Canadian Real Estate Industry: Consumer Sentiment Survey

Consumers need more than basic housing market knowledge from their professional realtor when navigating challenging Canadian real estate market, new study finds

New consumer survey by RE/MAX reveals that buying and selling in the Canadian housing market is not a simple “transaction,” but a complex negotiation

    • Almost half (41 per cent) of Canadians claim they aren’t knowledgeable when it comes to buying or selling real estate
    • 91 per cent of Canadians say that when looking for a REALTOR® for outside support, the top must-haves are ethics in business, patience, active listening and empathy
    • Eight in 10 Canadians (81 per cent) say that they would be more likely to work with a REALTOR® if they had a certification in professionalism

Toronto, ON and Kelowna, BC, May 26, 2021 – Homebuyers and sellers navigating the Canadian real estate market are in uncharted territory. Not only are they confronting another cycle of rising prices across the country, but historically low interest rates may test their long-term thresholds of affordability. As demand continues to far outstrip supply, none of this will be easily rectified in the short or mid-term.

Adding to these complexities is the unexpected rise of Canadians upending their urban lives in favour of new beginnings in suburban and rural settings, creating a dramatic shift in lifestyle expectations. As many as 35 per cent of RE/MAX brokers across Canada recently indicated that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021.

Given these mounting challenges, it’s not entirely surprising that nearly half (41 per cent) of Canadians claim to not be knowledgeable about the buying and selling process, according to a recent Leger survey commissioned by RE/MAX Canada. Yet, 50 per cent still expressed interest in buying or selling a home using a DIY platform for its perceived efficiency, ease and convenience. But nothing about the current Canadian real estate market is easy, and with affordability issues coupled with the current health and safety measures, going it alone could have unintended consequences.

Alexander adds, “It’s about educating buyers and sellers on how to vet and source a REALTOR®. Agents with the right local knowledge to help them successfully find properties that are reasonably and transparently priced, and homes that will not leave them financially stretched when interest rates inevitably creep up.”

Of the 41 per cent who aren’t knowledgeable when it comes to buying or selling real estate, nearly half (46 per cent) are millennials, the largest cohort of buyers and sellers across the country. They are also the ones most likely to test alternatives to a REALTOR®-led transaction; as many as 57 per cent state that they are more likely to buy or sell a home using real estate technology, given its increased availability.

Canadians’ thoughts on REALTOR®s

To date, most Canadians will choose to lean on a real estate professional to guide them through the buying and selling transaction; as many as 77 per cent claim to have previously used a REALTOR® to buy or sell a home. A streamlined process enabled by technology, knowledge of the market, support with legal paperwork, and access to listings are all notable reasons why consumers retain an agent, but technical acumen alone is not the marker of a REALTOR®.

According to the report, much of the satisfaction Canadians derive from the working relationship with a REALTOR® comes down to skills and qualities such as honesty/transparency (52 per cent), trust (39 per cent), and effective communicating (31 per cent). Good business ethics, patience, active listening, and empathy were all tied for the top REALTOR® must-haves by Canadians (91 per cent).

Yet, less flattering perceptions of the profession persist as a result of the industry not putting enough emphasis on the importance of using an agent who embodies the qualities of a professional realtor. As many as 51 per cent of Canadians feel that REALTOR®’s commissions are their only priority, with a third (32 per cent) believing that REALTOR®s do not accurately represent their experience or credentials, conflicting with the importance of honesty and trust.

Certain industry practices, such as blind bidding or under-market-listing, also add fuel to the fire, particularly for buyers. The lack of transparency around the transaction process has become a prominent point of conversation amongst industry professionals and consumers alike. The ongoing discussion of ethics as it relates to these practices presents an opportunity for those within real estate to realign on the best way to move forward for Canadian home buyers and sellers.

Guiding Canadians toward true industry professionals

The key to ensuring that Canadian home buyers and sellers are adequately supported through this challenging market, as well as breaking down any negative stigmas, starts by informing and educating Canadians on the attributes of a true professional realtor. With increasing technology providing more options for virtual, DIY listing and selling, it’s more important than ever that REALTOR®s promote and advocate the professionals who represent the vast majority of the industry.

“When 86 per cent of consumers who have retained a REALTOR® in the past say that they’ll retain once again, it suggests that we’re doing a lot of things right. But given the tragic and disruptive effects that the last year of living in the pandemic has shown, we cannot take anything for granted and we must advocate for the interests of our clients by helping them source the best, most ethical, most proven REALTOR®s in their communities,” says Ash. “We can start by advocating for more transactional transparency, helping consumers know the questions to ask when vetting agents and assessing their quality of professionalism, and educate them on the credentials and referrals to expect from their REALTOR®.”

