Sunny Freeman – The Huffington Post Canada

Carleigh Pawlikowski is a bit of a control freak. So when it came to the biggest purchase of her life — a first home — she was lucky to find herself in Nova Scotia, one of the only places in Canada where home buyers can get direct access to property information.

The 30-year-old project coordinator and her partner relocated from Ontario and rented for three years before deciding to plunge into home ownership in Dartmouth, N.S. They recruited family back home in Ontario for help with the search, and their relatives were astounded by the amount of information accessible online — down to a home’s sale history, number of days on the market, even scheduled garbage pick-up days.

Comment: I am not sure I want anyone and everyone to be able to find out what I paid for my house… And garbage pickup is clearly available on my city’s website. No big secret.

“If you’re somebody who’s like me, who wants to know all the pieces of information, it definitely alleviates the pressure on your realtor,” Pawlikowski said.

“I don’t think we could have done it without a realtor, but it gave us the independence we were looking for because we definitely wanted more control over this process.”

Pawlikowski’s real estate broker, ViewPoint Realty, is one of the few in the country that has opened up property data in an online database. That’s because the two real estate boards in Nova Scotia voted to allow members to catalogue such information, a business model the vast majority of the country’s 100 real estate boards forbid.

Why do house hunters in Nova Scotia have such a distinct advantage over those in Ontario or B.C. or Alberta? Soon the Toronto Real Estate Board, the country’s largest, will be called before Canada’s Competition Tribunal to answer that question.

Comment: But they don’t. The same information is available here. You just need to ask a real estate agent for sales history. Big deal. You don’t have to sign a contract, just send an email and ask a question. Or make a phone call.

The push for more real estate boards to embrace the information age isn’t just about consumer convenience — the Canadian economy is shaped by data controlled by these realtor organizations.

Comment: No so much. It is shaped more by the actions of a couple hundred thousand people, buying and selling. And all the mortgage lenders and home inspectors, contractors and renovators, connected to those transactions. And there are all the other people in all the other industries that shape the economy. Let’s not put too much emphasis on real estate.

The Canadian Real Estate Association is the lobby group representing the interests of the country’s 100,000 realtors. Its monthly sales and prices report is one of the most widely used sources of housing data in Canada. Statistics Canada, the Canadian Mortgage Housing Corporation and the Bank of Canada use CREA’s data as a basis for their own calculations, reports and policy decisions.

Comment: CREA is NOT a lobby group! It is the national association to which all Canadian realtors belong.

But unlike most data used in government reports, these housing numbers are prepared for and by the industry in question. The data is unregulated and unaudited. CREA aggregates sales totals from the country’s real estate boards and trusts that they are reporting correctly. Researchers’ access to the raw data is limited, making it difficult to verify or to conduct second-level analysis.

Comment: Are you accusing them of lying? Ask the mortgage industry group, the CAAMP, they would have a pretty good idea since the vast majority of transactions would require a mortgage.

The lack of industry data available to analysts, economists and researchers leaves them in the dark about the actual health of Canada’s housing market.

Comment: Uh, what? They have all the data. They just think that CREA is lying and seem not to trust the numbers for some reason.

ViewPoint Realty founder Bill McMullin told HuffPost he believes those who head up the industry fear that putting more information into consumers’ hands could leave realtors in the same fix as travel agents, whose importance has diminished because of technology.

“They’re trying to keep the system, the structure, the policies in place … that prevent members from providing services on the web that are more efficient, consumer-friendly, allow people to learn on their own,” McMullin said.

Comment: You mean we are trying to keep control of the system we built and that we pay for? You want access, get your real estate license or ask a realtor. Try finding out what all the used cars in Scarborough have sold for over the past 6 months, you can’t. Or whether red cars sell for more than white cars. Or how long does it take, on average, for 2010 Ford Taurus to sell.

But it’s hard to know exactly what CREA is thinking. The organization’s president, realtor Beth Crosbie, rarely speaks publicly and the association refused requests to interview her for this story.

