Monthly Archives: October 2010

GTA Market Report – October 19, 2010

Toronto house sales mid-October 2010

The Toronto Real Estate Board today released sales data for the first half of October. The average price for a home sold in the GTA in this time period was $444,644, approximately 7% higher than the corresponding period in 2009. Placing that figure into our usual chart (above) gives a remarkably familiar picture. The pattern is classically seasonal, almost identical to the outcomes in 2009 and 2007, and also pretty much the same as in 2006 (and many previous years). 2008 is and will remain the outlier.

It’s almost embarrassing to point out that the single previous month when home prices were this high was May 2010 ($446,593). While results for the entire month of October are not assured to be quite this high, the overall pattern shows continued typical behaviour in the Toronto housing market.

The number of properties changing hands continues to be on the low side this month. At the same time, the numbers of available listings are also pretty modest. A simple explanation for the thinner volumes this fall is that a large number of purchases were made in the first half of 2010. The final number of sales on TREB this year will be very close to 2009’s total of 87,308 (the record volume was 93,193 homes sold, in 2007).


Social media: Aren’t weak ties a wonderful thing?

Malcolm Gladwell’s recent piece in the New Yorker, titled “Small Change: Why the revolution will not be tweeted,” is worth reading. It’s a thought-provoking analysis of what social media can and cannot do, or at least do well. At a time when many of us are absorbed in trying to stay abreast of the latest tech-savvy trends in business and culture, it’s a good idea to assess the strengths and weaknesses of the assorted social tools we now use.

Malcolm Gladwell

Gladwell describes the kind of social activism that led the Civil Rights movement to success in the 1960s. He contrasts the intense commitment and precise organization of a handful of activists who pioneered lunch counter sit-ins, with the soft activism of Facebook, where, he notes, “the Save Darfur Coalition has 1,282,339 members, who have donated an average of nine cents apiece.” He questions the influence of Twitter during the 2008 Iran election, quoting Golnaz Esfandiari  in Foreign Policy. “Simply put: There was no Twitter Revolution inside Iran. … Western journalists who couldn’t reach—or didn’t bother reaching?—people on the ground in Iran simply scrolled through the English-language tweets post with tag #iranelection,” she wrote. “Through it all, no one seemed to wonder why people trying to coordinate protests in Iran would be writing in any language other than Farsi.”

The key concept, according to Gladwell, is to recognize that social media have specific strengths:

The platforms of social media are built around weak ties. Twitter is a way of following (or being followed by) people you may never have met. Facebook is a tool for efficiently managing your acquaintances, for keeping up with the people you would not otherwise be able to stay in touch with. That’s why you can have a thousand “friends” on Facebook, as you never could in real life.

This is in many ways a wonderful thing. There is strength in weak ties, as the sociologist Mark Granovetter has observed. Our acquaintances—not our friends—are our greatest source of new ideas and information. The Internet lets us exploit the power of these kinds of distant connections with marvellous efficiency. It’s terrific at the diffusion of innovation, interdisciplinary collaboration, seamlessly matching up buyers and sellers, and the logistical functions of the dating world.

Gladwell takes issue with claims made by New York University lecturer Clay Shirky, a prominent commentator on the social impact of new social media. Shirky is convinced that we are witnessing an epochal change akin to the original industrial revolution. In his blog, Shirky writes:

With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem.

In response, Gladwell writes, “The instruments of social media are well suited to making the existing social order more efficient. …  If you are of the opinion that all the world needs is a little buffing around the edges, this should not trouble you. But if you think that there are still lunch counters out there that need integrating it ought to give you pause.”

Canadian internet expert Michael Geist followed up on Gladwell’s article with his own comments in the Toronto Star. He argued that there are appropriate roles for the “weak tie” activism of social media, and pointed to the recent success of individuals and NGOs around the world in affecting the final outcome of the recently finalized anti-counterfeiting trade agreement:

While digital advocacy alone was not responsible for these efforts, it played a crucial role, providing instant dissemination of leaked documents and expert analysis. The battle over ACTA may not be the equivalent of the fight for civil rights in the 1960’s, but the relative success in changing the terms of the agreement that was a top U.S. priority demonstrates the power of digital advocacy and the potential for weak ties and loosely organized groups to come together to influence global policy.