What will drive Canadians to work with REALTOR®s?

In addition to the foundational legal licenses required of a REALTOR®, eight-in-ten Canadians (81 per cent) say that they would be more likely to work with a REALTOR® if they had a certification of professionalism or a standard they need to formally abide by to operate. Governing bodies such as the Canadian Real Estate Association have a professional code of conduct, known as CREA’s REALTOR® Code. Many provincial regulators have their own sets of regulations that also exist. Unfortunately, home buyers and sellers are often unaware that these standards are in place, not understanding the rules that govern industry practices, and may make assumptions that all REALTOR®s are free to professionally engage as they wish.

With nearly half of Canadians needing additional support and guidance when buying or selling real estate, certifying and making Canadians more aware of the proven markers of professionalism must be encouraged. It can serve as an optimal way to support home buyers and sellers through one of the most complex real estate landscapes experienced, while simultaneously improving public sentiment of the profession.

Additional survey highlights

  • 56 per cent are confident in buying/selling residential real estate; 48 per cent are not confident – and almost half (49 per cent) of those who state they’re confident are millennial homebuyers
  • Those who have worked with a REALTOR®, which accounts for 77 per cent of Canadians, are satisfied were very satisfied with their experience (51 per cent)
  • The factors conducive to real estate professionalism, as determined within the RE/MAX’s home buyer and seller survey include:
    • Honest/transparent (52 per cent)
    • Trustworthy (39 per cent)
    • Effective communication skills (31 per cent)
    • Neighbourhood knowledge and expertise (27 per cent)
    • Effective negotiating skills (24 per cent)
    • Ethical (24 per cent)
    • Dedicated (17 per cent)
    • Personable (11 per cent)
    • Punctual (9 per cent)
    • Good use of technology and online tools (9 per cent)
    • Good email/phone etiquette (8 per cent)
    • Empathetic (7 per cent)
    • Poised/can maintain composure (5 per cent)

About the Survey
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,500 Canadians was completed between January 28 – February 2, 2021, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.

Recent Blog Posts

Is the Okanagan Valley real estate market enduring a frenzy? Is relief on its way for this element of the British Columbia housing market? Will local homebuyers engage in bidding wars with out-of-province prospects? Are families looking to establish vacation properties in Okanagan? Many questions are lingering amid the current Okanagan housing boom, but first-time homebuyers only have one: Will we be able to afford a home in this red-hot market?

Across the entire western province, housing markets are experiencing a tremendous surge in sales activity and prices. As is the case throughout the whole of Canadian real estate market, it is a simple problem of shrinking supplies and soaring demand.

From Vancouver to Kamloops, prices are being driven by sluggish housing inventories and strong demand for what is left on the market. While some properties are coming online, not everyone is convinced it will be enough to feed the appetite of homebuyers desperate to acquire properties in one of the hottest markets of British Columbia.

For now, it would be prudent to comb through the recent spring trends in the Okanagan Valley real estate market.

Conditions Remain Hot in the Okanagan Real Estate Market

According to the Association of Interior REALTORS®, residential sales in the Okanagan Valley real estate market enjoyed record numbers in April, totaling 1,719 transactions.

The benchmark price across the region reported double-digit year-over-year growth for single-family houses and townhomes. However, condominium units recorded only single-digit percentage gains.

Overall, the average residential price is in line with the national average of around $700,000. At the same time a year ago, the average valuation for a home was approximately $600,000. What a difference a year can make!

But what is happening in the Okanagan Valley housing market? The primary trend in the area is supply failing to keep up with demand, a development that has become commonplace throughout the Canadian real estate market. This is evident in the listings and inventory data.

New residential listings came in at around 1,600 in April, while active listings were below 2,000. Active listings were way below the ten-year average.

The number of months of inventory was about two, which is down from more than 12 at the same time last year. This is a good measurement for housing stocks because it represents the current number of months it would take to sell present inventories at the current rate of sales activity.

“We can’t look at the data as we normally would as this time last year we were in the thick of our first lockdown due to the pandemic,” said the Association of Interior REALTORS® President Kim Heizmann in a news release.

She added that the region is facing a supply drought as “supply is still not catching up to demand.”

