A great deal of valuable information currently exists on the BC real estate market, however, there are challenges with the current approach. The geographic framework by which this information is viewed is problematic focusing on regional differences instead of provincial commonalities. The BC market is experiencing many different trends such as new dwelling types, alternate ownership models, FSBO and unique behaviours by demographic segments. Understanding these trends is hampered by missing data and an inability to link different data sources for analysis. Furthermore, most of this information is presented through a static geographic lens making it challenging for the ORE audiences to absorb and utilize. A fresh look at the data requirements for the industry will assist planning for the future.
This research report is a part of the British Columbia Real Estate Association's Journey of Discovery. BCREA launched the Journey of Discovery (JOD) to help our organization and BC’s eleven member boards strategically plan for the next five years. This project seeks to understand where the greatest contributions of products and services could be for increasing the innovation of REALTORS® in service of their consumers. If organized real estate is to effectively adapt to and proactively initiate change, which we believe is necessary now more than ever, the first stage is to gain a solid understanding of the current and future states of the industry. For access to the slides with links and our other reports, please visit http://web.bcrea.bc.ca/jod/reports.htm
This presentation was prepared by CE Holmes Consulting, Solvable & Monique Morden Consulting
1. JOURNEY OF DISCOVERY
RURAL & URBAN:
IDENTIFYING DATA-DRIVEN
COMMONALITIES
FORCE OF INDUSTRY CHANGE 4
SLIDE DECK
Please ensure you click the hyperlinks as you navigate
16 July 2014
2. “Each time you learn something new you
must readjust the whole framework of
your knowledge.”
Eleanor Roosevelt
3. of the largest being inability to have a data driven view of
the industry. It is very difficult, if not impossible, to gather
and combine data from different sources (e.g., Statistics
Canada and MLS®) for conducting even the most basic of
analyses.
We should not limit ourselves to relying solely on geo-
graphic boundaries as there are many other dimensions
on which the industry could be viewed to provide added
value, whether by characteristics based on demograph-
ics, type of property and dwelling, ownership, residency
and many more. Examining larger trends occurring across
the province would assist all parts of the province in better
understanding and assisting REALTORS® in capitalizing
on these trends.
This report examines the similarities and differences that
exist using the current data available and presents other
possible frameworks for consideration. An ability to dig
deeper into the market trends on different dimensions
common to all areas of the province will help all levels of
ORE. BC ORE has an opportunity to play a role in creating
a clear market picture for regional boards, Brokers and
REALTORS®, simultaneously connecting dots and
stakeholders in the process.
Know Thyself
Rural & Urban: Identifying Data-Driven Commonalities is
one of five Forces of Industry Change Reports designed to
build a greater understanding of the BC real estate indus-
try through the analysis of data. This report highlights the
challenge of finding new frameworks to understand our
urban and rural environments across the province, and
aims to identify opportunities for greater collaboration and
data aggregation across British Columbia.
The BC ORE is currently comprised of eleven different
regional member boards, each varying greatly in terms of
the land base and population included in their boundaries.
This geographic framework has unfortunately focused the
industry discussion on regional differences instead of
commonalities and created a lens counterproductive to
proactively planning for the future.
The current framework also creates considerable logistical
challenges. First and foremost, the member board bounda-
ries do not line up with any other regional demarcations—
whether Canada Post postal codes, Electoral Districts,
Census Divisions, Regional Health Boards or otherwise.
Even within ORE there is no consistency, as the Real
Estate Council of BC uses different regional boundaries
based on counties within the province. This inconsistency
in regional definitions is problematic for many reasons–one
5. As the fifth largest province in the country, there is no
shortage of land in BC. However, the vast majority (95%)
is crown land—94% provincial and 1% federal. Having just
5% of the land under private ownership (below the national
average of 11%) places considerable constraints on real
estate and explains why, despite the fact we have the third
largest population and second highest growth, our
population density is the fourth lowest.
David Baxter from the Urban Futures Institute wrote
Canada’s Rural and Urban Portrait based on 2006
Statistics Canada census data showing the urban status of
British Columbia compared to other provinces. JOD
updated this 2006 analysis to 2011 Census data. Some
may be surprised to learn that BC is an urban province,
with 85% of the population residing in urban areas and
15% in rural areas – exactly equal to that of Ontario and
also similar to proportions in Alberta and Quebec.
Thinking of BC as an urban province might seem at odds
with the vastness of the province; but given only 5% of
the land is under private ownership, the population is con-
gregating in urban centers. And in fact, it is congregating
in many different urban centres, not just one or two major
centres as happens in some provinces (e.g., Manitoba,
Saskatchewan).