As commentators continue to parse the implications of new media, the rest of us will be on our toes, trying to keep, if not exactly abreast, at least in hailing distance of the cutting edge. Just as I’ve started to put up individual web sites for my listings (with a sticker on the lawn sign that says the equivalent of “”), I’ve learned that I’m still behind the curve… The latest thing is to put a bar code on your sign, that can be scanned by buyers on their iPhones, giving them an instant link to my web site. Once we’ve climbed onto this merry go round, there’s evidently no getting off.

Mortgage rates continue to be low

In a climate where bank rate increases are being put off indefinitely, Canadian mortgage rates continue to be extremely low.

Mortgage specialists report discounted rates for 5-year closed mortgages at 3.69%, and “quick-close” 5-year mortgages are being offered at 3.25%. Variable rate mortgages are availabe at around 2.5%. Given a lack of upwards pressure on rates, the variable-rate products look increasingly attractive this fall.

In this market, buyers are left in a position where they have to make serious choices, about how much debt to take on, and how quickly to pay down that debt. This is a great opportunity for buyers, but with that opportunity comes a responsibility to make serious plans (and stick to them).

What’s going on with MLS?

You may have seen media coverage regarding potential changes to MLS. The MLS system used by Realtors across Canada is owned by the Canadian Real Estate Association (CREA). In 2010, the Competition Bureau entered into a discussion with CREA, indicating its concerns that the rules which regulate how MLS is used by its members might be too restrictive or monopolistic. Many Canadians have expressed strong feelings about this issue. In this post, I’ll put down my personal take on what it all means.

A little background…

The genius of the Multiple Listing System concept is this: it allows member Brokerages to share information, including much that is confidential, with other Brokerages who are all bound by the same rules of confidentiality and responsible use. It allows me, as a licensed Realtor, to “co-operate” with any one of hundreds of Brokerages in the GTA or beyond, in order to show or market their listings to my clients. (Note: the “public MLS” site,, is a separate marketing site, where confidential information has been stripped from the data.)

The benefit of MLS for Sellers is clear: their home can be marketed by all Realtors to their clients, rather than only by their own Brokerage. The benefit to Buyers is also clear: a client with any Realtor has access to all suitable homes, regardless of which Brokerage holds the listing.

There is a second benefit to Buyers that is crucial, but less obvious. The rules that govern the use of MLS by member Brokerages ensure the reliability of the system, and the data on it. Brokerages are responsible to ensure that the information they load onto the MLS database is accurate and timely. This means that if a house is advertised as having a private drive, the Brokerage has ensured that it does in fact have one. If a Brokerage advertises that the living and dining rooms have hardwood floors under the broadloom, and it turns out to have plywood, then the Brokerage is answerable to the Buyer. The measurements, legal descriptions, and tax information all have to be accurate. Every day, when Realtors bring their clients to one of my listings, they rely on the integrity of the information I have provided on MLS, which they pass on to their clients.

Why the fuss?

The complaint has been that since MLS is so widely used, it’s not fair to keep out folks who just want to get their house posted. In fact, some brokers for years have envisaged a business model where they could charge owners a small fee to simply provide a conduit for the electronic uploading of “for sale by owner” listings onto MLS. This would be something like Craigslist, though not exactly free.

One misconception is that until now there has been no choice in the price for Brokerage services. In fact, Realtors have been competing openly and aggressively for as long as I can remember, and wide varieties of pricing are being used every day.

As a member of CREA, my view has always been that the strengths of a well-managed MLS add a lot of value for consumers, both buyers and sellers. If changes can be made to increase the value of the MLS system, great! But I’ve always been aware that openness and competition are just pieces of the puzzle. Part of the responsibility of operating a web-based data system is to protect people’s privacy, under the federal government’s PIPEDA legislation. And as Brokerages we function in a regulatory environment under provincial statutes, which in Ontario include REBBA and the Consumer Protection Act. These laws demand strict adherence to rules about how business may be done, and who is permitted to do it.

What’s going to happen next?

CREA and the Competition Bureau have a tentative agreement, which needs to be ratified by CREA’s stakeholders across Canada. Until a firm agreement is in place, details will not be released. When the dust settles, expect both sides to claim victory without too much changing.

My guess is that CREA will find a way to spell out how some limited-service options can meet the legal requirements to be placed on MLS. Brokerages will still bear legal responsibility for their listings. As information technology continues to evolve, consumers will have more options for how they obtain information. And Realtors will continue to add value to their clients’ buying and selling. Some will provide narrower service options, and that will enhance the range of available choices.