Comment: Well yeah… our industry is not headed by the most personable or media-friendly people.

The real estate industry has been taken to task by Canada’s competition watchdog. The Competition Bureau reached a deal in 2010 with CREA over restrictions that prevented brokers with alternative models from posting home listings on their monopolistic Multiple Listing Service, where 90% of the country’s real estate deals takes place.

Comment: Yes, and they still cannot steal data or infringe on trademarks. Just like Gmail cannot steal emails from Hotmail or use their trademarks. Exactly the same thing.

That has opened the door for websites specializing in a la carte services for a flat fee for those who opt to sell their home privately rather than pay the typical 5% commission. “CREA represents Blockbuster, while we’re a Netflix,” is how Walter Melanson at PropertyGuys.com characterizes the divergent business models.

Comment: All commissions are negotiable and all agents have open models where they do different deals with different people. There is no “typical” or “standard” 5% commission anymore. Trust me.

This time the fight is over access to information that would allow traditional agents to adapt and compete with alternative models.

Comment: No, the fight is over forcing realtors to hand over the keys to the system and database that they have built and paid for over decades. Anyone can start their own competing system, but they have to generate their own data. They cannot steal information from a system that is proprietary and privately held. Just like you cannot put your used car on a dealers lot to sell it, that is their property.

After a years-long legal battle over technicalities, the Competition Bureau will square off against the Toronto Real Estate Board in December over its prohibition against realtors building online databases like ViewPoint’s to give their clients direct access to more information. Currently, realtors must provide that information by email, fax, phone or in person.

Comment: No, that is not it. The Competition Bureau wants to make MLS available to everyone and anyone. Try forcing Google to hand over their search algorithms to Bing, for instance. No one argues about that. Bing is more than welcome to create their own search engine, but they cannot have access to data that is not theirs. That is what this issue is about.

Although the ban on such sites is widespread at boards across the country, the Competition Bureau targeted the Toronto board because it will have the greatest impact on consumers. The outcome of the case could shake up the entire industry, the way a similar case against CREA’s U.S. counterpart opened the information floodgates in that country.

Comment: And if the Competition Bureau wins, all major real estate companies will abandon MLS as you know and go to a new proprietary system. It is already being planned and built as we speak. This is a fight that is wrong on so many levels and will never end well.

After years of fighting over real estate agents’ right to post in-depth MLS information on their own websites, the U.S. National Association of Realtors and the Department of Justice reached a settlement in 2008.

Comment: I am allowed to post any information on my site as long as I have written permission from both the buyer and the seller. There are no rules against that. The rules are against me starting a competitor to MLS and then stealing all the information contained on MLS to populate my site. People have done that, been sued, and lost.

It paved the way for a new era of buying and selling homes in the United States. Now sites such as Zillow and its recently acquired competitor Trulia allow consumers to do much of the initial searching by themselves.

Comment: Like Redpin or Zoocasa here. We already have those same systems, there are alternatives all over the place for consumers. Property Guys, flat fee realtors, you name it.

Although the services benefit buyers most — those who aren’t paying anything for an agent anyway — they also allow homeowners to get an estimate of their home value simply by typing in some key information. Some argue that access to data — such as what neighbours’ homes have sold for — actually helps to stimulate the market because it gets homeowners thinking of selling.

Comment: And sellers could simply have 3 realtors come over and give them market evaluations. For free. How hard is that? Heck, have just one come. Or, they could hire a licensed appraiser to give them a value. The options are endless for people to get access to information. They just want our information. For free. And that is why we will fight it.

The sites haven’t destroyed the market for realtors, as some feared. In fact, many now advertise their services on Zillow to find new clients.

Canada’s Competition Bureau believes the Toronto Real Estate Board’s current rules prevent realtors from using technology to do their jobs more efficiently and give consumers more choice, said Richard Bilodeau, assistant deputy commissioner at the bureau.

