The housing peak was not just a market failure; it was a professional one

The rapid rise in housing prices leading up to the late-2021, early-2022 peak is often explained by familiar factors: historically low interest rates, limited supply, pandemic-driven demand and investor activity. All of these played a role. But focusing only on macroeconomic forces ignores a more uncomfortable truth, one that those inside the industry are reluctant to acknowledge.

A significant contributor to the price distortion of that period was widespread professional incompetence within the real estate sector itself, particularly around pricing, risk management and client advice.

As someone who has acted as an expert witness in lawsuits involving real estate agents, I have reviewed a large number of failed transactions, collapsed deals and post-closing disputes arising from that era. Patterns repeat with striking consistency. These were not isolated mistakes. They were systemic failures.

Under-listing replaced pricing skill

In a functioning market, pricing is grounded in evidence: comparable sales, adjustments, market trends and reasoned judgment. Leading up to this cycle’s peak, that discipline eroded.

Many Ontario agents lacked a working understanding of valuation. Instead of determining a reasonable market value range, they relied on aggressive under-listing as a strategy. Homes were deliberately priced far below any defensible estimate of value, not to reflect market reality, but to generate interest and create bidding wars.

This practice was often framed as “letting the market decide,” but in truth, it bypassed the agent’s professional responsibility to advise on value. The result was artificial competition, emotional decision-making, and prices that escalated far beyond fundamentals.

Buyer agents enabled risky behaviour

On the buying side, the same lack of pricing competence was evident. Many agents treated the asking price as a meaningful benchmark, despite knowing — or at least having the ability to know — that asking prices are arbitrary. They can be too low, too high or simply wrong.

Buyers were encouraged to bid well above list price with little reference to actual market value. More troubling, they were routinely urged to remove all conditions in order to “win,” including financing and home inspections.

In the litigation files I have reviewed, buyers frequently testified that they did not fully understand the risks they were taking. They relied on their agent’s advice. When that advice is driven by competition rather than competence, the consequences can be severe.

The disappearance of conditions and the rise of lawsuits

As conditions vanished from offers, problems surfaced after closing. Buyers discovered major defects, deferred maintenance or safety issues that inspections would likely have revealed. 

Repair costs often ran into tens or even hundreds of thousands of dollars.

Unsurprisingly, litigation increased. Buyers alleged they were pressured into unconditional offers and not properly advised of the risks. These claims did not arise because properties suddenly deteriorated; they arose because professional advice deteriorated.

In many cases, the core issue was not disclosure by sellers but the failure of buyer agents to slow the process, assess risk, and provide balanced guidance.

Chain transactions and overpriced listings

Another recurring problem involved chain transactions. Buyers were told they could easily sell their existing home at an inflated price and should therefore proceed with an unconditional purchase.

Too often, that first property was grossly overpriced. It failed to sell. The buyer could not close on the new purchase. Deposits were forfeited, contracts collapsed, and lawsuits followed.

Once again, the common thread was poor pricing advice on both the buy and sell side, combined with unrealistic assurances about market behaviour.

A flood of ill-prepared agents

Rising prices attracted record numbers of new entrants into the industry. Membership levels in Ontario reached historic highs. Experience and training did not keep pace.

Many new agents entered the market with minimal education, little mentorship, and limited understanding of valuation, agency duties, or risk management. In a fast-moving market, that lack of competence magnified every other problem.

The focus shifted from client protection to transaction velocity and commission capture.

A warning for the next cycle

This is not about vilifying individual agents. It is about acknowledging a systemic failure that harmed consumers and distorted the market.

When large numbers of professionals do not understand pricing, markets lose their anchor to reality. When risk is downplayed or ignored, consumers bear the consequences. And when accountability comes later through lawsuits and claims, the damage has already been done.

The next hot market will come. When it does, the same pressures will return: competition, fear of missing out, and aggressive tactics. If education, standards, and professional judgment do not improve, the outcome will be the same.

The lesson is clear: markets do not just fail because of external forces; they fail when professional competence fails with them.

What the industry must take away

The lasting lesson of the 2021 housing peak is not about timing the market. It is about professional accountability.

In my work as an expert witness, I have reviewed numerous lawsuits arising from transactions during that period. A recurring theme in those cases is not market volatility itself, but the conduct and advice of agents — particularly around pricing, risk disclosure, and the removal of conditions.

These disputes did not arise simply because prices later declined. They arose because buyers and sellers alleged they were not properly advised, not adequately warned of foreseeable risks, or encouraged to proceed on assumptions that did not materialize. In many cases, the issue was not fraud or bad faith, but failure to meet an expected professional standard of care.

Pricing is not marketing theatre; it is a professional obligation. When under-listing replaces analysis, the risk of misaligned expectations increases. When buyers are encouraged to rely on asking prices rather than market evidence, the margin for error narrows. When conditions are removed without a clear, documented explanation of the consequences, agents expose not only their clients but themselves.

Chain transactions proved especially vulnerable. Lawsuits frequently followed, where clients were advised to proceed with unconditional purchases based on optimistic assumptions about selling their existing property at inflated prices. When those assumptions failed, the resulting losses were often attributed to the advice given, not the market itself.

The next active market will create the same pressures: speed, competition and fear of missing out. The difference between a successful cycle and a wave of litigation will rest on whether agents slow the process enough to apply judgment, evidence and restraint.

Realtors do not control market cycles, but they do control their advice. Courts and insurers tend to focus less on outcomes and more on conduct: what was said, what was recommended, what was documented and whether a reasonable professional would have acted differently.

The takeaway is clear. Markets recover. Reputations and claims histories do not always do so as easily. Competent pricing, careful risk explanation and disciplined advice are not just good practice — they are the strongest protection a Realtor has when the next cycle inevitably tests the profession again.

From a professional risk perspective, many of the disputes arising from this period ultimately engaged errors and omissions coverage, where the focus was not on market outcomes but on whether an agent’s advice, documentation, and conduct met the expected standard of care at the time.