out of the US Real Estate market, it was amazing that Canadian Real Estate continued to remain hot for so long.

  15. I haven't seen one comment regarding the new mortgage preapproval requirements. Having to be able to qualify for a fixed 5 year term, and putting down 20 % of the house price has severely affected the ability of new buyers to enter the market. My house is up for private sale in Dawson Creek, but currently the market is flat ( private and realtor ). However, as the oil and gas sector is all important here, home sales pick up in the fall and winter, when that sector becomes more active.

    • The 20% down only applies when you are getting an second/investment property.

      You can still purchase your principal residence with 5% down (but you have to buy insurance with CMHC or a private insurer).

      I don't know how much the requirement to qualify for the 5-year fixed rate affects sales, since most people go for a fixed mortgage anyway.

      We are looking at buying our first home in 6 months or so, and I don't think either of those factors is going to get in the way of getting the home we want.

      • This is awesome to know! Thanks.

  16. I agree with that Torpedo, a lot of the market was motivated by young and sometimes foolish buyers that would sign on to any deal if they just had to get that property. The new requirements have to have impacted the market in a big way.

  17. I'm finding the Realtor bashing on this thread to be quite distasteful. It is not warranted at all. The common theme of distaste for Agents seems to be more with the "persona" of Agents. I get it. I would suggest this "persona" is a thing of the past. An Agent's "value" and fees move with the market… and the market has changed.

    There are a plethora of choices to Sell your home in Canada. Good Agents are worth every penny they earn. 50% of a Listing fee goes to a Buyer Agent with the balance going to staging, photography, marketing, advertising, insurance, fees, etc., Add on overhead and (gasp!) some kind of profit to live on…

    And why does 92% of the Buying public use an Agent to help them find a home??? But become an expert when it comes to Selling?

    Agents and Real Estate Boards do not control housing pricing any more than they control the Weather. The market determines pricing.

    You have a choice. So stop maligning the Real Estate profession. Talk with your actions.

    • Hey "anon agent"! Not warranted? Not warranted!!?

      I suspect that agents try to prevent buyers from being diligent on the biggest financial committments of their lives. How many times have you advised a potential buyer to hire a house inspector that DOES NOT make his living from real estate agent referrals? Or to have a mold inspection done? A sewer line inspection? Plumbing, electrical and framing compliance inspections? A foundation assessed? A square footage verification? A check that the envelope is thick enough to prevent a mold infestation?

      One "inspector" that a realtor tried to get me to pay for claimed water marks did not indicate a moisture problem, that severely curled shingles were good for 5 years, that a poorly finished basement "was cleary done been by a professional", that the footage was correct when it was exaggerated by 10%. Think about that. Gross negligence or deception by the agent and the inspector on the most basic of facts. That agent had 30 years of experience. The inspector had 20.

      So, perhaps some harsh opinions are warranted.

  18. Hey "anon agent"!

    Much of the criticism is at the board, which in my personal opinion, has repeatedly and consistently shown that is more focused on generating or maintaining sales momentum than on accurately reporting what is happening and the likely reasons for it.

    With respect to commissions, the "cost of sales" could be far lower if the listing services were publicly accessible. The problem with real estate, as a business, is that the Internet has the capacity to significantly reduce agent's (and other 3rd parties) invovlement in the sales process, which will significantly reduce comissions and thus revenue streams of real estate companies. The board acts in ways that make me suspect it wants to prevent sellers and buyers from leveraging the Internet to reduce the costs of selling and buying real estate. That sort of thing upsets people who have to work a very long time to bring home the $30,000 that they have to pay as commission (on average).

    • Boards simply report on what has already happened with some kind of prediction for the immediate future. They have no motive or ability to report statistics any other way than with accuracy. Accurate predictions? That is an oxymoron.

      There is a plethora of publicly accessible listing services. 10 seconds on your favourite search engine and your ala carte menu appears. They are largely unregulated and subject to gross inaccuracy. (Via malfescence or ignorance…) So caveat emptor people.

      What should be considered is the NET difference in Selling privately vs with an Agent. I pay my accountant $800 for my personal tax return services. I could get it done for $80. But he has saved me ~$32,000 in the last 3 years because he is one of the best at what he does.

      Let's be honest. What's really at play here is the Selling public does not feel Listing Agents are worth what they are preceived to be paid. (Ironically the Buying public is very non-vocal about their use of Buyer Agents?) Good Agents deliver good value and "net" Sellers a greater return on average. Of the 99,000 Agents in Canada, there are likely a few that don't deliver this value. Obvious! Choose wisely.

  19. Hey everyone out there who hates Realtors and the industry they belong to as much as I do.

    Read my article written by Jason Kirby on April 1, 2010. I tell it like it is.

    Also, I sold the house myself without a money-grubbing realtor and their out of control commission rates! Saved myself over 16k.

    When the market collapses, and it will, maybe all the money-grubbers can go back to selling hamburgers for $6 per hour. It is all they deserve!

  20. I am a Realtor and I support anyone who wants to sell their home themselves. Heck, I even bring buyers around to them if the property meets my client's needs – I figure the commission will take care of itself.

    For the 80-90% of people who are not comfortable marketing their own home, a good Realtor earns their keep. Sure there are bad Realtors out there, bent only on making their next commission cheque, just like there's lousy doctors, dentists and airline pilots (well, maybe not pilots). There's lousy clients too who think we are overpaid for the work we do but neglect to understand the costs and risks we assume as agents – risks even your lawyer doesn't take on, despite what the Property Guy's say.

    I applaud Robert/Jason above for saving himself $16k but I also ask him how much time and money he spent marketing his home, is he confident he got market value for it and who's going to stand between him and the buyer if that wet basement or dry well rears its ugly head and the buyer comes calling? Not his lawyer – well maybe for $300/hr on top of the court settlement R/J will have to pay. That $16K will go mighty fast…