Comment: Well then they are wrong. I am free to do almost anything, to be honest. I cannot “scrape” MLS for all their date, but I can post a lot of information on my site. And I do. I can negotiate my commission, and I do. I took a lower commission last week to make my buyer’s offer higher and she got the condo. There are no rules preventing me from doing any of that.

“We continue to have concerns about the restrictions they impose on agents wanting to innovate, and that’s why we’re continuing with this case,” he said.

Comment: I wish I knew what those restrictions were, I don’t have any on me.

The Toronto board declined comment for the story, but it maintains that it opposes online databases to protect sellers’ personal information. The board has set up a website, protectyourprivacy.ca, that warns if the bureau wins, sellers’ information will be made “publicly available to anyone on the internet.”

Comment: Which is a dumb argument. The real heart of the matter is that we built a system, it is OURS, we made it and we own it. And we should not be forced to give anyone access if we don’t want to.

The competition watchdog rejects that assertion, saying it is calling for password-protected sites that would be available to customers working with an agent.

Comment: Ever seen Redpin? They have their own version of MLS, essentially. There are data feeds you can set up that pipe listings into any site. From a neighbourhood to the whole country. We have consumer portals such as realtor.ca. People can purchase subscriptions to Geowarehouse and get assessment information, sales history, neighbourhood demographics and more. I pay $225/year for access to that information, anyone who is not a realtor can as well.

ViewPoint.ca is password-protected but open to anyone who registers for a free account, not just realtor customers. But it hasn’t changed the dynamic of the real estate industry, said McMullin, who wants to bring his ViewPoint service to Ontario and is a witness for the Competition Bureau.

Nova Scotia has more realtors now than it did in 2009 before the province opened up its data, and ViewPoint’s sales are booming, with its agents just as busy as before.

“It’s totally baffling to me that we’re in the dark,” he said. “If the competition commissioner does not win that case, or something doesn’t happen outside of that case, we’re going to be in the dark in Canada.

Comment: No one is the dark! The information is all out there, you just have to look and maybe pay for it. Or, god forbid, call a realtor and ask them a question. How hard is any of that? Seriously…

“The lights will be on in Nova Scotia, but out everywhere else, because people cannot make a well-informed decision if they don’t have the data.”

There are also questions about the accuracy of the real estate boards’ data. McMullin says he did a comparison of MLS sales data for Nova Scotia and the province’s land registry data. That research has led him to conclude that as much as 20% of the housing stock in Nova Scotia is not sold over the MLS.

Comment: But how do we know his math is accurate? You can question the data from one source, but then I can question your accuracy the same way. He said, she said.

“It’s important because most of the decisions related to policy in lending decisions are in some way based around what the MLS data says,” said McMullin.

Comment: What? Uh, no. Individual mortgages are based on a person’s credit and the appraised value of the property. Mortgage rates in general are based on bond yields. And prime rates are set based on internal and external economic factors. MLS has pretty much nothing whatsoever to do with any lending policies.

Not only are some houses potentially left out of the count, but CREA has faced allegations that it may be over-counting the number of sold houses.

Comment: And yet no one has been able to prove that.

Last year, a former real estate agent, Ross Kay, pointed out that some homes sold were being counted as two or three sales in CREA’s monthly numbers because they were listed for sale at several real estate boards, such as Toronto, Burlington and Oakville. When CREA aggregates the monthly numbers from local boards, one sold house listed on three boards is counted as three sales.

Comment: And that guy was soundly disproven. Toronto does not count Oakville sales, everyone knows that. But for some reason this guy thinks it is the case. And yet he has nothing to back it up.

CREA acknowledged that this is sometimes the case, but said the effect is insignificant and accounts for only about 0.8% of home sales.

Comment: And if you check the numbers after a few months, they change. Errors are found and data is confirmed. With hundreds of thousands of sales across 7,000km, sometimes a couple of mistakes could creep into the data. How about StatsCan and their job numbers that were off by 42,000 a couple months back? Data has errors, this is the way things work. Ever read about a survey that has margins of error? Come on folks, this is no uncommon, nor a sign of anything sinister.

