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.

This week, the Canadian Real Estate Association (CREA) announced the launch of its Canadian Realtors Care Award 2025. The award recognizes the long-lasting impact of realtors nationwide who dedicate their time and efforts to charities and causes important to them.

Nominations are now open to recognize a realtor who has played a vital role in lifting their communities. The recipient of this year’s award will be announced at CREA’s Annual General Meeting on Tuesday, April 8, 2025.

10th anniversary of the award

To celebrate the award’s 10th anniversary, the recipient will receive a $10,000 contribution to their charity of choice in their honour.

Latest recipient and past nominees

Since 2016, 10 realtors from five provinces have received the award, including 2024’s recipient, Kelly Byers of Woodstock, Ontario.

“It feels awesome to know that we are able to do so much for our community and for those who are struggling,” says Byers. “And it’s pretty cool to see how many realtors step up year after year.”

The award has also helped highlight the many stories of realtors across Canada who give back through their own charitable endeavors. Past nominees include Crystal Hung of Vancouver and Chris Dunlop of Toronto.

Nominations for the Canadian Realtors Care Award 2025 are open until Sunday, December 1, 2024. Learn more and nominate a realtor here.

The federal Competition Bureau is investigating whether rules set by the Canadian Real Estate Association (CREA) are pressuring home sellers to pay higher commissions to real estate agents, the National Post reports.

The inquiry, launched in June, is looking into two potentially “anti-competitive” practices, per federal competition law, that could be inflating commission rates.

Competition Commissioner Matthew Boswell’s investigation centres on two specific practices: CREA’s “Buyer Broker Commission” rules and the newer “Realtor Cooperation Policy.”

Boswell is looking for the Federal Court to approve an order mandating CREA to provide records dating back to January 2019, including information about why the rules and policy being investigated were developed.

First potential breach: ‘Buyer Broker Commission’ rule

The “Buyer Broker Commission” rule requires sellers to offer part of their agent’s commission to the buyer’s agent in order to list a property on MLS. The Bureau suspects this rule may push sellers to offer higher commissions, as agents might steer buyers toward listings with higher-than-average payouts.

The National Post cites a statement from Bureau spokesperson Rosalie Leblanc:

“We want to determine if these rules discourage agents from competing on commission rates and incentivize them to prioritize listings with higher commission offers, which might not always align with the buyer’s best interest. There are also concerns that these rules could pressure sellers into offering higher commissions to buyer’s agents to avoid their listings being overlooked by the buyer’s agents.”

Second potential breach: ‘Realtor Cooperation Policy’

The Bureau is also scrutinizing the “Realtor Cooperation Policy,” introduced in January, which mandates that most residential listings must be posted on MLS within three days of being publicly marketed, or agents could risk having their CREA membership revoked.

The Bureau is concerned the policy could disadvantage non-MLS services and smaller brokerages, which may struggle to meet the fast turnaround time, having fewer resources than larger providers. As well, it notes that services “differentiating themselves from an MLS system on privacy or by offering different features” could experience challenges.

Bureau investigator Adam White wrote in a court-filed affidavit: “Large brokerages have a greater number of agents working for them, and thus these agents can advertise listings to a larger network of agents without contravening the Realtor Cooperation Policy.

Conversely, smaller brokerages with only a few agents working in them will have less of an opportunity to advertise listings outside of an MLS system.”

CREA: ‘Pro-competitive & pro-consumer …  increasing transparency & helping realtors better serve buyers & sellers’

In a statement to REM, James Mabey, chair of CREA, says it’s unaware of any determinations or conclusions made at this time (this is also noted in the National Post article.)

Rather, as part of its investigation, he says it’s typical for the Competition Bureau to seek a court order, as it’s currently doing, to produce records and provide written responses.

Mabey notes the organization is cooperating with the Bureau as part of this investigation phase, and that CREA believes its rules and policies are “both pro-competitive and pro-consumer, including by increasing transparency and helping realtors better serve Canadian property buyers and sellers.”

Mabey references realtors’ long history of serving their clients by being knowledgeable about developments in real estate, actively updating their education and committing to the Realtor Code. He also cites the professional services realtors offer, including “posting property information to an MLS system and handling every element of the transaction, including market analysis, pricing advice, advertising, making and receiving offers and much more.”

