Canada Needs to Get Housing Right

The people can be forgiven for viewing elections with indifference. Like a spouse’s obsession with binge watching old television shows (that weren’t great when new), the themes can seem dully repetitive. Yet for those in the real estate industry, the pandemic-fuelled, hyper-focus on the importance of one’s home has elevated housing to arguably the most important issue in the 2021 federal campaign. Two topics that are generating a disproportionate level of debate are the housing supply crisis and the brokerage sales process itself.

Affordability is the surface issue that gets consumer’s blood boiling, and a lightning rod for vote-seeking politicians. Royal LePage research reveals that 57 per cent of Canadians aged 18-34 say that a candidate’s position on tackling housing affordability will influence their vote this fall. Further, we found that 84 per cent of Canadians are fearful that an increasing number of people will never own a home.

Yet affordability is simply the symptom – the result of the underlying malady. If you insist on dancing barefoot on sharp rocks, buying Band-Aids is folly. You need to buy shoes to stop the bleeding. Canada’s crisis is our meager housing supply. We have far too few roofs to shelter our people.

This is at least a decade-old problem; one that is getting progressively worse. Our millennials, the most populous generation in Canadian history, have driven unprecedented levels of demand for new housing. Newcomers, driven by the most economically successful immigration program in the world, need homes too. Instead of rising to the challenge, public housing policies at all levels of government have been a barrier to progress. Our bureaucracy has created slow and expensive regulations.

A recent Scotiabank report found that Canada’s persistent under-building has resulted in a shortage of some 1.8 million homes in this country, the lowest number of housing units per capita of any G7 country. Crisis is not too strong a word.

Thankfully, the major parties are waking up to the fact that adequate housing supply is the solution to affordability. Policy proposals include a number of new program ideas to increase the speed with which we build homes in Canada. We must hold the new government accountable to delivering on these promises.

Farther from the core housing shortage issue, the real estate brokerage process itself has found its way into stump speeches. Erroneously, some politicians (and too many consumers) have been led to believe that the way homes are sold is actually responsible for driving prices higher.

The current brokerage practice of sharing with prospective buyers the number of registered bids but not disclosing the value of those bids does not artificially inflate home prices.

Openly sharing the value of competitive bids would not materially impact home prices either. The brokerage process does not drive changes in property values. As Syrus wrote in the first century B.C., “Everything is worth what its purchaser will pay for it.” And in a market with escalating demand and limited supply, houses are worth more. Much more.

Importantly, while we recognize the fact that the brokerage process doesn’t hurt consumers, failing to evolve how we service clients would be a lost opportunity for our industry. We should and must continue to improve how we help families buy and sell homes. We need to embrace openness because our clients are demanding openness.

In the 2000s there was a series of emotional battles within the industry. Some Realtors fought our move to provide quality online images of a property’s features and detailed website mapping, arguing, “What will they need me for if they know where the house is and can see property features?” Of course these fears proved completely unwarranted. Even the Competition Bureau-triggered opening of the MLS system to limited service brokerages (mere posters) has done nothing to diminish the desire of clients to work with highly trained, licensed real estate professionals. FSBO-like services have smaller market share today than they did a decade ago.

In my business career, I have seen again and again that restricting a customer’s access to information they consider vital always backfires. As honest property brokers, we must move steadily towards the next stage of information sharing. The value of previously sold properties must be available online. And the competitive bidding process must become more open.

Transparency equals trust. And trust is good for business.
Article courtesy of Phil Soper, president and CEO of Royal LePage and Bridgemarq Real Estate Services – a Brookfield Company.