For most Canadians, a house is not just a physical structure; It is the cornerstone of their lives. It is where they raise their families and build their future. Houses represent significant financial investments and often form the foundation of pension plans. Owning a house is stability, safety and a sense of solidarity.
In recent years, rapid price fluctuations, offering wars and rising interest rates have emphasized buyers and sellers, as a result of which the real estate market reformed. Because Canadians are now struggling with an affordability crisis, they want and earn transparency in protecting their most important financial assets: their home.
Professional assessors play an indispensable role in promoting a fair and reliable real estate market and the general housing system. They are hired by residential, commercial and industrial market participants, as well as the public, to give independent, evidence-based, real-time opinions about the value of real estate to help Canadians make informed decisions. In 2024 alone, the professional assessors of the Appraisal Institute of Canada (AIC) carried out nearly a million reviews with a value of more than $ 1.5 trillion. Their assessments not only ensure that home buyers are protected and loans remain responsible, but they also inspire trust in the housing market.
The AI ​​factor
In an era in which AI is everywhere, increasingly takes over tasks and jobs, Canadians trust overwhelmingly certified appraisers about automated valuation models (AVMs) when it comes to determining the value of their home. This sentiment was emphasized in a recent study by Spark*Insights, which showed that 84 percent of Canadians prefer assessors for accurate ownership assessments, with only 14 percent confidence of AVMs more than appraisers. Of these 14 percent, half are still concerned about the local market knowledge of AVM and lack of inspections on the spot-two of the most important assets that professional appraisers bring, which means that valuations are rooted in real market conditions and not just algorithms.
AVMs neglect essential on-site inspections
The rise of online real estate platforms in the early 2000s led to the use of AVMs, so that the way in which properties are assessed are effectively assessed by removing the human element.
These automated models use statistical data to estimate the market value of a house. Although this approach can offer convenience, the concern evokes as the housing landscape of Canada becomes more and more complicated. It removes the human touch of the most important purchase experience that most Canadians will ever make.
AVMs neglect the essential on-site inspections that professional appraisers perform. Canadians are concerned that, without this critical analysis, only relying on evaluations generated by the computer can lead to inaccuracies. Such inaccuracies are risks of under- or overvaluation, in particular when houses are deteriorated or recently renovated, where markets change quickly, or in rural areas where data can be scarce.
Although Canadians have the right to ask their bank or lender to use a traditional appraiser – especially when the property is unique or does not meet typical market conditions, the decision is ultimately with the lender based on their policy.
Call for action
Although AVMs can have their practical applications, it is clear that there are questions about their limitations. At the same time, it is clear that financial institutions will continue to include AVMs in their processes. That is why we call for supervision.
We roepen de federale overheid op om een ​​​​permanent adviescomité met meerdere sector op te richten die bestaat uit experts uit de industrie, waaronder beoordelaars, om te anticiperen op het opkomen van consumenten- en systemische risico’s, de kwetsbaarheden van regulators, de kwetsbaarheden van de regulators te identificeren, transparantie, vertrouwen en beleidsreactiviteit te versterken en toezicht te geven op automatisering en algoritmische Tools such as AVMs. This committee would aim to reduce market risks and improve the integrity of the mortgage system in Canada.
Data shows that 79 percent of Canadians agree with the formation of a committee, which emphasizes a strong public demand for supervision of the system.
The affordability of housing is still a problem for most Canadians. For many properties, the price remains high and the debts of the households are increasing. Homeowners are also confronted with reduced equity and rising mortgage payments, whereby the Bank of Canada warns that financial stress will grow.
Because of this volatility, supervision of the living system has never been so important. The federal government must give priority to the integrity of home valuations, so that the future of the homeowner in Canada is based on trust and expertise instead of algorithms.
Donna Dewar Brings more than 20 years of experience in the non-profit sector on the AIC, after he has held performing positions at the Federation of Canadian municipalities, the Canadian Nurses Association and the Canadian Red Cross. She specializes in strategic planning, partnership structure and program development.
She has an MBA in innovation leadership of the University of Fredericton and a Project Management Professional (PMP) indication. She is passionate about stimulating positive change and believes in the value of innovation and efficient member support.
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