He continues: “CREA’s realtor members know the benefits of an informed consumer and promote transparency and innovation within the industry. They use their collective voice to champion the interests of Canada’s property owners, buyers, sellers and renters. And, they contribute to a cooperative tool known as MLS systems — efficient, collaborative marketplaces that help connect realtors representing buyers and realtors representing sellers — to the benefit of both realtors and their clients.”

Mabey also notes that the industry is built on a foundation of cooperation, expertise and care. “Every day, realtors in every corner of this country are helping Canadians navigate their real estate aspirations and realities,” he adds. “As the world around continues to change — from our housing needs to the market and economic conditions — what realtors stand for hasn’t. Realtors have and will continue to be there to support their clients through it all.”

So far, Boswell has not found any wrongdoing against CREA.

There’s an interesting pattern emerging in Canadian real estate: ever since the Bank of Canada’s first rate cut, home sales have increased as buyers get improved affordability, though still well below the long-term average.

Price recovery is still yet to be found, and sales volume trended up again 1.3 per cent month-over-month in August, reaching its highest level since January 2020.

At the same time, new listing activity continues to accumulate with new listings climbing for the fourth straight month. Will this trend continue? The market will head into buyer’s market territory, where supply is outgrowing demand.

With that in mind, there are expectations that future rate cuts into 2025 well lead to cautious optimism among potential buyers and investors.

Newly listed properties in Edmonton and Calgary offset GTA decline 

Despite the uptick in sales, the market remains mostly stuck in a holding pattern as many buyers are waiting for improved affordability before making purchases.

The number of newly listed properties increased by 1.1 per cent month-over-month in August, with approximately 177,450 properties available for sale — up 18.8 per cent from the previous year, but still below historical averages.

But for the second month in a row, there was a boost in new supply in Calgary, with Edmonton also witnessing an uptick of listings. The rise of newly listed properties in Edmonton and Calgary offsets a decline in the GTA. 

Consistent, stable increase in sales-to-new-listings

The national sales-to-new listing ratio rose slightly to 53 per cent, matching our record in April. We’re a long way from returning to what was our highest average of sales-to-new listings which we achieved in December 2023: 81 per cent.

We have been relatively and consistently stable ever since our increase from January’s 46 per cent to February’s 52 per cent. So, it may be some news that we’ve matched our April 2024 average. 

Prices

After Canada experienced a record high price in 2022, the market recoiled down about as quickly as it jumped up. Since the bottom of the recoil, we’ve seen very little upward or downward momentum in price. 

Significant fluctuation in GTA condominiums

Toronto area condominium apartments are having a significant fluctuation, with a recoil off of an all-time high price and a few bounces since the blow-off top. 

Source: x.com/Tablesalt13/

It’s clear that the outlook doesn’t look good for 2025, as it seems it will touch the 350 margin — the record low from around 450 in January 2022.

On Monday, the federal government announced changes to mortgage rules to help more qualified buyers access mortgages and become homeowners.

The changes, taking effect this year on December 15, include allowing 30-year amortizations for first-time buyers and for newly constructed homes, along with a higher limit on insured mortgages ($1 million to $1.5 million) to reflect current housing prices. As well, homeowners will have the freedom to switch mortgage lenders at renewal without having to take a new stress test.

“We are now making the boldest mortgage reforms in decades to unlock homeownership for younger Canadians,” says The Honourable Chrystia Freeland, deputy prime minister and minister of finance, in a statement. 

“Everyone deserves a safe and affordable place to call home, and these mortgage measures will go a long way in helping Canadians looking to buy their first home,” The Honourable Sean Fraser, minister of housing, infrastructure and communities, adds.

Support from the country’s national industry voice

The Canadian Real Estate Association (CREA) says it welcomes the announced reforms, which represent a significant step towards improving access to homeownership and making housing more attainable, something realtors have long advocated for and continue to stand behind.

“This is good news for buyers, particularly first-time buyers and those in more expensive markets such as Toronto and the Greater Toronto Area (GTA), as well as Vancouver and surrounding areas,” says Janice Myers, CREA CEO.

Broad support across the industry

The mortgage reforms will drive more housing construction and supply and reflect recommendations that the Canadian Home Builders’ Association (CHBA) has been calling for. The organization says it’s just what the market needs to help correct the falling trajectory of housing starts and build more homes.

