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SOLD OVER ASKING: A buyer's nightmare and a seller's dream, maybe? What is going on with the real estate market in most Canadian cities? Bidding wars, multiple offers, all time record selling prices. Sounds great if you're selling, right? except most of still have to buy another place to live in the same market.
Bidding wars are not just happening in Toronto & Vancouver they are happening in many small and rural communities as well. With recent pandemic fears at an all-time high and people working from home. This combination is driving thousands of Canadians out to small town and rural neighbourhoods away from the big cities.
Speaking of the pandemic, when the pandemic hit last year in March, many economists predicted the housing market would be in big trouble. There was a slowdown for a couple of months, but overall their predictions never materialized. In fact, housing market numbers are up across the board. In the GTA single-family homes are approaching an average price of $1.5 million a 25% annual increase. Why? Many say the main reason is housing inventories are low and demand is high. Is the answer that simple?
Many experts are predicting a housing market correction by the 3rd quarter of 2021 but are not expecting it to last long and most are definitely not predicting a crash in the housing market this year. Now that vaccines are here and on the horizon there might be an end to the pandemic and a loosening of immigration restrictions combine this with a kick starting Canadian economy and these factors show an even stronger housing market.
Many hard-working Canadians simply can not afford to buy a home in the current housing market If we need new regulations we DON'T need regulations that will push Canadians further from home ownership such as higher minimum credit scores, lower maximums on debt service ratios or increasing the amount of min down payments required. People need homes to live in, and the above-mentioned measures will negatively affect regular blue-collar working people.
We need regulation to increase the foreign buyers tax, increase capitol gains tax on investors that buy simply to flip and investors that buy and simply leave the house vacant for months or years.
As a mortgage advisor, I feel the single most important policy change has to come from the Canadian Real Estate Association (CREA) They must regulate realtors to stop listing properties for $300k less than the value to encourage bidding wars. And stop them from holding offers for 5-7 days. This is driving the bidding frenzy and creating the multiple offer situation. This is not the normal process. In past years agents would list the price based on comparable sales and as a seller you would be happy to get the asking price. Because of these volatile market conditions, innocent people/buyers do not know what the house is worth and are told they need to bid high or they won't have any chance to get the house. They are also encouraged to waive all the conditions such as financing and home inspection. Waiving these conditions is a dangerous business for home buyers and ends in disaster for many people.
None of us should want policy change simply for the sake of change, and we don't want policy change that gives some even more of an advantage than they have now. In this Mortgage Agent's opinion I am for some regulation and policy changes, but only if it actually helps regular working people to get in to the market and make home ownership affordable for more people not less.
If you have any mortgage questions - It's my pleasure to help. Call me direct
Tim Deering - 905-441-3991 or email me at email@example.com