This morning, the Bank of Canada (BoC) surprised the market by announcing a 50 basis point (bps) cut in its benchmark interest rate, bringing it down from 4.25 per cent to 3.75 per cent. As homeowners and potential buyers digest this news, the primary question on many minds is how this will impact mortgages, real estate, inflation and the broader economy.

Here’s a breakdown of what the rate cut could mean, with a focus on the housing market, mortgage renewals and the wider financial landscape.

Why a rate cut might not be all good news

At first glance, the BoC’s 50 bps rate cut might seem like positive news for borrowers. Lower interest rates generally translate to cheaper borrowing costs, which could help prospective homeowners and businesses. However, such a rate cut may not be a sign of economic health.

Often, when central banks cut rates significantly, it’s because they anticipate economic challenges ahead. In this case, the rate cut could signal concerns about a looming slowdown or potential recession in Canada. A recession could lead to deflationary risks for some parts of Canada’s economy, and when consumers feel prices are falling, they stop spending and wait for better prices. This fear is especially real outside of the housing market.

Within the housing market, we see that shelter inflation is a primary contributor to inflation in Canada, according to the BoC’s recent Monetary Policy Report, released with today’s interest rate cut. This inflationary pressure from rent and mortgage interest costs can be observed below in the CPI component breakdown. Especially worth noting is that “House price related services” have been ice-cold for the better part of two years now. Realtor commissions remain at historic lows, and the BoC could be gaining confidence that the market will not overheat in response to rate cuts.

Though the lower rate will reduce the cost of borrowing, it also suggests that the BoC is attempting to stimulate a flagging economy. While homeowners may see some relief in their monthly payments, this could be overshadowed by rising unemployment or weaker economic activity if a downturn materializes. RBC noted this reality very directly in a recent brief that characterized retail spending as “abysmal”: 

Effect on inflation due to mortgage renewals

While the BoC has cut its interest rate, inflation continues to be a concern, partly due to mortgage renewals at higher rates. Tiff Macklem, the BoC’s governor, mentioned they’re equally concerned about the risk of deflation and inflation. If we don’t see further reduction, mortgage rates could keep upward pressure on inflation into 2025 and 2026.

From mid-2020 to early 2022, Canadian mortgage rates were exceptionally low, prompting a surge in both new mortgages and refinances. As a result, a large proportion of these mortgages — about 60 per cent — are set to renew in 2025 and 2026. With today’s overnight rate now standing at 3.75 per cent, homeowners renewing their mortgages will face significantly higher payments than they did during the era of 0.25 per cent overnight rates. 

This situation has indirect implications for inflation. Higher monthly mortgage payments reduce disposable income for other goods and services, potentially slowing consumer spending and easing some inflationary pressure. However, the “base effect” comes into play, as the shift from historically low interest rates to the current elevated levels still poses a financial strain for many households. Even with the recent cut, the elevated rates for renewed mortgages will continue contributing to inflationary pressure in the Canadian economy — particularly through rising housing costs.

Bond yields control fixed-rate mortgages, not the BoC

A common misconception is that the BoC directly controls all mortgage rates. While it does influence variable mortgage rates, the majority of Canadians who opt for fixed-rate mortgages are affected more by bond yields than by the BoC’s overnight rate. Fixed-rate mortgages are very popular and closely tied to the performance of government bonds, especially the five-year one, which has been on a declining trend since April 2024.

As it stands, the bond market seems to be pricing in fewer cuts in the future, though there’s likely a bit of myopia toward the market as a result of the United States election. The market likely doesn’t anticipate any significant actions from the Federal Reserve prior to the election, as it could become too politicized. (In fact, it already seems to be.)

This means that we’ll likely need to wait until the U.S. election is over for a real idea of what will happen with bond yields and interest rates in 2025. To get an understanding of this, it’s very important to think about how the BoC monitors Federal Reserve activity. 

The importance of U.S. Federal Reserve decisions

In light of the BoC’s 50 bps cut, the interplay between Canadian and U.S. monetary policy becomes even more significant. The U.S. Federal Reserve plays a crucial role in shaping the broader North American economic landscape. Since the Canadian and U.S. economies are closely linked, the BoC must carefully consider Federal Reserve actions to avoid a widening policy gap. If the BoC continues cutting rates aggressively while the Federal Reserve holds rates steady or raises them, it risks devaluing the Canadian dollar against the U.S. dollar, because the Canadian currency would have a lower “return” — as measured by its interest rate.

Since we purchase most of our imports in USD, a weaker CAD makes imports from the U.S. more expensive, which could drive up inflation in Canada — a risk that the BoC is keen to avoid. This is why, despite today’s cut, the BoC will remain cautious and closely watch the Federal Reserve’s decisions moving forward. The bank’s goal is to maintain a balance, ensuring that the Canadian economy stays competitive without letting inflation rise uncontrollably due to a depreciating currency.

One key byproduct in this regard is that the BoC observed exports becoming an increasing contributor to Canadian GDP. A weaker GDP could support that notion, but we don’t have a significant export-based economy to capitalize on that reality as we have in past recessions, where Canada was a larger exporter. 

A recession could help reduce inflation

Though it may seem counterintuitive, a mild recession could keep inflation at more manageable levels. Economic slowdowns typically reduce demand for goods and services, which can ease price pressures. According to economists like CIBC’s Benjamin Tal, recessions are often an inevitable part of the economic cycle and can play a role in controlling inflation. This is why Tal often states that when given the choice between inflation and a recession, the BoC will choose a recession every time. 

The BoC may be willing to allow a controlled recession if it helps bring inflation closer to its target range. While Macklem did mention in his press release question period that he felt he could stick the landing, time will tell if it’s possible. A recession would result in short-term economic hardship but has historically proven as necessary to restore balance in the economy and ensure long-term stability. This is especially true in economic setups where a risk of rising inflation might be present — and Macklem made it clear that he’s just as worried about a return of inflation as he is about deflation/recession. 