Likewise, the Toronto Regional Real Estate Board (TRREB) says it strongly supports these measures, which will help reduce the monthly cost of mortgage payments and make homeownership a reality for more people across the country, as well as stimulate new housing construction and help address the ongoing housing shortage in our communities.

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., agrees. In a company blog post, she notes, “For many homebuyer hopefuls, the monthly mortgage payment is often the deciding factor between a property that fits in their budget and one that doesn’t. An extra few years to spread out those payments will help many purchasers make the transition from renter to homeowner. Those shopping in Canada’s most expensive markets, where home prices over $1 million are the norm, will also find it a little easier to get into the market.”

Myers shares similar sentiments: “In a recent budget submission, we had advocated for extending 30-year amortization terms to all first-time buyers. We’re pleased our suggestion was adopted to provide more opportunities for homeownership.”

Yolevski expects the implementation of the new rules to likely follow another interest rate cut or two this year. “Lower borrowing costs, combined with these extended mortgage powers, may stir first-time buyer demand in the months ahead, setting the stage for a robust spring market in 2025.”

TRREB: Another call to action

TRREB notes that increasing the insured mortgage price cap in today’s market will allow more people to qualify for an insured mortgage and provide crucial homebuyer support in high-cost areas like the GTA.

It also supports the government’s earlier decision to allow insured mortgage holders to switch lenders at renewal without undergoing a new mortgage stress test and would like this extended to uninsured mortgages, typically those where the homeowner made a larger down payment.

“We have long advocated for these measures, particularly for homeowners to be able to switch lenders at mortgage renewal without a stress test,” notes TRREB CEO, John DiMichele. “Increased competition among lenders is good for homeowners and homeownership, so we reiterate our call for this measure to be extended to mortgage renewals for those who do not require mortgage insurance.”

CMBA: Price cap jump ‘reflects lack of policy change in over 10 years … will finally provide more options’

The Canadian Mortgage Brokers Association — British Columbia (CMBA-BC) and its sister organization, CMBA National, are also in support. For several years, they’ve consistently called for “real changes to address mortgage eligibility policy, (with British Columbians) having felt squeezed out of almost every market in B.C. and across Canada.”

“We are pleased to see the federal government has finally listened to our advice and expanded eligibility of 30-year mortgage amortizations to include all first-time homebuyers as well as buyers of new build homes,” says Rebecca Casey, president of CMBA-BC.

“The announcement of an increase in the price cap for insured mortgages to $1.5 million will also provide additional flexibility for homebuyers as they will not need to make a 20 per cent down payment for an additional $500,000 in purchase price,” adds Casey. “This reflects the lack of a change in this policy in over 10 years and will finally provide more options to homebuyers on how to place a downpayment on their future home.”

‘Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy’

“These types of changes are exactly what CHBA has been calling for, because we simply can’t build homes, be they condominiums, townhomes or whatever housing form makes sense if owners can’t qualify for mortgages,” states Kevin Lee, CEO of CHBA.

Lee explains that better access to mortgages will enable buyers to access the market, driving more housing starts and giving industry a chance to push towards targets to close the supply-demand gap. He adds, “Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy — it’s exactly these types of policy changes that are needed to create the conditions necessary to move forward.”

TRREB President Jennifer Pearce notes that TRREB members continue to support first-time buyers with the purchase of their homes. “The latest changes to mortgage rules are a step in the right direction and provide affordability and flexibility for homebuyers,” she says. “We look forward to our continued collaboration with CREA and the federal government as we work together to achieve our shared goal of ensuring more Ontarians can access housing and financing options that meet their needs.”

Home Buyers’ Bill of Rights Blueprint

The Canadian government also announced its release of blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights. CREA says it’s aligned with the four guiding principles laid out but will continue to engage with government as discussions evolve.

Myers points out, “The federal government has acknowledged the primary role of provinces and territories in regulating real estate and the desire to work collaboratively to build a national consensus and strengthen housing access and affordability for all Canadians.”

She notes that CREA will continue working with governments and stakeholders to develop solutions across the full housing spectrum.

CHBA response to argument of rules’ inflationary effect on market

CHBA understands that some feel improving access to mortgages will have an inflationary effect on the market, particularly now, but that the extreme under-supply of homes Canada has faced over recent years is a much stronger home price inflation driver.

