Real estate industry must be free to innovate
Toronto board reveals its Luddite side in restricting access to transaction data, Murtaza Haider and Stephen Moranis say.
“Where ignorance is bliss,” wrote Thomas Gray, “’tis folly to be wise.” However, it’s not the same in commerce, where ignorance leads to losses and inefficient markets.
Last week, the Supreme Court dismissed the Toronto Real Estate Board’s (TREB) application seeking leave to appeal an earlier federal court decision in which the Competition Bureau had accused TREB of anti-competitive practices. The decision has paved the way for property (especially housing) sales data to be made readily available to buyers and sellers.
However, TREB’s response to the ruling suggests that it will be some time before consumers benefit from the innovations in big data, Artificial Intelligence (AI), and analytics, which have transformed many industries in the recent past, but have largely bypassed the real estate industry in Canada.
TREB is the largest real estate board in Canada with over 50,000 members. The Board has resisted past attempts to launch discount brokerages and prevented Board members from listing detailed home sales data, especially sale prices, online.
This has created an information asymmetry between listing agents and prospective buyers, as the only way to get sale price information was to approach a real estate agent.
The Supreme Court order has changed all that. According to a statement by the Competition Bureau, TREB will now have to remove “restrictions on the display of historical listings and sale prices online through virtual office websites” ( VOW ).
TREB, in an advisory to its members, appears to be complying with the court order. However, TREB warned that those members who would like to make “sold, withdrawn, expired, suspended or terminated listing information available” must do so “in compliance with the VOW Agreement”, which allows access to data through a passwordprotected VOW “operated by a TREB Member for informational purposes in the context of residential real estate transactions.”
TREB lists residential and non-residential properties for sale and rent. The above suggests that TREB is allowing only residential property data to be made available through VOW. It’s not explicitly stated but can be assumed that residential rental transactions could also be listed on VOWs.
However, TREB, even after the Supreme Court order, refuses to let its members derive or share any insights from the real estate transaction data. It cautioned the members that the “data cannot be scraped, mined, sold, resold, licensed, reorganized or monetized in any way, including through the sale of derivative products or marketing reports.”
There you have it. In a world awash with data and analytics, TREB has decided to join the ranks of digital-age Luddites. For decades the real estate boards in Canada have been data rich and insight poor. The wealth of information TREB holds cannot be subject to datamining for the benefit of Board members or the consumers.
Recent advances in analytics, AI, and data science have transformed entire economies where data-driven intelligence has led to greater profits, larger markets and reduced inherent risks. This became possible because smart businesses used data to generate insights for evidence-based decision-making.
At the same time, businesses let their data be used in innovative ways by others for the larger benefit of the industry. Just look at the airline industry, which opened the doors to its data so that innovative entrepreneurs could generate online solutions that helped grow the airline business.
Even traditional businesses, such as Walmart, have transformed their core by using data as a competitive advantage. Walmart’s agile supply chain is an excellent example of how data-driven business models reduce overheads and inventory sizes for greater profits.
Smart businesses do not rely just on the in-house capabilities to analyze data for better insights. They are making proprietary data available for hackathons where data scientists compete to develop improved predictive analytics.
Netflix is just one example of a company that has crowdsourced algorithms for better client services. Alphabet (Google’s parent company), Facebook and Twitter are among the largest businesses in the world, and their raisons d’être are nothing but data and analytics.
TREB and other boards generate data and content that drive millions to their websites — they are content and data rich. The natural next step in TREB’s evolution is to embrace analytics and become not just a data vendor but a purveyor of property market insight.
But instead of encouraging and facilitating that transition, TREB is trying to restrict it. It is imposing unproductive constraints on the use of data by limiting its use to providing “residential real estate brokerage services between a Realtor and a client or customer.”
TREB’s lack of imagination and initiative are preventing innovation and restricting consumer choices.
Ignorance is not bliss. And it’s not folly to be wise. Why TREB believes so remains a puzzle.