Mr. Chairman, and honourable members, my role today is to speak from a real estate perspective about depreciation and stigma.
My name is Barry Lebow. I'm from Toronto. I've been a real estate professional since 1968. This is my 47th year in real estate. I'll dispense with, of course, my CV and everything, and say only that I've testified at over 500 trials across Canada and the United States. A large percentage of those had to do with real estate depreciation and stigma cases in the years I was an active appraiser. With about 10% of the cases actually making it to court, and most cases being settled, I've written probably thousands of reports that have gone to courts around the world on this subject. Some years ago I was awarded the Meritorious Service Award by the Toronto chapter of the Real Estate Institute of Canada, and I've obtained 14 designations in real estate, four of which deal with appraisal. I retired from being a full-time appraisal professional after 30 years as a member of the Appraisal Institute of Canada.
Today I spend most of my time working with seniors in Canada from a real estate perspective. I'm the founder of the accredited senior agent designation program for Canadians, which has now reached about 3,000 realtors coast to coast.
During my years as an appraiser, under the Hazardous Products Act in the 1980s, urea formaldehyde was banned in Canada. But what does that have to do with this? About 80,000 to 100,000 homes in Canada were affected by UFFI, and most people were in a panic because they believed their houses were going to lose value. The courts have found, especially in Quebec, that there is no scientific proof that UFFI causes health concerns, but go tell that to people whose houses have urea formaldehyde. They believe it. Buyers believe it.
What I had to do in the early years—and that's how I got involved with this—was, no footprints in the snow, work with CMHC in an advisory capacity to figure out the loss in value of houses with urea formaldehyde and the stigma effect of having had it even if people had it removed. Eventually houses did sell. I tracked thousands of homes across southern Ontario, and eventually I did about a thousand cases involving urea formaldehyde, about 70 of which went to different courts in the province of Ontario.
I found myself in a new vocation: stigma. By default stigma is basically theoretical. It's simple. It's a depreciation that lingers after something is cured. With that said, I always joke that I'm probably the leader in stigma in Canada, because no one else wants to specialize in this type of field. I've lectured and done cases involving asbestos, all kinds of oil and other types of contamination, suicide, murder, and yes, haunted houses. I have a course called “Selling the Haunted House or the Impact of Stigma on Real Estate”, which teaches real estate agents what to disclose to buyers.
You may ask what haunting has to do with anything about this. One of the most famous cases we have had in North America was that of the ghost of Nyack. The ghost of Nyack is a very fascinating case because somebody bought a house and it wasn't disclosed to them that it was supposed to be the most haunted house in America. They in turn took it to court, and the court kicked it back. The people weren't satisfied. They took it to the Supreme Court of the State of New York. The Supreme Court of the State of New York basically said a haunted house is real, because if people believe it to be real, it's real.
That leads us to what real estate stigma is all about. Bill Mundy, a well-known professor in Washington state, once said that real estate stigma does not have to be real to be realized, and that is what it's all about. It's about perception.
Years back when I was a kid, Ralph Nader came out with a book called Unsafe at Any Speed. He said the Corvair was the most dangerous car in North America. It took years of investigation. When it was over, it was no safer and no less safe than any other car. When that news came out in the newspapers, it was buried somewhere between the obituaries and the comics because it wasn't sensational.
I can go into all kinds of stuff. In Toronto, where I live, my town, I just have to mention a certain intersection, and people know it to be notorious for crime, but I know it as a neighbourhood where people raise their families in peace.
People have perceptions. When I look at the three decades I've been studying this, there are perceptions out there. There is a class distinction. The lower the economic class of a neighbourhood, the greater the impact of word of mouth. They perceive it; they believe it. You're going to have a problem with safe injection sites. The problem is, where are you going to put them? The problem's going to be, people are going to perceive problems. The reality and the public's perception are two different things. The public will believe it. Word of mouth will be there.
I look at stigma. People are afraid because real estate values across this land are large. They're the highest they've ever been in history. People don't want anything to negatively impact their value. That includes the retailers who have stores along a commercial strip, or whatever. People are going to say “not in my backyard”.
The last thing I wanted to say is, in Ontario we have under rule 21 of the Real Estate and Business Brokers Act, 2002, about disclosure, the material fact. Anything a real estate agent knows about a property, and that includes proximity, the real estate agent has to disclose. We have a problem with that bill. The regulation is not defined, but the worst problem in Ontario is there is no statute of limitations. It has to be disclosed forever.
I want to reiterate one more thing. As I said, perception of depreciation or stigma doesn't have to be real to be realized.
With that, I'll wait for your questions. Thank you.