“If we don’t quickly start building more houses, falling interest rates will create more demand on the limited number of homes available, further driving up prices,” Lee asserts.

“We need to come at the housing shortage from every angle, and adjusting mortgage rules is a big part of that. Canadians who want to buy their first home need a fair opportunity to do so, and young Canadians who were able to buy a starter home, like a condominium, need to be able to get an insured mortgage for their next home, for example, a new townhome.

Today’s changes will help enable them to do so, and will drive more supply of the types of housing Canada needs.”

Like much of the country’s real estate industry, Myers expresses that CREA remains focused on advocating for policies that will help drastically increase housing supply across the continuum so that all Canadians find a home that meets their needs.

The Canadian Real Estate Association (CREA) recently released its latest episode of its REAL TIME podcast, featuring yours truly and CREA CEO, Janice Myers. On it, we discussed the draft business case CREA released earlier this summer that outlines a path forward for REALTOR.ca as a taxable entity and the incredible opportunity that could provide.

Here are two key takeaways of our podcast conversation:

1. I fully acknowledge and understand any concern and hesitation that’s been shared with us about the proposed transition — REALTOR.ca is our most valuable asset. But I firmly believe our biggest risk is inaction. Let’s seize this incredible opportunity to ensure REALTOR.ca continues to be the trusted platform for all things Canadian real estate — with REALTORS® planted firmly at the centre of it all.
2. If you haven’t already, please read the draft business case, which can be found at CREA.ca/REALTORinc.

REALTORS® have seen firsthand how REALTOR.ca has paved the way for how real estate is marketed and consumed in Canada. The platform has become a cornerstone of our industry, providing unparalleled value for both our business and consumers.

REALTOR.ca has evolved from a public-facing website to a comprehensive platform with integrated components, like native apps for iOS and Android for both REALTORS® and consumers, and the REALTOR.ca Data Distribution Facility (REALTOR.ca DDF®), which facilitates the consistent and accurate distribution of real estate listings across 10,000 advertisement, franchisor and member websites.

We are the proud owners of a REALTOR®-centric tool that commands more than 50 per cent market share¹ in Canada because of the trust and appreciation of the consumers who turn to it. As a business tool, there’s really no comparison to the reach and exposure it provides.
How we use the internet has changed dramatically in the last decade. You could even say that about five years ago. To help ensure REALTOR.ca’s future success, we need to change our approach to maintaining such a powerhouse platform.

Year after year, competition in the tech landscape grows, consumers expect more and operational costs increase. The status quo isn’t sustainable.

CREA is proposing it turn REALTOR.ca into a taxable, wholly owned subsidiary as both a financial necessity and a strategic move to secure REALTORS® at the centre of Canadian home buying, selling and renting journeys.

Why change is essential

Currently, REALTOR.ca is operated by CREA under its not-for-profit status. While this structure has served us well, under this model, REALTOR.ca isn’t able to pursue new revenue streams or engage in certain business-related activities. Transitioning to a business model would give us the ability to unlock that potential, better positioning us to stay ahead in an increasingly competitive market.

PricewaterhouseCoopers (PwC) conducted a comprehensive analysis and presented an overview of the opportunities this transition could offer in the draft business case.
Based on initial revenue and cost projections associated with the transition, operational enhancements and pursuit of revenue opportunities, REALTOR.ca as a taxable entity could generate significant estimated revenues that could help reduce dependence on CREA funding from member dues. In other words, the current allocation of my annual $310 CREA membership dues that goes to REALTOR.ca (43 per cent) could be reduced — allowing CREA to instead allocate those funds to equally impactful priorities like government relations work and enhancing and protecting the REALTOR® reputation.

The dollars and cents are important but shouldn’t be what motivate you to consider this path forward. What’s at stake here is possibility. We can’t do more or be more by staying the same. If we want to remain the go-to choice for consumers, we need to set ourselves up to take advantage of all that’s possible for REALTOR.ca.