How mortgage holders and market activity will be affected

For those with variable-rate mortgages, the 50 bps rate cut will bring some immediate relief. Variable-rate mortgage holders have seen their payments increase significantly over the past year due to previous rate hikes. With the overnight rate down 50 bps, these borrowers can expect their monthly payments to decrease slightly, offering some breathing room in their budgets. Static-payment variable rate holders will see more principal paid each month. 

In this regard, the BoC can really only play to the supply side of the market by easing pressure on existing mortgage holders, reducing the likelihood that they sell their property. Because variable rates are priced higher than fixed rates in today’s market, a reduction in variable rates doesn’t “add” any buying power to the market. If buyers needed a lower rate to get more buying power, they’d have used the fixed rate. Therefore, the bond market is more in control of the demand curve in Canada through fixed-rate mortgage pricing. 

Lower interest rates typically boost housing market activity by making borrowing cheaper. However, with housing prices already elevated in many parts of Canada, today’s rate cut may not be enough to spur significant increases in homeownership, especially with the stress test still in place and most buyers opting for two-, three- or five-year fixed-rate mortgages.

Additionally, the overall economic uncertainty caused by the rate cut may cause potential buyers to remain cautious. While borrowing costs will drop, concerns about a slowing economy or job losses could temper enthusiasm for new home purchases in the short term. Many market participants seem to be adopting a “wait and see” approach, to wait even if rates continue falling, and to better understand if there are risks under the surface. 

The BoC’s decision to cut interest rates by 50 bps, bringing the overnight rate to 3.75 per cent, offers both opportunities and challenges for Canadians. While variable-rate mortgage holders will see some immediate relief, those buying with fixed-rate mortgages might not benefit as much, this early.

The broader economic implications, including potential recession risks and inflation concerns, mean that this rate cut is not all good news. Realtors, homeowners and prospective buyers should carefully consider the broader economic context as they plan their financial futures.

As a realtor, you juggle everything from client relationships, crafting and implementing marketing strategies, handling endless paperwork and trying to balance both work and life — often all at once. Cue the overwhelm!

What if there was a way to work smarter, not harder? The secret to tackling overwhelm is outsourcing.

Embracing outsourcing means you can streamline operations, save valuable time and focus on what you do best: selling properties. Let’s explore how outsourcing can transform your real estate business.

Common real estate challenges

Outsourcing alleviates these common challenges in real estate, empowering you to grow your business while focusing on what truly matters.

1. Time constraints: Long hours managing multiple clients, listings, open houses and more.

2. Administrative overload: Paperwork and scheduling consume your energy.

3. Market competition: Standing out requires maximizing your productivity.

Why outsourcing will transform your business

Here’s why your business can be transformed through outsourcing.

1. Time is money: Focus on what matters. Your time is invaluable. Prioritize activities that drive your sales, such as client engagement and closing deals. By outsourcing tasks like scheduling, marketing and paperwork, you can shift your focus to high-value actions that enhance your business performance.

With the global outsourcing market growing to over $700 billion (according to a report from Deloitte), now is the ideal time to leverage this resource for your business growth.

2. Access to specialized skills. You may not always have expertise in areas like marketing or paperwork management. The good news is that outsourcing gives you access to specialized skills without the overhead of full-time staff.

Many businesses that outsource their marketing experience enhanced engagement and lead generation.

3. Scalability without stress. Outsourcing offers flexibility as your business expands, allowing you to adapt to increased demand without long-term commitments.

During peak seasons, businesses can often manage significantly more clients while maintaining high-quality service by outsourcing tasks.

4. Elevating your client experience. Reclaim valuable time to focus on delivering exceptional service to your clients. With a tech-savvy virtual assistant (VA) managing your administrative tasks, your CRM and automation systems will operate seamlessly, leading to enhanced client satisfaction.

This personalized approach can generate better reviews and increase referrals. HubSpot found that a 5.0 per cent improvement in customer retention can boost profits by as much as 25 per cent, highlighting the significant impact of excellent customer care.

5. Cost-efficient and productive. Full-time staff can be costly, but outsourcing provides similar productivity at a fraction of the cost. According to a GlobalStrategic.com analysis, approximately 37 per cent of small businesses outsource at least one business process, showcasing a growing trend toward efficiency.

The same source notes that in the real estate sector, 44 per cent of firms choose to outsource document or back-office-related tasks, allowing them to effectively manage repetitive work without staffing concerns.

Outsourcing solutions

The following tasks and tools will be key outsourcing solutions for your business.

1. Administrative tasks: Appointment scheduling, email management, paperwork filing

2. Marketing: Social media management, email campaigns, property listings

3. Lead generation: Researching and following up with potential clients

4. Customer support: Handling inquiries and providing updates

5. Data entry: Maintaining databases and client records

6. Managing your CRM: Managing client relationship systems

Navigating regulatory challenges

Stay up-to-date on market statistics and regulations, such as the British Columbia Real Estate Development Marketing Act or similar acts for your region. Outsourcing compliance research helps you maintain credibility while focusing on client relationships.

Real-life success story: Sarah, a realtor from Toronto

Sarah, a Toronto-based realtor client of ours, transformed her business through outsourcing. Before she began the process, Sarah found herself overwhelmed, working long hours just to keep up with her responsibilities. Once she integrated VAs and online business managers into her operations, her business transformed:

• Enhanced client satisfaction. Quicker response times and better task management led to positive feedback, strengthening Sarah’s reputation in the market.
• Streamlined operations. Delegating tasks allowed Sarah to optimize her workflow, focusing more on high-priority tasks and strategic growth.
• Stronger networking opportunities. Increased referrals created new connections and potential collaborations with other professionals in the industry.
• Sustainable growth. The efficiency gained through delegation positioned Sarah for long-term success, enabling her to scale her business effectively.
• Focused marketing efforts. The time saved allowed Sarah to invest in targeted marketing strategies, reaching a wider audience and attracting more qualified leads.

Sarah’s success story, based on her detailed measurements and tracking, highlights the potential benefits you could achieve through outsourcing.

Imagine what you could accomplish with the right support! Here’s how to get started.

