When you look around the world – and even directly at our neighbours to the south – you quickly realize that home buying and selling looks a lot different in Canada. And while many technology trends are shaping the experience for consumers, Canada’s real estate industry boasts strong structures.
I recently spoke to Realtor Kristi Mercier, the chair of CREA’s technology committee, and Patrick Pichette, vice-president of Realtor.ca to talk about technology trends shaping the real estate industry in Canada.
How is the Canadian real estate brokerage industry different from other countries?
Mercier: I visit my family in the U.S. and no matter where I go, like in Canada, real estate comes up and everyone wants to talk about the market and where it’s going. We also talk about how the brokerage industry is different in Canada compared to the U.S., where it’s a fragmented and messy landscape. When I explain how we’re structured here – and also how Realtor.ca is a resource for consumers that is run by Realtors, they’re in awe. The collaboration we have in Canada is second to none.
Pichette: How real estate is conducted in other countries is the wild west. In Canada, the large majority of licensees are Realtors. This means that the MLS system and rules of co-operation are at the heart of the transaction. The only other country similar to this is the U.S. But, only about 50 per cent of licensees are Realtors and participate in a local MLS system. So, what we have in Canada is great. (Realtor.ca) is a trusted brand. Realtor.com is a for-profit in the U.S. We get calls from other countries asking us about the Canadian system, which shows how highly regarded we are globally.
What trend surprised you the most over the last year?
Mercier: It didn’t go how I thought it would. Especially at the beginning of the pandemic, everything stopped. Agents who survived were nimble and had to quickly adjust to work with clients how they wanted to be worked with. I work in a more rural area – we saw a lot of people coming to the suburban centres. When you have people selling properties in the Greater Toronto Area (GTA), they often have more money to spend. These people then used those funds to buy in the suburbs and many locals in those suburbs started to get priced out of their own markets. Looking back, it’s obvious because lack of supply across Southern Ontario is a major factor.
Will this trend last, the movement from urban to rural?
Mercier: People who came from a very urban environment to rural areas are only now getting to understand what it means to live in a rural environment. If you want a Starbucks coffee, you have to drive 10 minutes to get it. If you forgot milk, that is another 20-minute drive. You have to be prepared! With schools, there are certainly not as many options. If you have a two-acre property, this is a lot of work. You can’t just buy a lawn mower – you need to budget even tens of thousands for a mower and other property maintenance equipment. But, there is no bubble that’s going to pop – if anything, I see the market flattening or slowing in price appreciation. No indication that the market is going to collapse based in large part on the lack of supply I mentioned before.
Pichette: Traffic from Realtor.ca showed a surprising trend that’s busting the myth that millennials and gen Z’s don’t want to buy. We saw people between the ages of 18 to 24 double in our total search traffic from five to 10 per cent of all traffic. There’s a difference in how this demographic approaches buying and selling – they’re starting their research earlier. They’re hungry for information and looking at the process for buying real estate. They consume our blog to learn about the process of buying a home and use our mortgage calculator at a greater rate than other demographics.
The takeaway is that they may not be ready to buy today, but when they’re ready to buy, you want to be top of mind. Dream of homeownership is still there and strong. Another myth is that millennials want to buy and sell on their own. We are still seeing millennials looking towards their Realtor to help them find a home and cut through the clutter of the information.
Would you say economic situation versus age is what drives the decision to use/not use a Realtor?
Mercier: Yes! I’ve seen that FSBOs are often those from the older generation, which is not the assumption.
It is often said that millennials won’t take a referral from parents and want to do everything virtually. I’ve found that a lot of millennials, if anything, were more in tune with wanting a trusted advisor, they ask more questions and want to understand more. This is here to stay.
How about the role of the Realtors? What trends are here to stay?
Mercier: Millennials especially demand more from Realtors themselves because they want to make sure their properties and listings are seen via digital advertising. So, Realtors better know how to do this. Also, digital signatures in the past were not trusted or embraced by many, but in the pandemic, you have to use technology. Virtual meeting presentations are another area where technology can help Realtors better serve our clients.
While I’m a very in-person kind of person, when you have a relationship with a client, it’s often more efficient to do a virtual meeting, like we are now. I can do a Zoom call and show them the paperwork as I’m filling it so it’s not coming out of left field before we sign an offer. I found that walking through the documents with a screen share on Zoom helped to keep my clients in the loop and comfortable in the process.
Pichette: Consumer expectations for digital engagement aren’t going away. The pandemic accelerated the adoption of technologies that were fringe before the pandemic like using live streams to do showings. In a couple of months, thousands of virtual open houses were promoted and homes with virtual/3D tours listed on Realtor.ca doubled. Another technology that had increased adoption was digital signatures. We have a 10-per-cent increase in uptake annually of digital signature tools. The takeaway is learning how to use these tools and integrate them into their businesses. Realtors have to be prepared to engage digitally.
What emerging technologies have your attention?
Pichette: Augmented reality (AR) and virtual reality (VR). Imagine if you could virtually see a property as if you were actually in the property and then be able to change the environment? That will change how we look at real estate, without a doubt. I believe as wearables become more acceptable, VR/AR will have a huge impact on the industry as real estate is a very visual product.
We were paying attention to this pre-COVID – and today we are still just scratching the surface. Augmented reality will let us virtually visit the house and walk through with the contractor, change the environment, change the furniture replacement, the colours on the wall. Virtual reality will let us experience the neighbourhood. We’re starting to see this. It’ll integrate into Google Maps. It’ll likely start with a street view and then you can click on the house and enter into it.
Mercier: When I think about what Patrick is talking about, it’s a natural progression. I’ve been a Realtor for 13 years and I remember only being able to put up 13 pictures on my MLS listing. Now I can do virtual tours and show a 3D view of the house and now drones are allowed – they were previously restricted by air field regulations and general bylaws.
We already see old homes that are in terrible condition and people are digitally enhancing the home to show what the home could look like. Live action or real time are both being augmented by technology. Right now, I feel that we still need to go in person because photos don’t give an accurate sense of space, but virtual and augmented reality is so immersive that you can get closer to that. I still laugh when I see listings come up and someone took pictures with their cell phone and there are only four photos. It’s mind boggling that that even happens today.
What is everyone else betting on that you think won’t happen?
Pichette: Displacement of Realtors. Realtors will not go away, they will continue to be part of the transaction. I’m a technology enthusiast. But there’s a human element to buying and selling. Technology will take over the administrative side of the business, such as research, back and forth on paper work, but that’s likely it. Realtors will have to be ready to integrate these technologies, but there will also be a role for the Realtors as a trusted advisor.
Mercier: Some people point to the example of buying a car online as the future for real estate – but a home is a very expensive event. It’s a non-recurring event, which makes the decision more valuable and costly if you get it wrong. Our role has to focus on being a consultant and to navigate the process. This is where technology comes into play to support us but it cannot replace us.
What’s a half-baked crazy prediction you have about the real estate industry (anything goes)?
Pichette: Some day somebody will own real estate in outer space. But to get real about the question, something we’ll hear about a lot more is fractional ownership. The technology is there today to do this. Blockchain will make it easier to record who owns what. Crypto currency will simplify the process and payment. Whether for financial reasons or investments, this fractional ownership is something to pay attention to.
Mercier: Less half-baked and more of a “fingers crossed” wish is that the different levels of government get more creative and make legislative changes for more flexible options for home ownership, such as fractional ownership, renting out more of your home more easily or building more rental space on a property.