The benefits of a taxable subsidiary

Turning REALTOR.ca into a taxable entity could create other key benefits:

1. Innovation. With the ability to generate new sources of revenue, REALTOR.ca could adopt new technology like artificial intelligence, reach new demographics and introduce new features and tools.
2. Enhanced value for REALTORS®. REALTOR.ca could deliver things like higher-quality leads, better tools for managing client relationships and new features that enhance the overall REALTOR® experience.
3. Long-term viability. Creating opportunities for REALTOR.ca to better compete in today’s fast-paced tech landscape is crucial for maintaining our competitive edge and continuing to provide the high level of service that consumers have come to expect from the platform.
4. Self-sustainability. Reducing REALTOR.ca’s dependence on member dues could enable CREA to allocate more resources to core services like government relations, professionalism and promoting and protecting the value of working with a REALTOR®. This could help better position both entities for greater long-term sustainability and success.

The path forward

I’ve had the pleasure of connecting with many across the REALTOR® association community on this proposed transition. We know what’s at stake.

As stewards of this powerhouse brand, we have a duty to ensure its future success. The proposed transformation is a responsible and forward-thinking step towards securing REALTOR.ca’s market leadership in an increasingly competitive environment while also keeping REALTORS® firmly at the heart of that future.

Once again, I encourage you to visit CREA.ca/REALTORinc to read the draft business case, check out the other resources and share your feedback. We’re excited about what’s possible and look forward to bringing this to a membership vote at CREA’s 2024 Special General Meeting on Wednesday, October 23.

James Mabey
CREA Chair

¹ Comscore

Garry Bhaura, vice chair of the Canadian Real Estate Association (CREA) and broker of record at Re/Max President Realty, celebrated his 50th birthday through environmental stewardship with the planting of 50 trees at the Claireville Conservation Area in Brampton.

The September 6 event, organized in collaboration with the Toronto and Region Conservation Authority (TRCA) and the City of Brampton, aimed to combat climate change and promote a greener future.

The trees planted will enhance local biodiversity, provide essential green space and help mitigate the effects of climate change by sequestering carbon and improving air quality.

Significant for both the community and the real estate industry

The initiative was significant for both the community and the real estate industry. It attracted Bhaura’s friends, family, colleagues and community members — all committed to supporting environmental sustainability. 

Attendees included Brampton Mayor Patrick Brown, City Councillors Rod Power and Rowena Santos, Regional Councillor Gurpratap Toor, Member of Provincial Parliament Hardeep Grewal, Don Kottick, president of Sotheby’s International Canada, Larry Cirqua, CREA past chair, Winson Chan, Tridel VP of sales and CREA director, along with members of the Re/Max President Realty team. 

Reflecting on the event, Bhaura states, “Planting a tree is planting hope for a greener, more sustainable future. Each tree represents our commitment to nurturing the planet. Together, we are shaping a healthier environment for generations to come.

I’m deeply thankful to the Toronto and Region Conservation Authority, the City of Brampton and everyone who joined us in this meaningful endeavour.”

While there were early signs of renewed momentum in June following the Bank of Canada’s first interest rate cut since 2020, activity in Canada’s housing market took a pause in July, according to data released earlier this month by the Canadian Real Estate Association (CREA).

“With another rate cut announced on July 24, we’ve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year,” Shaun Cathcart, CREA’s senior economist, says in a statement.

“Combine that with a record amount of demand waiting in the wings, and the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk.”

According to CREA, in July:

• National home sales decreased 0.7 per cent month-over-month
• Actual monthly activity was 4.8 per cent above July 2023
• Number of newly listed properties was up 0.9 per cent month-over-month
• MLS Home Price Index was up 0.2 per cent month-over-month but was down 3.9 per cent year-over-year (benchmark price was $718,700)
• Actual national average sale price ($667,317) was down just 0.2 per cent year-over-year

Uptick in market interest since interest rate cuts

Phil Soper, CEO of Royal LePage, says there has been a material uptick in market interest since the Bank of Canada started cutting interest rates. 

“Our principal portal which is royallepage.ca is the busiest real estate company portal in the country. Not as busy as realtor.ca … Every week I get an update from our IT team on royallepage.ca and we’ve seen a material uptick in viewership and engagement in our planning tools.”

Soper notes that a leading indicator is the increasing number of people using the site is unusual for August: “August is typically a very slow month. Things pick up at the end of August and into September. It’s indicative of re-ignited interest.”

He says the final leading indicator is the brand’s showings system, which clients use to book property showings with their realtors: “We saw an uptick in that in July. There’s clearly more interest and I believe it’s related to three principal things.

