Okay, so it’s not beautiful. But it’s a house that comes with 4,000 square feet of land, two bedrooms, a fireplace and a garage. It’s not the greatest hood, but it’s in a major US city – Chicago. And it’s selling for a reasonable price – $10,000, or a third of its assessed value.
However, this post is not about the 1931-built bung. It’s about information.
We know this property was worth $189,000 in July of 2008, which means it has lost 95% of its value. We know the house next door is valued at $81,000, and the place across the street’s worth $90,000. We know every time it’s been listed, sold, or had the price changed. And we know how it is valued relative to not only every home for blocks and blocks around, but also historically compared to the area average.
We know this, and more, because when it comes to telling consumers about the one asset than means more to them than any other, Americans believe in freedom. Unlike here. Below is a history of the bungalow’s value, thanks to the web site Zillow.
Is there a correlation between good information and affordable prices? Maybe. Americans are privy to property details which realtors systematically and purposefully hide from Canadians. The only way most of us will ever discover what a house sold for last time, how long it was listed or re-listed, how many times the price was changed, escalations in property taxes or who handled the deal, is by begging a real estate agent. And even she cannot see what Zillow or Trulia reveals.
So, the average house in Canada sells for $361,516. The average in the US, with ten times the population and economic output, is $184,000 – 49% less. Of course, disclosure doesn’t account for all of the insane premium on this side of the border, but I have no doubt it’s a factor. Blind buyers can often make dumbass decisions.
My research reveals only one place in Canada where anything approaching Zillow-type info is made available, and where a real estate entrepreneur is battling – so far without success – to bring the model to the rest of the country, especially Ontario. So, if you are buying a house in, say, Halifax, here is what Viewpoint.ca will tell you about the sales history:
This renovated, 80-year-old house on a 6,000-square foot lot sold last month after 27 days on the market for 95% of the list price of $479,000. That’s all the real estate board would like you to know. But thanks to this site we also see the property was for sale for almost 300 days before that, was withdrawn and re-listed several times, and came to the market at the wrong price thanks to greedy sellers, who originally wanted $525,000. We also discover it took 323 days to sell it the time before, which suggests anybody buying this better get the price right.
Why isn’t Viewpoint operating in Ontario, Saskatchewan or BC, where poor investors stumble into deals with the scantiest of information?
I asked Bill McMullin that question. He’s the guy behind it. Here is his response:
It’s sad that the breadth and depth of information we make available is only related to Nova Scotia real estate. Real estate consumers in the rest of the country are essentially ‘in the dark’ and not on equal footing with the professionals and institutions that will get their money/fees when a property transaction takes place. As you know, the entire system is “permissive”, biased toward consumption, and we both know the cycle and eventual outcome under such scenarios.
Consumers are not morons when it comes to real estate. They can interpret and analyze real estate information, like sold prices and lot sizes, as well as any professional. ViewPoint is popular because it gives consumers access to the same data and information that professionals have access to, putting them on equal footing. Nova Scotia real estate consumers are not subject to the perils and costs of ‘information asymmetry’ because they can know and see what the agents know, for example. I believe that the information imbalance in the rest of the country comes at a significant cost to consumers and great benefit to professionals and ‘real estate institutions’ across Canada. If consumers only have easy access to list prices but not the corresponding sold prices, and other important information such as days on market, price changes, cancellations, fallen sales and other such activities, what impression are they left with? I think it’s best described as “irrational exuberance” or “ignorance is bliss”.
I believe I have more experience than anyone in Canada with fighting for access to public property data and listing data from real estate boards. I have uncovered what I see as scandalous and collusive activities by and between institutions to prevent real estate consumers, the taxpayers, from getting access to data and information that enables them to make well-informed decisions respecting real estate.
McMullin has just finished testifying as the first witness in an action against the mighty Toronto Real Estate Board. The federal competition cop sued TREB for preventing its own members from having efficient access to their MLS data (and, of course, Viewpoint). The Competition Tribunal is expected to make a ruling early in 2013.
The outcome will be closely watched by real estate boards across Canada who profit from their efforts to keep you ignorant.