In the 2017 Demographia International Housing Affordability Survey of the most unaffordable cities in the world, Canada’s Vancouver placed at number 3 and Toronto is at number 13. The reports came out on February 1st, 2017. The ranking in the list is based on cities that have a population of over 1 million.
If you take a look at Canada’s real estate market, you will agree with the statistics as Canada’s real estate market clearly suggests that Toronto is a very hot market now. Real estate prices have jumped more than 22% and everything is by all accounts because of exemplary supply and demand. High demand while a shortage of available calls for lower listing prices and ultimately to the bidding wars. People who have ample cash in their pockets and accounts are going beyond what seems reasonable. A house sold in early January for more than $1 million over asking is an example of that.
Without a doubt, it is situated in a territory that is alluring – particularly with The Bridle Path steps away, yet they deliberately priced it low to draw in buyers and start an offering war, a typical strategy utilized by real estate agent.
These bidding wars are craftily engineered by the real estate agents who put prices of the real estate property below the actual price or market value to attract the buyers.
We have all found out about the way this works. An open house is held at an alluringly evaluated property. Imminent purchasers are prompted regarding when offers will be accepted — and soon thereafter, the competition of bidding is at a whole new level with a few potential purchasers offering to pay more than the property’s actual cost.
Barry Kainth, President, and CEO of Galaxy Gate, believes that the process is very stressful and unfair for the purchasers. Many purchasers have approached him sharing him their experience at such bidding war auctions. He wants the governmental bodies such as RECO (Real Estate Council of Ontario) to guide and set policies to stop bidding wars. Advertising over asking price should stop. The practice of ‘One day to hold offers’ should stop. Bank of Canada should not provide mortgages to international buyers or international transferred money as per Barry.
This trend has made the local buyers with low income unable to afford most of the properties in Canada.
When will all This Be Over?
It is too soon to tell. In any case, it has been seen that the Canadian land market is getting consideration from Americans, at an expanding rate since Donald Trump came into power as the president of the United States. It is not necessarily the case that Americans are looking to leave the United States; they may simply be pulled in as they may see Canada as a steadier place than where they are right now.
The bidding wars are promoting the sellers, but it crushing the buyers and giving them a tough time to buy property in Canada. Barry Kainth is encouraging government and private bodies to step up and stop these bidding wars that are harming the buyers.