There has been a lot of news lately about opening up the Canadian Real Estate market and allowing easier access to list properties on MLS, in addition to accessing more of the detailed information on MLS. Historically, this data has only been available to licensed, registered real estate agents, but today, their stranglehold on this information may have loosened.

The Competition Bureau announced today that it will challenge rules imposed by the Canadian Real Estate Association (CREA) that “limit consumer choice and prevent innovation in the market for residential real estate services”. The Commissioner of Competition has determined that CREA’s rules restrict the ability of consumers to choose the real estate services they want, forcing them to pay for services they do not need. The rules also prevent real estate agents from offering more innovative service and pricing options to consumers, such as agents simply charging a fee for listing a property on MLS, and the consumer can purchase additional services only if they want to. The Commissioner’s application to the Competition Tribunal seeks to strike down these anti-competitive rules.

Melanie Aitken, Commissioner of Competition said, “Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options. While the Bureau would have preferred to resolve this matter amicably, CREA’s leadership was unwilling to agree to changes that would have opened up competition, and offered options for consumers and real estate agents.”

For example, under CREA’s rules, agents are prohibited from offering consumers the option of simply paying a fee for an agent to list a home on the MLS system. Instead, all consumers looking to list a property on MLS must purchase a pre-determined set of additional services from a real estate agent, such as the presentation of offers and negotiation of a final deal.

These rules have given room for the For Sale by Owner or private sales to grow. These companies mainly offer their services over the internet and charge a seller to list their property for a much reduced cost and they don’t have to pay a commission once they sell their property. The major issue is getting enough eyeballs or buyers to these websites, to generate enough interest for people to sell their homes. That’s the main draw of the MLS system, its popularity, as so many people use it to look for homes for sale, although after today’s announcement it will be interesting to see if that’s still the case in 5 years time.

The Canadian Real Estate Association (CREA) reported that existing home sales had its best month ever in December 2009, housing bubble, what housing bubble!? The second half of 2009 push annual sales above 2008 levels as MLS sales showed 27,744 units sales in December 2009, which was a 72% increase year on year, although December 2008 hit its lowest monthly level in a decade. December 2009 had a new record level of sales for Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland & Labrador.

CREA’s President said “The continuation of unusually low interest rates may keep national sales activity near current levels over the
coming months, as will a blip in housing demand in Ontario and British Columbia from homebuyers motivated to beat the introduction of the HST.”

A few interesting stats from the report:

These price increases and contiuing strong demand are bringing more sellers to the market as new listings on the MLS across the country increased to 33,090 in December 2009 which was the highest on record (+4.8% over Dec 2008).

CREA Chief
Economist Gregory Klump commented:

“CREA’s latest statistics will no doubt spark further bubble talk amongst the usual suspects,” said . “Cooler heads recognize that many of the recent gains reflect temporary factors that could fade by summer.”

“By the second half of 2010, price gains are likely to shrink significantly, since a year will have elapsed since the decline and rebound.”

“Further expected increases in supply will also take some steam out of the market. A more balanced market will result in smaller price increases in the second half of the year, but a massive decline in demand similar to what we saw in late 2008 and early 2009 seems as unlikely as a massive spike in supply.

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Here is the overview from Gregory Klump:

The Canadian Real Estate Association (CREA) has released Q1 2008 stats. The results thus far seem to indicate that the housing market in Canada is definitely starting to slowdown, however, it is performing much better than in many other countries.

Canadian House Prices:

Canadian Housing Sales

Foreign Markets
It looks like the Canadian real estate market has been fairly resilient when compared to other markets around the world, as reported in the Edmonton Journal:

The MLS ® Major Market Residential Summary:
First Half 2008