How to start outsourcing

1. Identify time-consuming tasks. Track your activities for a week to pinpoint areas ripe for outsourcing.

2. Set clear goals. Define what you want to achieve through outsourcing, such as 20 per cent more client interactions.

3. Start small. Begin with one or two tasks to get comfortable with the process.

4. Choose the right partner. Research and interview potential service providers or VAs.

5. Establish clear processes. Create detailed guidelines for outsourced tasks to ensure consistency.

6. Monitor and adjust. Regularly review the effectiveness of your outsourcing strategy and make adjustments as needed.

Overcoming common concerns

Be aware of the following common concerns and ways to overcome them:

• Quality control. Establish clear expectations and regular check-ins to maintain high standards.
• Data security. Use secure platforms and ensure your outsourcing partners follow data protection protocols.
• Cost concerns. Start with a small investment and scale up as you see returns.

Outsourcing goes beyond saving time; it’s about maximizing your efficiency and focusing on what truly matters — selling homes and building client relationships. By delegating non-sales activities, you regain time and energy to elevate your real estate success.

Take a moment to assess your daily tasks. Consider how outsourcing can help you scale your business and thrive in today’s competitive market. Remember, successful realtors like Sarah have transformed their businesses through strategic outsourcing. You can too.

Start small, focus on high-impact areas and watch your productivity soar. With the right outsourcing strategy, you’ll not only work smarter but also achieve the growth and success you’ve been aiming for in your real estate career.

In the rush to spin out the Canadian Real Estate Association (CREA)’s Realtor.ca as a taxable entity capable of generating revenues, I can’t help but wonder if we’re eliminating the very reason for its continued success.

Why have Canadians made Realtor.ca the leading real estate advertising platform in the country?

Spoiler alert, it’s not the technology. According to CREA, the three primary reasons Realtor.ca has held strong as the leading real estate platform for consumers across the country are trust, transparency, and complete lack of bias in how information on the platform is presented.

There is trust that Realtor.ca presents a complete picture, or as complete a picture as possible, of the real estate market across the country.

There is a belief that the information provided is done so in a transparent manner with more information, such as sold data, coming online as consumers demand it — without the requirement to set up an account or to provide any user information.

There is a belief that the information is unbiased and represents the source of truth for Canadian real estate markets.

I believe that the nature of Realtor.ca — owned by CREA and part of a not-for-profit, advertising-free and account requirement-free entity — is the very thing that has created a bond of trust with Canadian consumers. Realtor.ca is not revenue-driven or revenue-motivated. I believe this is what makes it very different from every other platform out there, and ultimately what makes it important to Canadians.

Revenue generation: Comes at a cost to the existing strong consumer relationship

Changing the nature of Realtor.ca to mirror that of every other for-profit, revenue-driven platform out there could be a fatal mistake. It’s all well and good that members might save a few bucks if it can be spun out and made to generate its own revenue, but at what cost to the relationship Realtor.ca has built with the consumer over the last many years?

The introduction of advertising, both direct and indirect for the purpose of generating ancillary referral revenue and selling user data, will fundamentally change the user experience that Canadians seek from Realtor.ca. Consumers will not only see but feel this change, and the touchstones of market differentiation that Realtor.ca currently owes for its success could dissipate.

There are other issues with spinning out Realtor.ca. These will be debated, hopefully, at the upcoming CREA SGM, but they are largely mechanical and logistical in nature. My concern is more existential. 

Just to be clear — what’s created a bond of trust with our consumers, and the literal foundation of our success, is that Realtor.ca is not revenue-driven and that there’s no motivation to create revenue from the consumer.

In spinning out Realtor.ca as a taxable entity, are we risking transforming our iconic site into just another platform driven by self-interest?

The British Columbia election is making headlines and capturing attention throughout the province, yet the proposed solutions to address one of the most pressing issues — housing affordability — have largely missed the mark.

Conservative plans: ‘Rustad Rebate’, ‘Get BC Building’

Let’s start with the Conservatives’ Rustad Rebate, a $3,000 monthly credit on rent or mortgage interest costs. While well-intentioned, this rebate seems to be a short-term fix that skirts around the larger systemic issues plaguing the housing market. This plan risks inflating property values further by offering rebates instead of addressing the root causes of high housing costs. The rebate could also inadvertently increase demand without a corresponding surge in supply, thus exacerbating the affordability issue it aims to alleviate. 

To be fair, the Conservatives have offered other housing solutions beyond the Rustad Rebate in the form of the “Get BC Building” plan. 

The costed platform and details of this plan were revealed just days before the election, leaving experts little time to understand the long-term implications of the proposed initiatives. Moreover, the platform sets an ambitious and unrealistic GDP growth target of 5.4 per cent, along with a deficit comparable to the one presented by the NDP. A lot of the content focuses on criticizing the NDP rather than providing further details on potential solutions.

Rustad’s proposal to develop new towns certainly captures attention and sparks creativity. But, many British Columbians, including myself, are eager to learn more specifics about how the details of this ambitious plan would be implemented. 

NDP plans: Cover 40% of a home’s cost for new buyers, tax cut & more homes for middle-class

On the NDP front, David Eby’s pledge to cover 40 per cent of a home’s cost for new buyers is similarly problematic, essentially transforming the NDP into the very speculators they criticize. 

While it’s designed to simplify entry into the housing market, this may also result in higher home prices, as sellers anticipate greater purchasing power from buyers. This also only targets a small group within the larger housing market in B.C. – first-time buyers. While we can all agree that first-time buyers are having an increasingly hard time getting into the market, this excludes equally important groups like young couples looking to start a family and seniors looking to downsize.

The plan also ties homeowners to long-term financial commitments that could become a burden if personal circumstances shift, echoing concerns from economic analysts about its potential to create new forms of financial insecurity. 

The NDP’s plan, combined with the Federal Liberals, could also significantly impact our housing market by encouraging potential buyers to pursue short-term incentives for homes that may ultimately exceed their long-term financial capabilities.

Both strategies reflect a trend toward using public funds to bring down housing costs. However, critics argue that these financial interventions don’t tackle fundamental issues such as property taxes and the cost of developing a project, which stand as significant barriers. 

Beyond Eby’s big idea to fund housing costs for new buyers, the NDP proposed a $1,000 boost for household budgets through a middle-class tax cut, along with a plan to intensify efforts against speculators and build 300,000 new homes for the middle class, which appear to be a fresh spin on their earlier policies. 

Green plans: Rental support & emergency housing

And lastly, the Green Party’s focus on rental support and emergency housing clearly leans on the public sector to boost housing supply and protect affordable rentals. While the public sector definitely has a role in making housing more affordable, we can’t forget about helping the private sector too. This approach overlooks a chance to come up with strong, creative policies that could connect with a wider audience looking for real change.  

Many of these electoral solutions fail to address the root causes of the complex housing affordability crisis in the region. From what we can see, even when they do acknowledge these underlying issues, they often lack specific details on how the party plans to implement effective measures.

Key solutions missing from the discussion include addressing the skilled worker shortage affecting home construction, slowing the growth of housing prices to allow wages to catch up, collecting wealth windfalls from zoning changes to fund affordable housing and implementing strategies to control costs in the regular housing market.

Ultimately, these housing strategies, though well-intentioned, risk becoming costly stopgaps. True progress demands policies that not only offer immediate relief but also pave the way for sustainable growth in our housing supply. B.C.’s housing crisis calls for a balanced approach that includes fiscal responsibility, market dynamics and long-term planning — a challenge that remains unmet in the current political discourse.

The attachment many Canadians have to their family cottage runs deep. These properties often become central to family traditions and legacies, passed down from generation to generation. But with the recent capital gains tax changes, this treasured inheritance could come with a hefty price tag.

The change and the concern

Effective June 25, 2024, the capital gains inclusion rate increased from 50 per cent to 66.67 per cent, except for the first $250,000 of net gains per year for individuals and some trusts, which are included in taxable income at 50 per cent.

This change raises significant concerns for families owning cottages or other secondary properties. Property values have soared, and many Canadians face an unpleasant reality: passing down the family cottage might result in a sizeable tax burden for their heirs.

When I work with families concerned about wealth transfer, I’ve seen firsthand how the new rules have impacted planning strategies. One increasingly popular solution is permanent life insurance, particularly joint last-to-die policies, which can offer a tax-efficient way to pay the tax bill.

Understanding capital gains taxation 

When someone passes away, their assets, including real estate other than their primary residence, could be subject to capital gains taxes. Capital gains are calculated by subtracting the property’s adjusted cost base (which includes the original purchase price, eligible expenses and capital improvements) from its fair market value at the time of death.

With the new inclusion rate, two-thirds of that gain is now considered taxable income, less the first $250,000 of net gains. For a family cottage purchased or inherited decades ago and now worth millions, this could mean hundreds of thousands of dollars in taxes.

The role of joint last-to-die life insurance

For many of my clients with spouses or partners, permanent joint last-to-die life insurance has become the obvious answer to this problem. It’s a relatively affordable solution that allows couples to preserve the value of their assets while avoiding the need to sell properties that hold significant sentimental value.

These policies insure both spouses but pay out only after the second spouse passes away, which is when capital gains taxes on their assets typically become due. The tax-free death benefit from the policy can be used to cover the capital gains taxes, ensuring your client’s heirs aren’t left scrambling to find the funds.

Strategy in practice 

Let’s look at an example. John and Susan, a couple in their late 60s, had owned a cottage in Muskoka for more than 30 years. It was their dream to pass the cottage down to their two adult children, who grew up spending summers there and now have children of their own who are forming cottage memories. 

The property, originally purchased for $300,000, now has a fair market value of $2 million. When John and Susan learned about the 2024 changes to the capital gains tax rules, they were shocked by the serious tax burden this would create for their children.

• Since the property appreciated by $1.7 million, the estate would be responsible for paying capital gains tax on this unrealized gain upon the second parent’s death. 
• The first $250,000 of the gain would be subject to a 50 per cent inclusion rate. For the remaining $1.45 million, 66.67 per cent would be included in taxable income.
• The total taxable capital gain would be approximately $1.1 million, resulting in an estimated tax bill of over $580,000, assuming Ontario’s highest marginal tax rate of 53.53 per cent.

This staggering amount could force their children into selling the beloved cottage to cover the taxes — something John and Susan are determined to avoid.

Working with their insurance advisor, John and Susan purchased a joint last-to-die life insurance policy with a death benefit of $400,000, intended to cover the bulk of the anticipated tax liability. 

The peace of mind from this type of planning is invaluable. Now, John and Susan can focus on creating more memories at the cottage, knowing it will remain in the family for future generations to enjoy.

Advise your clients to review their estate plan

The capital gains inclusion rate increase is a wake-up call for many Canadians. 

Life insurance is not only a way to preserve their legacy, but also a financial tool that can prevent asset liquidation during a difficult time for families. Joint last-to-die permanent life insurance policies are more affordable than individual coverage and couples can typically secure a policy even if only one spouse is insurable. It’s often the best option for long-term estate planning.

By planning proactively, your clients can safeguard their family’s future and ensure that cherished assets like the family cottage are passed on as a legacy — not a liability.

No surprise to most of us, the Competition Bureau (CB) is investigating the Canadian Real Estate Association (CREA)’s MLS commission policy requiring a commission be paid to buyers’ agents, and the Cooperation Policy requiring all listings to be on the MLS within three days.

I expected both, and I’ll be surprised if the Cooperation Policy comes out unscathed as I find it unethical no matter how many times I re-evaluate it, but I take real issue with the investigation into the mandatory buyers’ agent commission policy.

Now, this is clearly a complex issue involving both law and ethics and, as we realtors get used to saying, I am not a lawyer, but I would like to comment on both the legality and the ethics of the situation.

Our MLS at a high level

Before I comment, I need to back up a few steps and discuss our MLS from a high-level standpoint. MLS in North America is, to use the parlance of our times (Big Lebowski fans will recognize that line), a unicorn. In many, if not most, countries, listing agents do not cooperate with buyers’ agents, and even in North America we see that commonly with commercial transactions.