Rural Myth
The shift to a predominantly urban based population has
been occurring for decades. A roughly even split between
rural and urban existed up until the 1940’s when the
urban proportion began to steadily grow, plateauing at
85% from 2001-2011. Despite overall population growth
(up 13% points) during that same timeframe, these rural/
urban proportions have remained consistent and there is
no sign of this changing.
6. Image Credits: BCREA Journey of Discovery | Source: Statistics Canada 2011 Census Data
7. David Baxter’s article went further to analyze the population
by size of urban area across eight different development re-
gions within the province. In 2006, Statistics Canada used
five categories to define size of urban area: Rural (<1,000),
(1,000-<50,000), (50,000-<100,000), (100,000-
<500,000) and (500,000+). It should be noted that these
eight regions do not line up with the regional boards due to
an inability to match Statistics Canada data with the
member board regions. Highlighting the challenges of re-
gional analysis of data.
Nevertheless, the Urban Futures analysis revealed some
differences among the eight developmental regions, how-
ever, the commonalities are much more apparent. All of
the eight regions have rural areas and small urban centers,
creating a common framework for understanding the real
estate needs of these areas. Beyond that, four of the eight
regions have more varied sizes of urban areas (Greater
Vancouver, Vancouver Island/Coast, Thompson/Okanagan,
Cariboo) again creating commonalities across vast areas of
the province.
For the JOD project, this 2006 information was updated
using 2011 Statistics Canada Census data and its newly
reclassified groupings for population centres:
Common Ground
Rural (<1,000), Small (1,000-<30,000), Medium (30,000-
<100,000) and Large (100,000+). These new categories
reveal even more commonalities across the regions wheth-
er viewed across the four regions (as shown) or the eight
developmental regions. With the new categories of popula-
tion centres and updated census information, the findings
held true, in fact, even more similarities become apparent.
• Three out four regions have all of the four population
centre categories of rural, small, medium and large.
• All four regions have comparable urban centres exhibiting
common characteristics and common issues.
• With the population of Prince George at 72,000 and
growing, it will not be long until the Northern Region also
contains all four categories of population centres.
• While Greater Vancouver is indeed predominantly urban,
it is comprised of multiple large urban areas not just one.
Similarly, Vancouver Island is comprised of several larger
urban areas such as Victoria, Saanich and Nanaimo.
• Common ground can be found even when considering
the varying rural proportions across all four regions. For
example, the number of residents in rural areas in
Northern BC is almost equal to the number of rural
residents in Greater Vancouver.
8. Source (Top): Urban Futures Institute: Canada’s Rural and Urban Portrait | Source (Bottom): Statistics Canada 2011 Census Data
9. In addition to the previous example which viewed the
province through the lens of size of population centre, there
are many other opportunities to create innovative analytical
frameworks to assist in collaboration and innovation across
the province. BC is not the only jurisdiction struggling with
the appropriate framework as both the USA and Europe
have developed similar approaches with slightly different
nuances.
One approach was developed by the US Department of
Agriculture where Rural-Urban Continuum Codes form a
classification scheme involving nine codes that distinguish
metropolitan counties by the population size of their metro
area, and nonmetropolitan counties by degree of urbaniza-
tion and adjacency to a metro area. This scheme allows re-
searchers to break county data into finer residential groups,
particularly for the analysis of trends in non-metro areas
that are related to population density and metro influence.
The PLUREL project (Peri-urban Land Use Relationships)
is one component of a European integrated research pro-
ject within the European Commissions which is examining
different frameworks across a wide variety of industries–
land use being one of them. Similar to the US rural-urban
continuum codes, this framework use six classifications
Rural Urban Continuum
involving population size and proximity to large urban
centers. This goes a few steps further to recognize the
distribution of employment in a region and transportation
patterns for commuting to and from those various centres.
These models are presented for consideration and
inspiration for developing a new classification system in BC
that better reflects the commonalities across the province
on dimensions other than traditional geographic classifica-
tions. These frameworks reveal the important underlying
attributes that drive consumer behaviour and influence and
affect the real estate industry. BC ORE has an opportunity
to drive the process for developing a more robust frame-
work benefiting all levels of ORE in the province by
fostering collaboration and innovation.
11. There is a great deal of transactional information available
via BCREA, BC Assessment, MLS® and the regional
boards. BCREA economists alone generate a wealth of in-
formation through forecasts, publications and presentations
with breakdowns at the regional board level. This informa-
tion is further disseminated to REALTORS® through the
regional boards and is theoretically available to the general
public. While not a current focus of BCREA, it is noted that
the provincial association is viewed as a credible source
of information for the public, despite the fact it currently
lacks high awareness by the public. In fact, the data from
the JOD research is overwhelming with 90% of Millennials
indicating that BCREA is a valuable source of information
creating a huge opportunity for BCREA.
A recent example of BCREA data collection involves a re-
adjustment to the approach of analyzing whether the prov-
ince and member board regions have a balanced market.
