Which topic do you think will affect you more on a personal level?

Do you currently own a property that you are leasing out short-term?  Were you thinking of purchasing one?  Or are you a would-be renter who can’t find a place to live, and who feels that AirBnB is causing a shortage in Toronto?

Do you follow real estate legislation closely?  Are you familiar with the proposed changes to the Real Estate & Business Brokers Act?

Let’s look at the AirBnb story first…

AirBnb has its supporters and its detractors.  I’m willing to bet that the readers of this blog would be split 60/40 in favour of the platform, but I could be wrong.

I see the arguments from both sides, and to be quite honest, I’m torn.

Perhaps you folks expected me to pull out the laminated “Capitalist” card, and slam it down on the counter, while fighting in favour of AirBnb.  But here’s another thing you probably never thought you’d hear me say: we need regulation.

Some regulation, that is.  You know I’m not in favour of the government hatching new taxes a la, “pet licenses” and the like, looking to Big Brother their way to another $50 here, and another $50 there.  But real estate is perhaps one of the most complex animals in our fair city, and has been for the last two decades.  We truly do have a housing crisis in the city, and while we could argue all day and night as to what the cause, and potential solutions, of this crisis are, I think it starts with just a very basic amount of regulation.

People love to compare AirBnB to Uber, and the comparison is there.

I like Uber, but not for the number-one reason that most people do, which is cost.

The first time I ever took an Uber was after the LSU Tigers lost at home to the Arkansas Razorbacks in Baton Rouge, Louisiana, back in 2015.  I can’t even tell you what that experience was like, by the way.  Let’s just say that it was like every stereotypical college movie ever made, right down to the “quad” in the middle of the campus.  I mean, who brought the couches?  Where did they come from?  And who cleaned up the pyramid of 25,000 beer cans?

There weren’t any taxis floating around outside the stadium after the game, and we were told “Try Uber.”  We did, and another stereotype in the form of a “good ole boy” from the deep south picked us up in his Ford F150.  He was young, clean-cut, and so too was his car, which smelled like he just drove it off the dealership lot.  He gave us each a cold bottle of water from his cooler, and thankfully had iPhone chargers plugged into both back seats, which was perfect for me, since my phone was dead.  His country music playlist was spot-on, and just at the right volume.  He was nice, kind, told us all about the town, the football team, and engaged in a surprisingly mild conversation about American politics.  When he dropped us off, I was shocked at how low the fare was.  He said, “Oh boy, I turned tha meter off ‘long time ago.  I feel bad ’bout the traffic and the time y’all spent in muh truck.”

Contrast this experience with yet another stereotype: that of the “dirty cab in a big city,” and suffice it to say, I became an Uber fan.

I’ll be honest: I don’t really care if my cab ride is $17 or $12.  I’m not that price-sensitive, and while I realize that this is why most people enjoy Uber, it’s not why I do.

I had grown tired of Beck Taxi and their disgusting passenger seats, with torn pleather, stinking like a dozen different awful things that you can’t quite place.

I also preferred ordering a ride on my phone, rather than calling for a cab.  Remember that?  Many of you don’t.  But remember trying to call dispatch for Royal, Beck, or Co-Op on a Saturday night after the bar?  I still know the phone numbers off by heart.

More recently, I’ve seen the service level of Uber drop dramatically, but that happens in markets for goods and services where the first-mover-advantage gives way to the masses, and eventually new participants flock to the market and dilute the quality.

But I do think Uber has a place in the market.  I just don’t think that anybody should be able to get in the car and drive around, picking up passengers, without the proper insurance coverage, training, and regulation.  Yes, regulation.  Not necessarily financial compensation to the city.  These are two different topics.  But even a name in a database at City Hall is a good start, and a necessary one.

So when it comes to AirBnB, while I see a definite need in the marketplace, I also see the need for oversight.  Again, not money being siphoned to City Hall, but just enough regulation to prevent chaos.

There was a lot of press about this in the papers this week, but I always to go Tess Kalinowski from the Toronto Star first and foremost:

“Landlords Lose Appeal Over Toronto’s New Rules To Limit AirBnb, Other Short-Term Rentals”
Tess Kalinowski
Toronto Star – Monday, November 18th, 2019

Here’s an excerpt:

A provincial planning tribunal has rejected an appeal by Airbnb landlords and upheld the city’s short-term rental rules in a decision that is being touted as a “major victory for tenants across Ontario.”

In his ruling, an adjudicator for the Local Planning Appeal Tribunal (LPAT) rejected landlords’ arguments that short-term rentals were just like any residential use of a home.