“Despite the supply drought the market remains strong and is starting to rationalize,” she explained. “With vaccine roll outs underway, once more and more people get vaccinated and we get some mobility and comfort back, hopefully we see more homes come on market.”

Is fresh supply coming to the housing market? According to the Canada Mortgage and Housing Corporation (CMHC), housing starts in Kelowna, one of the primary cities in Okanagan, were slower in May, coming in at 95. In May 2020, housing starts topped 150. That said, in the first five months of 2021, housing starts have risen 816, up from 767 last year.

Is the Okanagan Valley the New Draw in British Columbia Real Estate?

Suffice it to say, the Okanagan Valley real estate market has become the next big thing in the broader British Columbia housing sector. Okanagan, which encompasses Revelstoke to Eastgate Manning Park and into the South Peace River region, has quickly turned into a red-hot area of the province as homebuyers look beyond their limited options in Vancouver or Victoria. Even out-of-province homebuyers are captivated by what they see in Okanagan.

But not everybody is able to get their hands on a detached or semi-detached property. Real estate agents and industry experts are warning that there is little supply amid soaring demand. This has been the case for the last several months. However, as noted, new supply is slowly coming to market. Whether it will be enough to ease pressure remains to be seen.

For now, many local agents are working with renters from the Lower Mainland, first-time buyers from the area, and retirees from Calgary. Who will be next to call this gorgeous area of British Columbia – and the official wine country of Western Canada – home?

  1. What is the Bank of Canada’s current policy interest rate?
  2. When does the Bank of Canada announce its overnight rate?
  3. When is the next announcement?
  4. What factors did Bank of Canada consider in its latest decision?

Bank of Canada’s Overnight Rate

On June 9, the Bank of Canada maintained its target for the overnight benchmark rate at 0.25%

The Bank of Canada has announced that it will hold its key interest rate target at 0.25%. This rock-bottom rate has been in place since March 2020, when the pandemic prompted a trio of rate reductions in an effort to stimulate the economy. The Bank is not expected to increase the rate until the economy recovers, likely toward the latter half of 2022. The Bank’s quantitative easing (QE) program will continue at $3 billion per week.

The Bank has cited some positive indicators, including vaccinations proceeding at a faster pace than originally anticipated, and stronger-than-expected household spending in early 2021. The third wave of Covid-19 and the associated lockdowns dampened economic recovery in the second quarter, as was expected, but recovery is in sight.

Bank of Canada’s 2021 Schedule for Policy Interest Rate Announcements

Bank of Canada announces its decision for the overnight rate target eight times a year, typically on a Wednesday. The schedule for 2021 is as follows:

  • January 20
  • March 10
  • April 21
  • June 9
  • July 14
  • September 8
  • October 27
  • December 8

The next interest rate announcement is scheduled for July 14, 2021.

“Bank of Canada today held its target for the overnight rate…”

Read the release below:

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which continues at a target pace of $3 billion per week.

With COVID-19 cases falling in many countries and vaccine coverage rising, global economic activity is picking up. Growth remains uneven across regions, however. The US is experiencing a strong consumer-driven recovery and a rebound is beginning to take shape in Europe, while a resurgence of the virus is hampering the recovery in some emerging market economies. Financial conditions remain highly accommodative, reflected in broadly higher asset prices. Commodity prices have risen further, notably oil, and the Canadian dollar has seen a further appreciation.

In Canada, economic developments have been broadly in line with the outlook in the April Monetary Policy Report (MPR). Despite the second wave of the virus, first quarter GDP growth came in at a robust 5.6 per cent. While this was lower than the Bank had projected, the underlying details indicate rising confidence and resilient demand. Household spending was stronger than expected, while businesses drew down inventories and increased imports more than anticipated. Renewed lockdowns associated with the third wave are dampening economic activity in the second quarter, largely as anticipated. Recent jobs data show that workers in contact-sensitive sectors have once again been most affected. The employment rate remains well below its pre-pandemic level, with low wage workers, youth and women continuing to bear the brunt of job losses.

With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending. Housing market activity is expected to moderate but remain elevated. Strong growth in foreign demand and higher commodity prices should also lead to a solid recovery in exports and business investment. Despite progress on vaccinations, there continues to be uncertainty about the evolution of new COVID-19 variants. More broadly, the risks to the inflation outlook identified in the April MPR remain relevant.