In other countries, buyers are forced to peruse multiple websites, drive around, talk to multiple agents — none of whom work in their best interests — and then ultimately work with one of these agents whose primary job is to get the most money from them as possible. Whether or not it’s the best home for them is secondary. These agents are’t bad people; this is just their duty, same as listing agents here. 

Of benefit to buyers, sellers and both agents

Our MLS strikes me as one of the best creations the world has ever seen, and I’m not exaggerating. For most of us, our home is an extension of who we are and one of the most important purchases of our lives. American psychologist Abraham Maslow recognized this almost 100 years ago when he placed shelter at the very base of his hierarchy of human needs. A comfortable, happy home is probably one of the most important factors of a fulfilling life.

The MLS gives homebuyers easy access to the widest selection of potential homes while simultaneously allowing them to have a trusted representative on their side in what may very well be the most expensive purchase of their lives. I dare say only a few things in this world are more important than that to the average person, though we rarely take the time to think that through.

At the centre of this transaction is the trusted representative, the buyers’ agent, the realtor. In my career, I’ve had the opportunity to work across the table from some very competent realtors. Watching these professionals at work has been a great pleasure and learning experience over the years. Many homebuyers have been able to purchase the best home available to them at the time with the least amount of effort and under the best terms and conditions available, thanks to the guidance of these professionals. MLS is truly a win-win-win-win — homebuyers, sellers and both agents benefit.

A conflict of legality and ethics, of cooperation and competition

Considering all these factors, the question arises: how should we reward these practitioners fairly and adequately? This is where the divergence between what is legal and what is ethical comes into conflict.

Is it ethical to have these people work for us with no guarantee of any pay, even up to the time of possession? No, but it is legal. Is it ethical to allow buyers to use this system without having to make any commitment to paying anyone anything at any time? No, but it is legal.

Before expanding on my answers, I need to cover a couple more things. As I mentioned, the MLS is a unicorn in that realtors cooperate and compete at the same time, and our legal system seems to have a difficult time wrapping its collective head around such a system, especially since the legal system is primarily an adversarial system and the notion of cooperation is foreign (I do find it particularly ironic and satisfying that both parties in a legal dispute start out adversarial but once nobody wins and they run out of money for legal fees, they quickly become cooperative.)

The real question: Is it unreasonable to ask that consumers using the system must pay for it?

The critical distinction is that whether we’re cooperating or competing, it is always in the client’s best interest. We cooperate to get the seller’s home sold and to get the buyer a home purchased; we compete to attract and keep business, and that means competing on fees. I can’t recall ever, not once, in 30-plus years having another realtor try to conspire with me for a mutually higher fee, but I sure have lost a lot of business to lower fees or better service.

Now, given the benefits I’ve just listed, here’s the real question, in my opinion: is it unreasonable to ask that consumers using this system must pay something? That something could be a dollar but it must be something and both parties are free to negotiate that fee. Is that unreasonable? Is that anti-competitive?

Negative price competition and steering: Not remotely possible

And this brings me to the current situation. The CB is investigating whether the commission policy negatively influences price competition and whether it enables steering. I cannot see how either of these is remotely possible given that the policy simply states that a fee must be offered — this could be any fee, even 10 cents.

Our Buyer Agency agreements in Alberta, and I suspect across the country, address specifically what happens when a listing offers more or less commission than we have agreed to with our buyer. If a buyer has chosen not to sign an agency agreement with us for their own interests, then we owe them the same commitment they owe us: little or none. This is both legal and ethical. We’ve offered them a mutually satisfactory arrangement and they refused. Additionally, it takes away a seller’s right to make their property more attractive to the marketplace, something I argue the CB and no human entity has the moral or legal authority to do.

A comical yet sobering proposition: Value of services rendered diminishes greatly once services are rendered

I remember being at a conference some years ago where an economist was speaking and he mentioned the system in which realtors only get paid after a transaction is completed. Economists had come up with a casual, humorous principle by which they described this system.

Decorum does not permit me to provide all the details, so let me just say that they compared our system of payment to the system of payment for one of the world’s oldest professions, as follows: the value of services rendered diminishes greatly after services have been rendered. It was comical for a moment but has been rather sobering since then, and it applies directly to today’s situation.

When we really need a service we will negotiate a higher fee; once we’ve received what we wanted, we want to renegotiate. That may be legal but it’s not ethical. If you use a product or service, you must expect to pay for it.

I don’t know the answer but I’m becoming more confident in my conviction that the CB needs to take a step back and re-evaluate the ethics of what they are doing. Competition is only one factor of many in the world of economics and business — nothing exists in a vacuum.

A challenge in the world of government relations is that it’s inherently a long game. Here in British Columbia, the provincial government has been hearing the desperate voice of the electorate to restore affordability as quickly as possible.

This has manifested into a litany of housing policy announcements that are often big on podium bluster and critically shy on advance research or sector collaboration. The result is often one step forward, two steps back. 

Housing policy often used for populist purposes; ends up rushed, under-researched & weak on advance collaboration 

The BC Real Estate Association (BCREA), in cooperation with a coalition of like-minded and equally concerned housing organizations including the likes of the Aboriginal Housing Management Association, BC Non-Profit Housing Association, Canadian Mortgage Brokers Association – BC, LandlordBC and many others, made a public call for the government to establish a permanent roundtable on housing in April 2023.

The ask, however, fell upon resistant ears for a likely series of reasons. One of the most concerning is the governmental tendency to use housing policy for populist purposes. 

It’s my perspective that a true crisis deserves the best minds working to solve it, and it certainly shouldn’t be manipulated to attract votes. What’s necessary is collected expertise working together, a non-partisan approach, in-depth research and evidence-based decision-making. Far too often in B.C., our housing policy is rushed, under-researched, weak on advance collaboration with sectoral expertise, and as a result, significantly less effective than it has the potential to be. 

It’s not that the provincial government doesn’t have good intentions and a genuine desire to effect positive change. However, the influential leaders involved are either unaware of best-practice policymaking or arrogant enough to believe their hodge-podge of ministerial policy staffers is sufficient to solve the incredibly complex housing issues before them. 