One, variable rate mortgages are cheaper given that the bank rate has come down. Two, fixed-rate mortgages are cheaper given the state of the bond market and the slowing economy — we’ve seen a real material drop in the popular five-year fixed. The third is building demand. We had this very large influx of new Canadians in 2022 (and) 2023 — a record. That’s going to put pressure on the entire housing ecosystem.”

Soper says demand is building and it will be released at some time. There will be an uptick in sales volume triggered by cheaper borrowing and pent-up demand should result in a busy fall. 

He believes those most impacted by higher interest rates, the overall lack of consumer confidence in the economy and the housing market in general are predominantly renters or first-time homebuyers. “That’s a big piece of the puzzle.”

Alberta, Nova Scotia, New Brunswick strong while Ontario struggles

Listings are going up because existing homeowners are seeing some positive indicators. However, Christopher Alexander, president of Re/Max Canada, says province by province is a different story.

“The year started off with a bang. Lots of anticipation that the Bank of Canada was going to start a series of rate cuts in the spring. That never materialized so you had this kind of malaise and slowness for several months, and then a strong majority of economists were insisting there would be rate cuts in June, so the market almost stopped in May. Then we got the rate cut and it really did nothing, but after the second rate cut we’re seeing renewed activity,” he notes.

“Alberta has been strong. New Brunswick and Nova Scotia have been pretty strong. Ontario has really struggled with slower market conditions.”

Alexander expects the market will see a renewed sense of urgency from buyers. 

“We’ve got a lot of inventory, so that should keep prices in check for the foreseeable future. We’re expecting more rate cuts and I think once the overnight rate gets to around four per cent, we’ll see sustained activity. All the indicators are showing we’re entering healthy territory again which is a good thing,” he says. 

‘End of the slump in most of Canada by end of this year’ but deeper rate cuts needed

Robert Hogue, assistant chief economist with RBC Economics, described the Canadian real estate market as slow, generally speaking, with obviously some variances across the country. Prices are mostly flat and some condominium prices are under pressure.

“We’ll need more interest rate cuts to get the market going,” he notes. “It’s a fairly slow grind this summer but it remains our view that as we get more rate cuts it’s going to translate more into lower mortgage rates, and that should get the market going a little faster.

We’re not expecting a big boom or anything like that but it will be the end of the slump in most of Canada by the end of this year.”

Hogue says the Bank of Canada’s interest rate cuts in June and July likely marked a turning point for struggling housing markets across the country, but so far the impact has been mixed. He says it will take deeper rate cuts to meaningfully reduce ownership costs and stimulate homebuyer demand more broadly.

“Supply, on the other hand, continues to grow. In some cases, such as in Toronto, it reflects the completion of many newly built units (mainly condominiums) that owners (mainly investors) are looking to offload. In other cases, it could be sellers betting lower rates will spur buyer interest and improve sale outcomes. In some, it may be a sign of homeowner distress arising from high rates,” notes Hogue.

He goes on to say that the balance between supply and demand varies considerably from market to market. “Conditions in Calgary, Edmonton and, to a lesser extent, Montreal favour sellers. It’s the opposite in the Toronto area where buyers have the upper hand — albeit just barely. A tenuous equilibrium holds in Vancouver.”

However, Hogue also points out that home prices have generally levelled off since spring. “Calgary — Canada’s housing hotspot — remains an exception, though gains have moderated recently. We see flat price trends persisting until larger rate cuts heat up demand more materially.”

Total listings up nearly 23%, sales-to-new listings below long-term average but balanced

According to CREA, at the end of July, there were about 183,450 properties listed for sale across Canada, up 22.7 per cent from the prior year but still about 10 per cent below historical averages (more than 200,000 for this time of the year). New listings were up slightly by 0.9 per cent month-over-month. 

The national sales-to-new listings ratio went down 0.8 per cent from June to 52.7 per cent last month. CREA notes the long-term average for the national sales-to-new listings ratio is 55 per cent, with a ratio between 45 per cent and 65 per cent generally consistent with balanced housing market conditions.

Despite gaining momentum in June, after the Bank of Canada’s rate cut that month, activity in Canada’s housing market paused in July.