As expected, CPI inflation has risen to around the top of the 1-3 percent inflation-control range, due largely to base-year effects and much stronger gasoline prices. Core measures of inflation have also risen, due primarily to temporary factors and base year effects, but by much less than CPI inflation. While CPI inflation will likely remain near 3 percent through the summer, it is expected to ease later in the year, as base-year effects diminish and excess capacity continues to exert downward pressure.

The Governing Council judges that there remains considerable excess capacity in the Canadian economy, and that the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s April projection, this happens sometime in the second half of 2022. The Bank is continuing its QE program to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding adjustments to the pace of net bond purchases will be guided by Governing Council’s ongoing assessment of the strength and durability of the recovery. We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.


Industry professionalism needed to build back consumer confidence

Particularly for buyers engaged in the Canadian real estate market, the transaction is filled with mounting complexities and undeniable frustrations – most specifically, the lack of transparency in under-market-value listing strategies within an already expensive market, and the perceived conflicts of interest this elicits among consumers toward professional REALTOR®s. In the interests of buyers and sellers, as they navigate limited housing supply, exceptional competition and associated affordability anxietiesit’s clear that the Canadian real estate industry needs to do better.

This starts by creating more standards of transparency in the pricing of properties, specifically focused on developing a fairer bidding process for all. It then continues within the offer process amongst prospective buyers to better manage their expectations, and those of sellers. This transparency helps to remove any doubt that a REALTOR®’s top priority is serving and advancing the diverse needs of each client.

Real estate should not be a side hustle practiced by those looking to make a quick buck. This undermines the credibility of the majority of REALTOR®s who treat this as a legitimate career, delivering critical advice to their clients every day. In a recent Leger survey commissioned by RE/MAX in February 2021, 86 per cent of Canadians who worked with a professional REALTOR® would do so again, suggesting that most REALTOR®s are fulfilling their professional duties. Yet, it’s not lost on us as industry leaders that perception is reality, and that the few can often undermine the many. New standards must be introduced, and fast.

RELATED READING: Consumer sentiments about the Canadian real estate industry

The scrutiny of Canadian real estate professionalism does not start and end with the consumer. Many of the industry’s own recognize that the practice of below-market-value listing strategies to spark bidding wars or enforcing blind bidding competitions are counter to helping clients engage in legitimate and affordable listings. Such practices also hinder a buyer’s capacity to make informed risk mitigation decisions about the transaction, such as the conditions they should include in an offer. A lack of transparency at the offer stage also increases the risk of buyers putting themselves in unnecessary financial jeopardy. If there was a time to make concrete updates to the practice of professional real estate, it’s now.

We recognize that most agents are doing their best within the confines of the current market, and that some of the push for blind bidding understandably comes from the seller. It’s the industry outliers who don’t do their best, who must be pushed out or forced to adapt their practices to that of the majority. The future of the industry depends on it.

Let’s take virtual listing platforms as an example. They have been widely available for some time, but their relevance and the inclination to use them grew in 2020. The opportunity for these platforms to replace the REALTOR® presented itself – but failed. The majority of Canadians surveyed who had recently used a virtual listing platform said they were likely to switch back to a REALTOR® for their next transaction. Why? Those same Canadians named ethical business transactions, empathy, effective communication, active listening and patience as their top REALTOR® must-haves. Virtual platforms simply cannot measure up in this regard. With that being said, preferences are subject to change over time. Industry professionals cannot let those working irresponsibly sabotage these sentiments as more alternative options present themselves moving forward.

What Does Real Estate Professionalism Look Like?

First, it starts by industry alignment on a new standard of REALTOR® professionalism that works to protect and benefit Canadian homebuyers and sellers. This should include industry regulations on the under-pricing of homes to eliminate overzealous bidding wars, as well as adding mandatory conditions to offers that make the purchase conditional on receiving legal approval. It means the creation of a national set of standards and ethics to operate as a REALTOR®, in order to help prospective clients better vet their credentials and professionalism. It means ensuring that buyers and sellers have the information, knowledge and necessary disclosures to both hire a reputable full-time professional REALTOR®, and by extension, engage in and complete Canadian real estate transactions that are within their means and levels of risk tolerance. Regulatory bodies in each province must put this on their agendas immediately to ensure that consumers are protected from unscrupulous activities within the industry.

Simply put, when we’re confronting one of the most profound and financially significant purchases of our lives, it’s paramount that the Canadian homebuyer and seller be in the ‘driver’s seat,’ both in perception and fact.

This column was written by Christopher Alexander, Chief Strategy Officer and Executive Vice President, RE/MAX of Ontario-Atlantic Canada and Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada