CREA & Competition Bureau Settlement Leads to Unintended Consequences in 2011

As with any structural changes to an industry, the settlement imposed by the Competition Bureau on Canadian Real Estate Association’s MLS website will have many unintended consequences on the health of the Canadian real estate market. We are currently completing a full report and analysis of these consequences (some of which are OK and some of which are not good news). This report will be released in the latter part of January 2011; however, here are some preliminary conclusions that will affect the overall market:

1.Housing metrics will indicate incorrect readings of the health of the market, leading to inaccurate analysis by some market commentators during the year

2.Often used metrics such as ‘sales to listings ratio’, ‘days on market’, and ‘overall number of listings’ will be impossible to use as comparisons to previous year’s performance. This is because, under the new rules, there will be many more listings being posted by people just fishing the market at very little cost (many poorly priced, poorly managed listings left in the system too long).

3.These additional listings will lead to average price increases being softened more than the underlying economics would usually lead to.