Residential Tenancy Regulation changes: A victory with unaddressed concerns remaining

As a result, there are many instances where the government announces policy, only to have to make rapid amendments to correct overlooked issues due to a lack of advanced research. Case in point, over the summer the Province amended the Residential Tenancy Regulation to require landlords to give tenants four months’ notice, instead of two months, when evicting for landlord or purchaser use. The amount of time a tenant had to dispute the notice was also increased from 15 to 30 days.

In response to feedback from the BCREA and the Canadian Mortgage Brokers Association – BC, on August 1, 2024, the Province announced that it would be further amending the Regulation to require a three-month notice period (down from four months) and would give tenants 21 days to dispute the notice (down from 30 days) when a landlord issues a notice to end tenancy for the purchaser’s use of the rental unit.

These changes took effect on August 21, 2024. This was a sizeable BCREA Government Relations victory in terms of identifying issues created by the new legislation and achieving an almost immediate public backtrack from government. But while this was a partial course correct, there are still a variety of issues and concerns with the legislation that, as yet, continue to go unaddressed. 

Privacy and transaction lead time concerns

We voiced privacy concerns about a new requirement that landlords provide a copy of the Contract of Purchase and Sale (CPS) with the notice to end tenancy. To the government’s credit, the new landlord web portal was then updated so landlords are no longer required to provide a copy of the CPS to the tenant(s). Landlords will still be required to upload a copy of the CPS to the web portal, but it will not be disclosed to the tenant and will only be for internal Residential Tenancy Branch (RTB) use.

We would like to see high-ratio insured buyers (including first-time buyers) who will be occupying the property continue to have a two-month notice period because of the financial hardship caused by a longer delay in them taking possession of their property, and the likelihood of them running afoul of financing restrictions.

In future, the B.C. Government should allow much longer lead times for implementation when making changes that involve real estate transactions and tenancy issues. Provisions should always be made to exempt transactions that are already in progress when announcements about these kinds of changes are made.

To protect the privacy of buyers, it would be prudent to eliminate the requirement to report to former tenants for buyers who intend to occupy their own units. The buyer’s intent to occupy could be documented for the RTB by use of a Statutory Declaration or as part of the Property Transfer Tax return process. An early sale of the unit could be tracked through the Land Titles or BC Assessment systems. The government already has its own sources of information to verify the occupancy status of an owner and that the unit hasn’t sold within the year.

Addressing needs of certain demographics and short-term rentals for owners between completions

They also need to provide a more paper-based alternative to the new web portal for use by less technically savvy landlords or allow the existing paper forms to still be used for giving tenants notice. The Ministry’s suggestion for such landlords to visit a Service BC Office or the RTB’s Burnaby office for assistance is hardly a realistic or efficient option and is dismissive of legitimate problems of different demographic groups within our communities.

Lastly, they should also allow the rules for short-term rentals to accommodate property owners or buyers who are stuck between completions if the rental is needed for a period under 90 days.

In about a week, the B.C. election takes place. In the end, the Province will most likely be governed by either the BC NDP or the Conservative Party of B.C. Whichever party emerges victorious, a new, more collaborative future that back-benches politics and puts a newfound focus on non-partisan results is vitally needed.

Please note that it’s BCREA policy to not respond to comments on any of its online articles.

No query is too big or small — if it’s about elevating the look of your real estate, we want to hear it and we want to help! Email your questions to ninadoiron@isodesign.ca

As a real estate agent, one of the key challenges you may face when helping clients sell their homes is ensuring the property remains show-ready at all times. While staging is an excellent way to present the home in its best light and attract buyers, it can be difficult for sellers to live in a staged home, especially when balancing busy lives. But don’t worry — there are plenty of strategies to help sellers keep their homes ready for showings while minimizing stress and maintaining comfort.

Here, we’ll explore tips for sellers on how to live comfortably in a staged home, keep the property show-ready and avoid potential pitfalls. With your expert guidance, your clients can increase their chances of selling quickly and for top dollar.

Why it’s important to keep a staged home show ready

First, it’s important to emphasize to sellers why keeping their homes in pristine condition during the listing period is essential. A staged home is designed to appeal to the emotional triggers of potential buyers. A clean, well-organized space helps buyers imagine themselves living in the home, which can lead to quicker offers and higher sale prices.

However, one messy or cluttered space can break that emotional connection for buyers. When they walk into a home that’s untidy or doesn’t look like the photos they saw online, they can become distracted by the clutter and may focus on negatives rather than the home’s best features. That’s why sellers must maintain the home in show-ready condition at all times.

Tip #1: Create a daily routine to stay show-ready

A daily cleaning and tidying routine can help sellers keep their homes looking fresh without the need for a deep clean every time there’s a showing. Encourage your clients to set aside 10-15 minutes in the morning before heading off to work and another 10-15 minutes in the evening to quickly tidy up common areas, wipe down countertops and do a quick vacuum or sweep if needed.

This daily routine can prevent messes from piling up and help your clients feel more in control of their space. Consider sharing a checklist of high-priority tasks to focus on daily, such as:

• making the beds (use photos taken on staging day as a reference to restyle the bed)
• clearing off countertops
• putting away toys, clothes and personal items 
• wiping down kitchen and bathroom surfaces
• emptying the trash
• checking for pet messes or odours

Tip #2: Pre-pack personal and non-essential items

Encourage sellers to think of the staging process as the first step of moving. Ask them to pack away personal items, non-essential decor and excess furniture that could make the space feel cluttered or personalized. By doing this in advance, they’ll have fewer items to worry about maintaining and will make the home feel more neutral for potential buyers.

Not only does this help declutter, but it also reduces the number of personal belongings sellers have to organize every day. Plus, it gives them a head-start on moving once the home is sold!

Tip #3: Implement organizational systems

Having organizational systems in place can make a world of difference for sellers living in a staged home. Encourage them to invest in storage solutions like decorative baskets, bins and drawer organizers to keep essential items easily accessible but hidden from view.

Here are a few quick organization ideas that can help:

• baskets for storing items like shoes, blankets and kids’ toys in living areas
• bins or baskets inside closets to hide clutter
• drawer organizers in bathrooms and kitchens to keep counters clear but necessities closeby
• decorative trays on coffee tables or countertops to display essentials (like remote controls) in a stylish, controlled way

Tip #4: Designate ‘off-limits’ areas

If possible, recommend that sellers designate one or two rooms or spaces where they can store personal items and daily clutter when showings are scheduled. A basement storage room, garage or even an out-of-the-way guest bedroom can serve as a quick spot for stashing toys, laundry or paperwork before buyers arrive. Remember, this doesn’t mean that they should toss these items into the space — these storage spaces should always be neat and tidy.

This strategy can ease stress and provide a sense of relief for families who still need a bit of extra space for daily life but want to maintain the overall appearance of the home.

Tip #5: Be prepared for last-minute showings

Showings can often be scheduled with little notice, which can catch sellers off guard, especially during busy weekends. To help them prepare for this, encourage your clients to keep a “showing emergency kit” ready with supplies they can use for last-minute touch-ups.

The kit could include:

• a microfiber cloth and multi-surface cleaner for quick wipe-downs
• a lint roller for furniture
• air fresheners or room sprays to neutralize odours
• a laundry basket to quickly gather and hide personal items
• a small vacuum or broom for fast floor touch-ups

By having these essentials ready to go, sellers can clean up quickly and feel more confident when a last-minute showing request comes in.

Tip #6: Keep pets and pet items under control

While many buyers are pet lovers, not everyone appreciates the presence of pets during a showing. To appeal to as many potential buyers as possible, advise your clients to manage their pets’ presence and belongings during the listing period.

Pet management could include:

• arranging for pets to be taken out of the house during showings, either to a neighbour’s home, to daycare or on a walk
• keeping litter boxes, pet beds and food bowls clean and out of sight
• neutralizing pet odours with air fresheners or odour-eliminating sprays

Tip #7: Maintain outdoor spaces

Don’t forget about curb appeal! The exterior of the home is just as important as the interior, so sellers should keep outdoor spaces clean and tidy as well. This could mean mowing the lawn, sweeping the porch, clearing walkways and even adding seasonal plants or fresh flowers to the entryway. Yard maintenance should be done on a weekly basis. 

If sellers are too busy for this, encourage them to consider outsourcing the task to a local yard maintenance company. It’s important to remember that the condition of the outdoor space is often a good representation of the indoor space. Both should be show-ready at all times. 

Why it’s worth the effort

While it may seem like a lot of work to maintain a staged home, the effort is well worth it. Homes that are kept clean, clutter-free and neutralized for buyers tend to sell faster and for higher prices than those that aren’t. By following these practical tips, sellers can live comfortably in their staged home and ensure that it remains show-ready, allowing them to maximize the potential of their sale.

As a real estate agent, your role is crucial in guiding sellers through this process and providing them with the support and advice they need. The result? A smoother selling experience and happier clients.

Got home staging questions for a future column? Submit them to ninadoiron@isodesign.ca

Recent changes in the housing market present exciting opportunities for homebuyers. As a realtor, your role is crucial in guiding clients through these updates, helping them build effective plans to achieve their homeownership goals by having them reach out to a mortgage broker to see what they are able to afford.

Knowing these new rules and guidelines will help with strategy and future goals of climbing the “real estate ladder.”

Expanded amortizations for first-time homebuyers

Starting December 15, first-time homebuyers will have access to 30-year amortizations. This change can benefit your clients in two significant ways:

1. Lower income requirement. By extending the amortization period, the income required to qualify for a home purchase decreases. This means more clients can meet the necessary criteria.

2. Reduced monthly payments. Clients will experience a decrease in their monthly payments, making homeownership more financially manageable. For instance, on a $600,000 purchase, the monthly payment could drop by approximately $250, providing greater flexibility in budgeting.

Increased insured mortgage cap to $1.5 million

For clients with high incomes but difficulties saving for a down payment, the increase in the insured mortgage cap to $1.5 million can accelerate their path to homeownership. Previously, purchasing a $1.4 million home required a down payment of $280,000. Now, as of December, clients can potentially purchase the same property with a down payment of about $115,000 — a savings of $165,000.00 in upfront requirements.

This change is also advantageous for “right-sizers” looking to downsize. It allows them to allocate more funds from the sale of their larger home toward retirement, as they can put less down on a new, smaller property. However, clients should keep in mind that closing costs, typically around 3.0 per cent of the purchase price, need to be accounted for in each scenario.

For a $600,000 purchase price, anticipate that clients will need an annual income of approximately $150,000 to meet today’s stress-test requirements.

Switching lenders at renewal: A business opportunity

While you may not initially think about how switching lenders can benefit your business, it’s essential to understand that mortgages encompass more than just interest rates. The Canadian Mortgage Charter now allows insured mortgage holders to switch lenders at renewal without undergoing a stress test. This change opens up opportunities for borrowers to shop around for better rates and terms, potentially saving them thousands of dollars.

Encourage your clients to consider lenders that don’t adhere to posted rates. This strategy can significantly reduce Interest Rate Differential (IRD) penalties.

Case in point

For example, let’s compare a $1 million mortgage with three years left on a five-year term at a 5.0 per cent interest rate: 

By choosing a monoline lender (provided qualifications are met), your client could save $25,000 in IRD penalties, allowing them to manage financial changes better and seize new opportunities.

Tax-efficient savings strategies

As well, two important tax-efficient savings methods have emerged that can empower your clients on their journey to homeownership:

1. RRSP withdrawal limit increase. The amount that can be withdrawn from an RRSP has increased from $35,000 to $60,000 per borrower. This change provides additional funds for clients to put toward their down payments.

2. First-time home saver account. Introduced in 2023, this account allows clients to save $8,000 per year in contribution room, which reduces their taxable income. Unlike RRSP withdrawals, funds from this account do not need to be repaid and any gains earned within it are tax-free. This account, however, has a sunset clause in 2028, making it vital for clients to act quickly to maximize its benefits.

