Hi All!
As we head into the spring market we are noticing a stir of activity in some sectors of the real estate market. It appears that with the Bank of Canada holding rates firm and anticipation that rates may even be decreased (however slightly) in the June or July meeting, buyers are beginning to regain confidence in the market and have come back to the battle grounds.
However, this is not to say we are back to the Wild Wild West of years past…yet. While we haven’t seen Black Friday lineups for open houses we are seeing offer presentation dates being set on some listings and multiple offers (bidding wars) are creeping back. This is not a regular strategy at the current time but could change if our inventory levels go down and buyers find themselves fighting over properties. We have had a 23% increase in inventory over the same period one year ago so perhaps this will maintain a bit of a balanced market for a bit longer. My guess is that if the rates do come down in June/July (and I only anticipate a tiny decrease) we may see things pick up even further and the bidding war strategy may become more prevalent.
If we return to the Wild West days, the Buyer Recission Period recently enacted by the government may have a factor in how things progress. In a balanced market, this regulation does not carry much impact as most contracts regularly contain conditions (inspection, financing, document review etc) so Buyers have a chance to do due diligence before financially committing to a purchase. If we revert to a seller biased market, the BRP affords buyers who make unconditional offers that win bidding wars the ability to void a contract within the first three business days of that contract’s lifespan for no reason at all – in return for a fee of 0.25% of the agreed upon price (eg: on a $1,000,000 purchase this would be $2500).
Sadly, the government did not (as usual) consult with members of the real estate community who could have provided valuable input into how this would affect consumers. I am afraid that we may have buyers that write offers on many different places at the same time, only to void all contracts but the one they want the most. This could artificially colour the level of demand on properties and will then compel buyers to continually offer higher and higher prices to win a property. Great for sellers…bad for buyers.
There are a number of ways that we can navigate a transitioning market that has evolving regulations. It’s not a cut and paste market anymore and we need to make sure that we navigate these times in order to make the ship run smoothly. If you or anyone you know has any questions about the market, feel free to reach out. The coffee is on me.