My bottom line

As an experienced Realtor, I know that my work has provided value for my clients. By providing market analysis and negotiating skills, I’ve optimized their monetary outcomes. By providing psychological support and partnership, I’ve made a complex and scary process seem almost easy for them. A lot of what I’ve done for my clients has not shown up on any invoice (see my earlier post, 9 Free Real Estate Services.) I’ve also done my share of volunteer work in the community, and I know myself well enough. Whether the work is paid or unpaid, it’s still my work, and I don’t compromise on quality.

Return on investment from early childhood education

People like to talk about “investing” in education. Too often you get the feeling that objective criteria still don’t really play a big part in how to spend education dollars. Here’s a chart that helps us see where that investment can really pay off:

University of Chicago economist (and Nobel Laureate) Dr. James Heckman uses a cost-benefit approach to demonstrate that investing in programs for very young children provides far greater economic benefits to society, as compared to formal or remedial programs for older youth or adults. In fact, Heckman’s detailed research shows some powerful advantages to extending ECE and pre-school education. Some key benefits are summarized in the 2009 Martin-Florida Report as follows:

  • Caregiver trust, which leads to higher confidence, less rigid approaches to problem solving, and higher levels of curiosity later in life
  • Language acquisition skills, which are important for verbal conflict resolution and curbing aggressiveness
  • Appreciation of relative quantities, which helps in later higher-order, non-rote mathematics
  • Symbol recognition, which is essential to advanced verbal and quantitative processes

This is an argument that should appeal to social conservatives. Spending more on early childhood education is a fiscal choice that shows prudence. It’s a way to reduce expenditures on  more costly social programs, while building a solid base of human capital to support economic growth in the next thirty years.

Why I support Smitherman

As a Realtor, I’ve always been aware that Toronto’s economic success has depended on employment and immigration, and that the GTA’s attractiveness as a place to live, work and invest has depended on our cultural tolerance and diversity. What puts Toronto on the map is our identity as a world city… our population is connected to all parts of the globe through family and cultural ties. What would harm Toronto now would be to pull back from investing in our people and our future.

A key part of the Mayor’s role is to articulate and represent the vision of the city. A year ago, it seemed that two potential candidates had the stature and skills to fill the role: John Tory, and George Smitherman. In my view, either would have been a fine choice. In the event, only Smitherman came forward, and it was not clear for some time whether he would face a strong competitor. Rob Ford’s success at embodying the discontent of many voters was probably a surprise to Ford himself. But it’s easy to complain, while leading a city takes hard work and an organized mind.

Smitherman as Mayor will provide a positive voice for Torontonians, and he will be determined to promote programs that enhance the city’s growth and quality of life. He is a workaholic with a proven record for getting things done; he knows how to prioritize and delegate; he will keep his eye on the big picture. Former mayors David Crombie, Art Eggleton, John Sewell and Barbara Hall all recognize that Smitherman is the best choice for Toronto.

For Smitherman’s campaign web site, go to .

Monday, October 25th is voting day, with polling stations open from 10:00 a.m. to 8:00 p.m.

GTA Market Report – October 5, 2010

Toronto home prices moved upwards as expected in September. The monthly figure reported by the Toronto Real Estate Board was $427,329. As you can see in our chart, this outcome is completely consistent with the seasonal pattern, representing about a 4% increase from the August average sale price. The uptick from the summer low is similar in four of the last five years (with Fall 2008 being the obvious outlier.)

Why these predictable  month-to-month swings? Most people point to consumer psychology. It’s just more popular to buy a home in the spring or fall months. (And in real estate, higher volumes and higher prices usually go hand-in-hand.) The other factor seems to be the tendency for the higher-end properties to change hands far less during the traditional family vacation times.

Common sense suggests that homes don’t simply increase or decrease in value on an arbitrary month-to-month basis. Nonetheless, knowing when the peak times are likely might play a legitimate role in a seller’s decision on when to market his home. For instance, if we dig deeper into the Toronto sales statistics for the month just past, we find an even more intriguing pattern. On a week-by-week basis, average sale prices in the GTA market actually rose around 2.5% per week, or 10% within the month… that’s right, from about $405K before Labour Day, all the way up to $447K in the last week of September. This pattern may have little to do with actual value, but it says an awful lot about how people – and markets – behave.