The new approach, which examines whether price increas-
es are in line with inflation, shows that all regions have a
balanced market where the previous method showed only
three regions as balanced.
The Land of Plenty
This example demonstrates the valuable information avail-
able but also the complexity involved which may be limiting
wider use of the data. For most consumers, and perhaps
some REALTORS®, the market information is complicated,
inaccessible and challenging for the average person to
understand. Thus, while there is a great deal of valuable
information available, much more value could be provided
by creating more user friendly mechanisms for digesting
complex information.
13. In addition to the challenge of engaging users, there are
numerous holes in our knowledge base preventing us from
identifying trends in the market including type of ownership,
green homes, ownership residency, secondary suites and
type of dwelling. For example, understanding dwelling type
by transaction can only be assessed by the proportion of
MLS® transactions involving single detached homes. More
robust information on dwelling type exists in BC Stats
databases but is not connected to transactional data. This
prevents the industry from understanding trends by other
types of dwelling (e.g., coach/lane homes, green homes).
Using single detached homes as a proxy for dwelling type,
the data reveals part of the story. Many of the regions are
within the norm with a few lying outside the norm, however,
an analysis of this data by size of population centre (dis-
cussed earlier) would provide more insight than by region.
For example, REBGV which is comprised of many large
population centres (100,000+) has the lowest proportion
at 40% of single detached homes reflecting the urbaniza-
tion of this region. Similarly, BCNREB, despite being the
most rural region, is only slightly above average (60%)
demonstrating the growing urban element in the region.
Changes in the proportion of single family homes over the
past 5-10 years reflects the rate of urbanization in BC with
Black Holes of Data
considerable decreases in regions with higher urbaniza-
tion – REBGV, CADREB, and FVREB are all down 8%
points demonstrating that factors other than geography are
driving these results. An analysis of type of dwelling viewed
through a framework based on size of population centre or
demographic segments could be more illuminating than by
region.
Providing consumers, REALTORS®, Brokers and ORE
with reliable and objective market data is an extremely
valuable function of BCREA. In an age of big data, an
untapped opportunity exists for BCREA to create a deeper
and broader understanding of trends and data related to
the real estate market beyond the current analysis of
transaction statistics. Furthermore, consumers are looking
for credible information, creating an opportunity for BCREA
to expand its audience through information that is
accessible, objective, transparent and user-friendly.
14. Image Credit: BCREA JOD | Sources: BCREA, BC Assessment Authority 2013
2013 Sales of Single Detached Homes
15. FSBO sales have been around for decades but there
is scant market tracking data to understand the trend in
depth. Our research revealed anecdotal evidence that the
number of FSBO transactions is increasing and at different
rates in different regions; but without hard data, the analy-
sis and resulting discussion is ineffective. Tracking FSBO
transactions is currently impossible, resulting in speculation
and widely varying opinions of the magnitude and trending
of FSBO sales.
BC ORE would be well served knowing more about FSBO
transactions. By example, NAR has conducted a study for
decades to measure the proportion of FSBO sales in 2012
is 9% based and has been decreasing over the past 20
years.
With the help of the BCREA economists, the JOD team
looked at changes to a proxy measure of FSBOs through a
calculation of MLS® and non-MLS® market share. While
calculating the MLS® market share data is simple,
comparing it to non-MLS® data is not. Non-MLS® data is
comprised of several types of transactions: exclusive
broker listings and subsequent sales, builder/developer
sales, non-arm’s length transactions and FSBO transac-
tions (a proportion of FSBO transactions will involve a
REALTOR® on the selling side).
Regardless, this analysis indicates that 24% of all 2012
provincial transactions are not going through MLS® with
a peak of 36% in 2008. The proportion of non-MLS®
transactions in BC has increased by six percentage points
over the past ten years. This data most likely creates more
questions than answers given the lack of clarity in the
non-MLS® transaction data, pointing to the need to better
measure and understand this trend.
The data also points to regional differences across the
province, from a high of 57% in PRSCREB to a low of
13% in VIREB. Regions with a high proportion of non-
MLS® transactions include: PRSCREB (57%), VREB
(41%) and CADREB (39%). Again, it is difficult to
determine if these trends are driven by FSBO or greater
development activity.
Examined over time, there are also regional differences in
the proportion of MLS® and Non-MLS® transactions.
• The largest increases were in REBGV (9%), CADREB
(9%), FVREB (9%), BCNREB (8%), and VIREB (4%).
• Conversely, OMREB and PRSCREB have decreased
their proportion of non-MLS® transactions (7% and 6%
respectively).
Clearly there is more that could be learned about MLS®
and non-MLS® transactions, as the current data makes it
challenging to draw conclusions. ORE could play a larger
role in understanding this phenomenon and its implications
for the industry and REALTORS®.