Last month, home sales dipped 0.7 per cent on a month-over-month basis, reversing a small portion of June’s post-first rate cut gains. There’s a likelihood of further rate cuts in the next interest rate decision with the pace of future policy likely easing.

Expectations of further policy easing and more rate cuts to come

It’s clear that we may take a while to return to the COVID era when home sales peaked in January 2021 — their highest peak since January 2009, reaching approximately 64,000 sales. Despite the 0.7 per cent drop in sales, there’s a positive side to this as sales remain close to the recorded level from June.

But after the Bank of Canada announced a second rate cut of 4.5 per cent on July 24, there have been growing expectations of further policy easing with markets anticipating additional cuts as we head into fall.

It’s good news that despite the slight dip in July, our actual monthly activity was still 4.8 per cent higher than in July 2023. As well, the number of newly listed properties increased by 0.9 per cent month-over-month with Calgary seeing a notable boost in supply.

The Home Price Index rose by 0.2 per cent from June to July, although prices remained 3.9 per cent lower than in June 2023. The national average sale price was virtually unchanged — dipping just 0.2 per cent year-over-year to $1,667,317.

A balanced market with potential for continued downward price pressure — fall will be oversupplied

Canada’s market is pretty much balanced at this point, steadily at just over four months of inventory and just over 50 per cent sales-to-new-listing ratios. This can result in continued downward pressure on prices.

All of this is correlated to the fact that national new listings inventory continued to climb in July, which is typically considered one of the slowest periods for new listings. Looking ahead into fall, there will be an oversupplied market.

Alberta and Ontario: Stabilized

The biggest price increase was observed in Edmonton and Hamilton-Burlington, whereas Calgary and Toronto both witnessed the largest average price increase, which levelled one another out. This has resulted in Alberta and Ontario stabilizing in terms of the provincial average home sales price trend over the last several months.

Interestingly enough, despite having the biggest decrease in average price, Calgary had the most number of properties listed, which contributed to the increase of 0.9 per cent of the national average. 

Source: Wowa.ca

Keeping an eye on these developments will be critical for understanding what’s in store for the industry this fall and beyond, and for helping us advise our clients well.

This year, the housing market has experienced slower-than-expected sales levels and a significant increase in property listings. Although this has helped stabilize prices in many markets, some still experienced notable price hikes, as a Zoocasa study of Canadian Real Estate Association (CREA) data found.

Single-family home prices in Canada

Of the 26 cities analyzed, three had more than a 10 per cent increase in benchmark single-family home prices since January: North Bay, Sault Ste. Marie and Sudbury. All three haven’t had as many new listings as other Canadian markets.

CREA reports that new listings in June were below the five-year average in Sault Ste. Marie by 11.2 per cent, in Sudbury by 6.6 per cent and in North Bay by 9.5 per cent. Sault Ste. Marie has seen consistent price growth and affordability. Since January, its benchmark single-family home price has risen by 12.6 per cent to $305,000.

Outside of Ontario, the next largest price gain for single-family homes has been in the Prairies. Since January, prices have increased by 9.8 per cent in Edmonton, 9.0 per cent in Winnipeg and 8.4 per cent in Saskatoon. However, home prices have remained below $500,000 in these markets.

Home prices on the rise despite slow spring market

Since January, most markets experienced more than a 5.0 per cent jump in single-family home prices, including the GTA and Greater Vancouver. Benchmark condominium prices, however, have not increased as much.

Of 23 condominium markets, 12 have seen less than a 2.5 per cent increase in benchmark prices since January. Five markets experienced less than a 1.0 per cent increase: Hamilton-Burlington, Ottawa, Niagara Region, Windsor-Essex and Winnipeg.

Condo demand and price growth may be driven by consumer concerns around home prices

Canada’s most affordable condominium markets are also experiencing the most price growth. Units in Saint John, Edmonton and Saskatoon saw the largest price gains since January, increasing by 13.9 per cent, 13.1 per cent and 10.8 per cent, respectively. These locations are seeing growing demand for condominiums, with price growth higher than that for single-family homes. The same is true in London and St. Thomas, Calgary and Regina.

Another recent Zoocasa survey found that 42.3 per cent of respondents cited rising home prices as their primary concern in the current market — something that could be driving demand for more affordable property types like condominiums and contributing to their rising prices.