But Kay warns this double-counting could also be distorting CREA’s average national selling price, which informs the CMHC’s reports on the Canadian housing market, which in turn are used by Statistics Canada and other government departments.

Comment: But he is wrong, so it doesn’t matter. Like the one single person calling for a 50% drop in home prices… a single voice against 10,000 pieces of evidence does not mean there are two sides to the story. It means you found a crank willing to spout doomsday scenarios to get their name in the news. Like climate change, the evidence is there and no crackpot screaming conspiracy can make it not true.

Kay owns a real estate consulting firm which has launched its own index of home values in Canada. His index relies on unfiltered data straight from the local boards rather than CREA’s aggregated number and strips out some of the issues with CREA data. He pegs the average year-to-date value for a Canadian home at $350,410 —about 15% lower than CREA’s comparable year-to-date estimate of $406,145.

Comment: So he takes the same data CREA does and then changes it to suit his beliefs, then calls it more accurate? Say what now? Does anyone else see a problem with that? He has a pre-existing bias, so he massages the numbers to suit his bias, then uses them as proof for his bias. Uh huh.

The monthly numbers have also come under scrutiny from analysts because the national organization does not immediately factor in revisions made at the local level. Some boards revise their estimates downwards after passing along data to CREA. Reporting initial numbers without revisions give the impression of a strengthening home market each month, Kay said.

Comment: Because the market is strengthening each day. Skip CREA and read the major papers in the major cities and they all talk about rising house prices. Like all of them. I read about this every day, I read the real estate news in Victoria, Edmonton, Halifax and Montreal. They all say the same thing as CREA, and not the same thing as this guy.

CREA’s figures are also skewed because of when boards take a snapshot of their listings — at the end of the month when inventory is at a peak, Kay said. Generally, the highest volume of listings expire on the last two or first two days of the month. For August 2014, he said, his calculations indicate that that meant more than 18,500 listings, or 7% of total listings, on July 31 were included in active listings and months of inventory estimates but were no longer for sale by Aug. 3.

Comment: When then means that when they say listings are down 4%, really they are down by 11%? That doesn’t support his position at all. It makes it even clearer that there is a supply/demand imbalance in this country that is pushing prices up.

Month after month, CREA reaches the same conclusion in press releases that pronounce the “Canadian housing market remains in balanced territory,” but Kay contends that the public is led to believe there are more houses available than there are, and that the market is not balanced but actually favours sellers.

Comment: Which I have been saying for years. And most areas do have a sellers market, and most media say so. Not sure what he is talking about. Prices rise when demand outstrips supply, as is the case in most parts of the country.

Many industry watchers are acutely aware of the issues with CREA’s data, especially in an era of inflated activity that continues to defy predictions of a market cooling.

Comment: Uh… nope. Really only this one single guy has a problem with CREA’s data.

Economists take CREA data with a grain of salt because numbers from an industry group are different from the vast majority of economic indicators analyzed in Canada, BMO economist Doug Porter said.

Comment: Where does banking info come from? The banks. Where does employment info come from? Employers. Where do car sales numbers come from? Dealers and/or car companies. The only way to get data on an industry is to ask the industry itself.

“The fact that the data are produced by CREA is simply a fact all parties should keep in mind when analyzing the figures, and more importantly, when reading their commentary,” he said, adding that overall he is not worried about the quality of the data.

“There may be some upward bias to the figures due to the double-counting issue, but we are ultimately looking at trends — is the market heating or cooling — and the decimal places don’t matter.”

Comment: Bingo.

Still, researchers want to crunch the numbers for themselves just as much as some consumers want to conduct the research themselves.

“Economists have accepted data points by MLS as de facto ways of measuring the real estate market, but really they are only half-measures,” Kay said.

“We need more data to analyze because CREA gives the good news only.”

Comment: They give you the news. If it happens to be good, you cannot claim it is false. If sales had been falling years, would he still question the data?

—————————————————————————————————–
Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
—————————————————————————————————–