Canada’s apparent cooling Housing market According to real estate brokers, many buyers and sellers are confused about home pricing and bidding methods, usually in the enthusiastic spring market.
People who spoke to Global News said that new markets often result in the bargaining power being reflected back to buyers.
Nasma Ali, a broker and founder of OneGroup Real Estate in Toronto, talked about the differences in the midwinter market before the Bank of Canada began hiking. Degree of interest — And today is “day and night”.
Back in January and February, she recalled in an interview with Global News that properties across Ontario, whether in cottages or in the city center, all saw multiple offers and far exceeded the question. I did.
“Every single-family home on the market was expecting multiple offers and was in very high demand,” Ali said.
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Then, in this strategy, the seller accepted the offer on one date and played in the hope that the bidding war would push up the final price. The buyer had little leverage here, she said. The sellers were not under pressure to accept the first offer they received.
“Why do they get a bully (offer) when they feel they can get astronomical magical numbers on the night of the offer?”
Toronto Regional Real Estate Commission Reported last week April sales in the market were down about 41% from the same month last year and 27% from March.
Ali said many potential buyers are waiting on the sidelines to see where interest rates land and how the housing market reacts before returning to the search.
Similar slowdowns have been seen in many other Canadian housing markets, including Montreal and Vancouver.
Craig Munn of the Greater Vancouver Real Estate Board told Global News that while the market has slowed since 2021, the pace of home buying today represents a return to normal from a record pandemic era. rice field.
“Multiple offers in the market are declining as homebuyers’ demand is declining,” he said, saying that units such as town homes are still one of the real estate classes with strong demand. Said.
Higher interest rates will bring British Columbia home sales back to normal, the association said.
Supply shortages are a major factor in Vancouver’s failure to become a buyer’s market, Mann said.
Why are home prices still so high?
While demand for homebuyers is softening, it is taking time to settle home prices.
The average home price in Toronto last month exceeded $ 1.2 million, down from about $ 1.3 million last month, but about 15 percent higher than the previous year when the average price was about $ 1 million.
However, this price change did not happen overnight. Ali saw a slow dawn to the seller that the number of people coming to the show gradually declined and their homes may not be able to generate the same buzz as before when the market was hot, she said. Said.
They started accepting offers based on what the house near the street last did, for example, rather than waiting for what they could get on the night of the offer. As a result, prices remained higher for longer until buyers began to awaken to real market conditions.
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Marc Le Francois, a broker of Royal Le Page Tendance in Montreal, I recently told the Canadian Press He has seen homes sell after receiving one offer, or after receiving just a few offers, rather than the 20 offers that brokers were accustomed to dealing with a few months ago.
However, due to the low number of bids received by some properties, some Le Francois clients wonder why they need to bid well above the asking price if sales are down. I am thinking.
“Buyer is a bit annoying. They were worried when buying a home and it wasn’t done under multiple offers,” he said.
“I have a client … (who) said,” Did I pay a lot? No one else was bidding, and it’s 20 people for the house in the last two years It’s strange because I was the buyer of.
Pritesh Parekh, a Toronto realtor at Century 21, told Global News that the cooling housing market has radically changed the way buyers understand list prices.
Palek said several clients have come to him in recent weeks without knowing how to handle the price of the sticker.
The list price may be close to what the seller expects, as demand is pushing up the selling price over the previous month. He said there might even be room for negotiation.
“You can see how confusing this is,” Palek said. “When a consumer sees a home listed for $ 1 million, is it worth $ 900,000, is it worth $ 1.1 million, or is it actually written on a sticker? I don’t know if it’s worth it. “
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One of the best clues for analyzing list prices is the offer display style. That is, whether the house is always accepting bids or only for one night.
“When we say’offer at any time’, we expect to go somewhere within or around that price,” explains Palek. “In the bid war situation on the offer day, all offers are always low, hoping that they will exceed that particular price.”
Ali said there are still some homes promoting the bidding war. This is reserved for real gems that “check all boxes”, but the vast majority of homes are no longer able to promote this type of activity.
“You’ll be surprised to be able to negotiate,” she said, for 90% of the homes on the market.
The condition is back at the table
Buyers have a little more freedom to add terms to their offers, as the market enthusiasm is less, according to the broker who told Global News.
“In this market, this is when you can negotiate 100 percent,” Ali said.
In Toronto, I’ve seen additional conditions added to inspections, funding, and even the sale of escape clauses. This is a condition under which the buyer or seller may cancel the transaction.
The terms of the escape clause give sellers the opportunity to retain prospects and search for other offers, but in reality, once a conditional transaction is accepted, they are willing to say that the house is on the market. Ali said that few people are thinking about it.
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“Once your home status is SC (sold conditionally), you can be confident that almost no one will come to see your home,” she said.
Returning to Vancouver, Mann says he’s heard that even the most expensive housing market in Canada is making more of a comeback.
“By the way, I’ve heard that the situation of multiple highly competitive offers is decreasing and more are coming back to the market,” he said.
In some situations, it may be wise for buyers to raise their bids “to show that they are serious” if they are trying to add conditions, Palek said.
— Use files from The Canadian Press
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