He said the city’s Airbnb regulations “represent a reasonable balancing … ensuring that housing is provided for residents, that a full range of housing is available including short-term rentals, and that the business and tourism economies are supported.”

Toronto council approved the zoning bylaw amendments in December 2017. They were supposed to take effect in June 2018 but were never enforced because of the appeal at the LPAT.

Under Toronto’s rules, short-term rentals would be allowed only in landlords’ principal residences for up to 180 nights a year for an entire house or apartment. Homeowners could also rent up to three bedrooms year round on a short-term basis — a term defined as less than 28 days.

Homeowners also wouldn’t be allowed to use basement apartments as short-term rentals. Only the full-time resident of those suites could let those units for less than 28 days.

In a written decision Monday, the LPAT said the city’s approved rules have the potential to return up to 5,000 of Toronto’s more than 21,000 Airbnbs to the long-term residential market. Those are the units where the property owners are not residing but rather using the homes exclusively as short-term rentals.

I can tell just from reading this excerpt that there are many different reasons why people don’t like AirBnB.

As I just explained, I think there needs to be some oversight and regulation.

But many seem to think that AirBnB is causing higher real estate prices, and in theory, I would agree.

It doesn’t take an economic genius to deduce that lower supply, with the same amount of demand, will cause the price to increase as a result.

But how many properties in Toronto are being used as short-term rentals?  Enough to cause a dramatic shift?

Later in the article, we’re told:

In a written decision Monday, the LPAT said the city’s approved rules have the potential to return up to 5,000 of Toronto’s more than 21,000 Airbnbs to the long-term residential market. Those are the units where the property owners are not residing but rather using the homes exclusively as short-term rentals.

“Even if you return only 3,000 it’s a huge win for renters in Toronto,” said Thorben Wieditz of Fairbnb, a pro-regulation coalition of tenant advocates, community groups, academics and hoteliers that participated in the appeal process.

How much of a “win” is 3,000 units?  Not from the standpoint of availability, or ease of securing a property, but rather from a price standpoint as the result of supply and demand?

My question isn’t rhetorical, and unfortunately, has no easy answer.  But 5,000 of 21,000 isn’t exactly a gold medal, is it?  Especially with the word “potential” thrown in there?

AirBnB too often gets associated with other unfortunate incidents, as we all remember this story:

“Video Of Balcony Chair Toss Sparks Calls To Re-Examine AirBnB, Balcony Rules In Toronto”

I’m no detective, but I might be inclined to suggest that this 19-year-old chair-thrower wasn’t a direct result of the existence of AirBnB.

And this week, the Toronto Star gave us this story:

“What Toronto’s New AirBnB Rules Mean For Party Rentals”

Again, I’m not sure if AirBnB is completely to blame for party rentals.

The house next door to me is for rent right now, and the owner is actually a guy I knew back in high school!  Our neighbour told me last week, “You wouldn’t believe the parties he and his sister used to have ten years ago when they first moved in.  They were young, had their own house, loved to party, and it was relentless – every Saturday night!  We’d be out on the street, shaking our fists, often calling the cops.”

Anybody can have a house party.  Anybody can rent a house out for a party.  AirBnB makes it a lot easier, but that headline seems to infer that it’s a larger problem than it is.  Just my two cents.

–

Our second topic today is one that I would like to call, “Much Ado About Nothing.”

Because when the dust settles, the smoke dissipates, and the mirrors are taken away, you’ll see this for what it really is: nothing.

Tess gave us this headline on Tuesday:

“Ontario Updates Real Estate Rules Making It Easier To Punish Bad Agents”

That is the one benefit that came from these changes, I mean, once it’s passed…………in four years.

But the rest of the headlines are all gobbledygook, if you ask me.

How about the press release from our Ontario government?

Wow, that looks impressive!

But those of us in real estate circles see very little within this legislation that will impact consumers.

First and foremost, consider that the existing act, REBBA, 2002, wasn’t in effect until 2006!  To be fair, there was an election in between, but nonetheless, who believes that TRESA, 2019, is going to come into effect any time soon?

TRESA.  The “Trust In Real Estate Services Act.”  It sure sounds more consumer-friendly than the “Real Estate & Business Broker’s Act.”

Unfortunately, the main take-aways here will do little to impact consumers:

1) Allowing personal corporations for real estate agents.

2) Specialty certifications as advertised must be proven through either education or a proven book of business ie. “Condo Specialist,” “Seller specialist,” etc.

3) Sellers to have the option of an open offer scenario where they can opt into sharing the details of all offers in a multiple offer situation.