FSBO By Way of Example
16. Image Credits: BCREA Journey of Discovery | Sources: BCREA, BC Assessment Data, 2013
17. utilization of rural properties: Australian Rural, First National
Rural, and Rural Properties International.
This creates both new challenges and opportunities for
REALTORS® as they market themselves and their clients’
properties requiring additional expertise in marketing their
specialty from the familiar local approach to the more
complex international stage. It also presents ORE with op-
portunities to create networks and track data related to this
trend.
Sister Cities is an international organization established in
the 1950’s developed to create bonds between people
from different cities around the world. Many cities in
Canada have developed Sister-City relationships interna-
tionally and nationally. The intent of these sister cities is to
build on similarities and create new value.
For BC ORE the concept could be expanded in scope and
applied based on dimensions of commonality. A framework
linking centres similar in size of population centre could
create rich connections among REALTORS® who special-
ize based on property type, demographics or ownership
models. Imagine the information sharing that could occur,
the expertise that could be developed, and the referral
capabilities of a network of specialists across the province.
BC ORE could develop these frameworks and enable
connections throughout the province as REALTORS®
cannot achieve this individually.
Global Specialization
Earlier JOD reports pointed to the trend toward specializa-
tion in REALTOR® practice whether based on a demo-
graphic, culture, region, property type or other dimensions.
Specialization is not exclusive to urban areas. It is also
occurring in rural regions where unique property types are
allowing REALTORS® to focus in specific segments of the
market (e.g., vineyards, islands, fishing lodges, and
ranches). For these niches to be viable, it is necessary to
reach a wider audience, causing the marketing of these
properties to expand from a local focus into increasingly
larger markets. JOD research pointed toward the challeng-
es inherent in reaching a narrow segment of customers and
how technological tools are emerging to support
REALTORS® and Brokers in their marketing efforts.
As such these properties are being marketed locally, re-
gionally, provincially, nationally and internationally. Global
specializations are spreading with early entrants getting a
jump on the competition in the online marketplace giving
the consumer a global net from which to choose. One ex-
ample of this is Vinesmart.com, a real estate site marketing
vineyards around the globe: USA, Canada, Europe, South
America, South Africa, Australia and New Zealand.
Australia provides an interesting case study and point of
comparison to Canada as it is similarly comprised of many
property types over a vast land mass. Australia is targeting
international buyer through the evolution of many online
specialized real estate sites based on the different
18. Image Credit: BC Farm and Ranch Image Credit: Kelowna Vineyards from the Okanagan Lake, Stuart Madden, Creative Commons 2.0 Generic
19. ing your home based on your usage patterns. This device
could also record your physical location in your house—
generating the equivalent of a Walkscore based on the
utilization of a house, thereby evaluating its layout. Imagine
how this type of information (and others) could change the
modelling for house prices.
The bigger these data sets get, the more powerful the
analyses but the greater the challenge in finding and telling
the story behind the data, especially when being shared
with diverse audiences. There are many free and commer-
cialized tools available to BC ORE which bring static data
to life and increase relevancy to the user. Reonomy is a
company providing data visualization tools specific to the
commercial real estate industry, enabling users to quickly
conduct analyses using a database of property and market-
level data collected across different sources instantly view
results.
The growing volume of data generated within cities, re-
gions and the province presents an unprecedented oppor-
tunity for the real estate industry to better segment markets
and products, target policies and investment, and capture
value. BC ORE is presented with opportunities for creat-
ing connections between various data sets, filling holes
in the data and supporting the development of interactive
data visualization tools. This will be of particular benefit if
BC ORE is able to develop more relevant frameworks for
viewing the data.
Seeing the Forest
There is a clear move toward the connection of multiple
databases in order to fill holes and expand the domain of
knowledge and ultimately to facilitate analyses not previ-
ously possible. More open sharing among ORE and its as-
sociated partners could present all concerned with tremen-
dous opportunities as it encourages greater understanding,
sharing and collaboration. ORE has an opportunity to
advance the value provided to regional boards, Brokers,
REALTORS® and consumers through a deeper analysis of
the data and creation of a broader base of data points.
The REBGV offers a version of the MLS® Home Price In-
dex where users can filter the information based on region,
property type and timeframe. This tool provides a window
into the many types of information that could become avail-
able in a user-friendly format for wider consumption and a
better consumer experience.
Sifting through the current information is challenging
enough, let alone when one considers the additional data
points that will soon become available. Adam Ozimek
explores this in an article for Forbes with the example of
modelling house prices which is currently based on stand-
ard data like property type, neighbourhood and square
footage. While this explains 80% of the variation in house
prices, the next frontier included the ability to accurately
explain the remaining 20%. Ozimek suggests this could
involve data from devices such as Nest—a smart thermostat
that creates a customized energy saving approach to heat-