These recent changes create valuable opportunities for your clients. By understanding the implications of expanded amortizations, increased mortgage caps, flexible lender options and tax-efficient savings strategies, you can help them make informed decisions on their path to homeownership.

The stalemate continues between buyers and sellers in Toronto’s real estate market this month. It’s easy to get excited because sales are up from last year — but let’s remember that last year was an exceptionally bad year. In the broader view, the fall market has been relatively weak in the long-term context against the typical month of September.

Key September points

The Toronto Regional Real Estate Board (TRREB) posted its monthly Market Watch report, and here are the key points you need to know from the summary: 

1. Sales are up 8.5 per cent from last year.
2. New listings are up 10.5 per cent, slightly outpacing sales. 
3. Properties taking 35-45 per cent longer to sell compared to last September.
4. Because of slowed sales cycle, active listings are up 35.5 per cent! Supply accumulation is becoming substantial.
5. House prices are still grinding down — nominally, 1.0 per cent below last year, with real house prices down 3.0 per cent when adjusted for inflation.

Source: TRREB

Recovery or rebalancing? 

TRREB argues the uptick in sales we’re seeing is the result of favourable market conditions, such as interest rate cuts and revised mortgage lending guidelines. These factors are certainly important to recovery, but a deeper look suggests that the GTA market might be more balanced than on a path to full recovery.

It’s worth seeing a long-term “sideways” market, rather than an “upwards” one. The key factor here is the rate of growth in supply, which has outpaced demand, challenging the notion of a straightforward recovery. Until that changes meaningfully from buyers entering the market more quickly than sellers, it’s tough to imagine a complete recovery has begun.

Sales increase due to new opportunities for buyers, but price still most important factor

The 8.5 per cent year-over-year increase in home sales (4,996 in September 2024, up from 4,606 in September 2023) is presented as evidence of recovery. TRREB President Jennifer Pearce attributes this increase to buyers capitalizing on lower borrowing costs and adjustments to mortgage lending guidelines.

These changes include:

1. rate cuts from the Bank of Canada 
2. reduced five-year fixed mortgages from a falling Canadian five-year bond yield
3. the coming introduction of longer amortization periods
4. the ability to insure mortgages for homes valued up to $1.5 million 

These factors certainly make the market more affordable for some buyers who are limited by capital costs and the lending environment. However, with the B20 stress test still in place and buyers qualifying at rates over 5.0 per cent, price ultimately becomes the most important factor for many buyers looking to re-enter the market.

Easing of stress test could build staying power

To this end, TRREB highlights that the easing of the mortgage stress tests for existing homeowners on renewal could build some staying power into the market, by making homeowners and investors able to afford to keep their homes rather than selling when faced with financial stress.

TRREB also expects further rate cuts to allow a growing number of households to afford homeownership. This notion is especially pointed at first-time buyers, who have been outlined by the Bank of Canada as nearly 50 per cent of all homebuyers, representing a key demographic for those hoping for a recovery in the market. 

Supply outpacing demand

A closer analysis reveals a more nuanced picture. While demand (measured in sales) grew, the rate of new listings entering the market has grown even faster, by 10.5 year-over-year, slightly outpacing sales growth. In September, 18,089 new listings were added to the MLS, contributing to an already better-supplied market. This gap between supply and demand, rather than indicating a shortage of homes, points to an easing of market pressures and a better market for buyers to enter. 

Compounding this, we’re seeing a significantly increased “time to sell” — meaning it takes an extra week for a listing to sell, compared to the average 20 days on market from September last year. This slowing absorption has led supply to accumulate, with active listings now up 35.5 per cent compared to September 2023.

Ability to negotiate on price: Indicates a market no longer heavily favoured to sellers

Should this trend continue to hold, it’s reasonable to expect that buyers will resume their home search as they see more homes on the market and hope they can capitalize on the supply, shop around and negotiate with sellers. This is how the imbalance between supply and demand is further materialized, in a decline in prices.

The MLS Home Price Index Composite benchmark was down by 4.6 per cent year-over-year, and the average selling price in September dropped 1.0 per cent compared to the previous year.

TRREB attributes this to increased negotiating power for buyers, especially in the more affordable segments like condominiums and townhouses, which are favoured by first-time buyers. More activity in the lower ends of the market can skew the average down. Interestingly, 416 condominium sales are actually up year-over-year, despite the market being in a severe state of excess supply. The ability to negotiate on price is a clear indicator of a market that’s no longer tilted heavily in favour of sellers.

Source: TRREB

The pricing context: A “recovery” in question

A true market recovery, by definition, would generally see home prices stabilizing or even increasing as demand starts to outpace supply. However, this is not currently the case in the GTA.

While average selling prices have edged up slightly on a seasonally adjusted basis compared to August 2024, the year-over-year decline in benchmark prices suggests that the market has not fully recovered to its previous highs. Affordability challenges that plagued the market before the interest rate hikes are being alleviated, but they haven’t disappeared.

Furthermore, while rate cuts may improve affordability in the short term, they don’t necessarily address the long-term structural issues in the housing market, such as supply constraints or high construction costs. It’s worth noting that while lower borrowing costs can temporarily boost demand, they can also encourage speculative buying, which could further distort the market, particularly if supply doesn’t keep pace.

Recovering sales, but not prices

Despite TRREB’s optimistic messaging, the GTA housing market appears to be in a state of balance rather than recovery. Yes, sales are up, and rate cuts have eased some of the financial pressure on buyers and sellers. On the other hand, the growing supply of homes, coupled with modest price declines, suggests a more buyer-friendly market, one in which supply is catching up to — and in some cases, surpassing — demand.

This dynamic is providing more negotiating power to buyers, and while that’s a positive development for affordability, it doesn’t necessarily signal a robust recovery in price. Instead, the current market is best characterized as one where buyers have regained some control, but where underlying challenges around housing supply and affordability remain.

The return to a balanced market does point to a steady resurrection of sales activity, which is welcome news for the real estate profession that has been dealing with drastically reduced activity for some time now.