4) Proposed new Tarion for builders in order to better protect the consumer who are buying/selling through developers rather than realtors

5) RECO is able to now enact tougher fines and immediate disciplinary action for minor infractions at their discretion

6) There will be no more customer relationship – either a “client” with fiduciary duties or “self-represented”

7) Proposed name change to “Agent” vs. Sales Representative

So which parts of this help the consumer?

#1 doesn’t, that’s for sure.

And #7 doesn’t either, since the public could not care less what we call ourselves.

I don’t believe #2 has any impact, since, again, the public laughs at the average Realtor’s claim that he or she is #1 in this or that.  Everybody is #1 at something, somewhere.  Not only that, this would really only be useful after the fact, ie. somebody complains that Joe Realtor is claiming to be a “Specialist” even though he does one deal per year.  So then what?  RECO makes him change his business card?

I personally don’t think #3 will have any impact, since no seller in his or her right mind would want this.  And if they do, well, they must be the same people putting their grocery money in the church donation basket every single Sunday.

#5 is great, but this lacks any detail whatsoever, and since RECO won’t stop from licensing more and more agents every year, with no qualifications, zero training, and making it easier for any moron to start a “Brokerage,” then they’re not really addressing the root problem.

#6 is something very few, if any, people know exists.  Did you know that there’s a “Customer” and a “Client” relationship choice, as a buyer or seller?  Probably not.  At least when somebody wants to be self-represented, today, we owe them certain fiduciary duties.  Strip that away, and let them be truly “Self-Represented” by definition, and they’re just another neighbourhood genius getting creamed in the most frenetic real estate market on the planet.

As for #4, this is where I think consumers could be the most protected, and I would love to see this legislation completely re-written, but I don’t believe it will happen.  Developers already run the city of Toronto, essentially telling City Hall, what’s up, so I have a hard time believing we will experience meaningful change here.  I think that RECO could do much more to protect consumers from themselves, which I’ve heard is going to part of this legislation.  Apparently a two-page summary of the risks of investing in pre-construction condos is on the table, to accompany the slime-covered APS that naive “experts” sign when they buy at the sales centre.  That’s a start.

What’s not included in this new legislation is any sort of “ban” on multiple representation, and that seems to be ruffling some feathers.

I read comments, just for fun.  I like to know what Joe Average thinks.

Here’s one that warrants discussion:

The part I want to highlight is this:

“A real estate brokerage will be able to ‘represent’ the interests of both the buyer and seller in the same transaction.”

I can’t even begin to tell you how crazy the market would be if an agent from ABC Brokerage could not present an offer for a listing under contract to ABC Brokerage.

I had eleven offers on 18 Alton Avenue earlier this week, and one was from an agent at my brokerage.

His offer was not the winning offer.

At no time did I do anything more than email him, “Received – thanks!  Will advise asap,” followed by a phone call one hour later to say, “We’ve got a much higher offer and it’s being signed.”

Why in the world could this agent not bring an offer on behalf of a buyer?

I barely know him.

In fact, there are agents at my firm that I have never heard of.

With respect to the person who commented above, he has no idea how real estate works in Toronto.  This idea that the “firm” controls the offer process is so archaic and misguided.  Real estate agents are independent contractors.  We don’t work “for” our brokerages.  With respect to Bosley Real Estate, I would never, under any circumstances, given an edge to somebody who has the same logo on their business card under the confused notion that I stand to gain.

And what happens to that buyer?

My colleague says, “Oh, sorry, we can’t offer on this house because it’s listed by an agent from my firm.”

How many agents work for Re/Max Hallmark?  Or Royal Lepage Signature?

What if you have 5,000 agents with one brokerage.  How many thousands of listings can those agents, under the idea of banning multiple representation, not show their buyers?

The idea is insane.

And what about small towns where there are only a couple brokerages, and a handful of agents?

Do you know what would happen if multiple representation at the brokerage level was banned?  Buyers would start looking for bad agents.

Think about it…

Let’s say you want to work with a seasoned, experienced, top agent who works for a solid, reputable firm.

So you hire that agent, except now, you can’t make an offer on ANY of the properties listed by his or her firm.

Doesn’t that seem counter-productive?  Now hundreds of quality listings, brought to market by a reputable firm who shares the same level of professionalism as the agent you hired, are essentially off-limits to you.

Under this new format, it would actually benefit buyers to find an agent that works for a crappy brokerage that doens’t have any listings.

If you want to ban multiple representation at the individual agent level, then let’s have a conversation.

But at the brokerage level, wow.  That shows a complete lack of understanding of our market, as well as an extreme lack of common sense.  Comments like the one above show me that people are so frustrated with the state of real estate, and so mad at the participants of the real estate market, that they’ll start making suggestions without thinking two steps beyond the mere idea itself.

Happy Monday, Folks!