Real eState

LACKIE: More transparency would improve trust in real estate industry – Toronto Sun

Published

3 years ago

February 19, 2022

Eliminating blind bidding might help, but it won’t solve the biggest problems

Ever the hot topic, it’s virtually impossible to discuss Toronto’s real estate market without people getting riled up, writes Brynn Lackie. Photo by Ernest Doroszuk /Toronto Sun

Ever the hot topic, it’s virtually impossible to discuss Toronto’s real estate market without people getting riled up.

With prices rising at an alarming velocity a full two years into a global pandemic, the eternal questions seem to be why is it like this and how will this end?

And those are great questions.

The current state of things can most simply be understood as the culmination of low supply meeting high demand, buoyed by cheap borrowing costs that are fuelling speculation, and lifestyle shifts brought on by COVID.

The situation is nuanced, obviously, but simply put — we find ourselves facing a confluence of factors that have resulted in would-be buyers having no choice but to battle it out against one another for the limited number of houses and condos currently on the market.

One of the most widely scorned aspects of our current market is the central role blind bidding seems to play in the offer process. Between the seemingly endless demand for properties and the industry penchant for pricing below market value to drive multiple offers, nine times out of ten buyers will find themselves in competition.

With strict rules restricting a listing agent from even intimating the content or nature of a competing offer, the buyer is then left to decide on their own what their bid should be based on recent comparable sales and their own personal opinion of value. Save for disclosure of the number of competing offers, it is an otherwise opaque process.

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The perception is that as a result of the blind bid process, buyers routinely pay substantially more in an attempt to outbid their competition than they actually need to.

An open auction format like they have in Australia has been put forward as a sensible alternative.

While I can understand the desire to shine a light and level the playing field, I’m not sure that eliminating blind bidding will do much to curb prices if that’s the goal. The open auction format is criticized on the basis that it drives bidders into a competitive frenzy — Australia has a market just as on fire as ours.

The main benefit to cleaning up the way multiple offer situations are run would be adding transparency to the process. Added transparency will certainly infuse some more trust to an industry that could use some serious help with its PR.

But the reality is that getting rid of blind bidding still won’t eliminate the competition that’s driving today’s prices. Let’s say a typical offer night brings eight offers — even if four of the eight decide to sit it out once they realize they can’t compete, that still leaves four buyers to battle it out, and in my experience all it takes is two motivated people to push prices to record levels.

The idea that there is one bid way out ahead of the competition is simply not the norm. Yes, it can happen, but in my experience there are almost always groups within the offers: a few at asking price, a few conservatively higher than asking but still restrained, and then a few more that are aggressive and immediately out front. The notion that the prices we are witnessing are the outcome of one person bidding against their self is simply not the case.

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But prices are undeniably wild right now and it’s important to understand why. Once upon a time the price a home fetched on offer night was almost always in line with the comparable sales, give or take, no matter how sizeable the lift between list and sale price may have been. The eye-popping prices are more of a recent phenomenon and are indicative of a broader market environment.

The Feds promised to do away with blind bidding in the lead up to the last election. But once the process is cleaned up, what then? Blind bidding may feel frustrating and unsavoury, but it is absolutely not why the market is bananas.

If you ask me, low interest rates coupled with lending policies that encourage pulling equity out of existing homes to fund second investment properties are having much more of an impact on prices.

So yes, feel free to rail against blind bidding — I get it — but if your concern is how to keep housing accessible to people who actually need somewhere to live, it might be worth looking little closer at the other market forces currently at play, particularly the role speculation is playing and the policies empowering that segment of the market.

@brynnlackie

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

1 week ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Homelessness: Tiny home village to open next week in Halifax suburb

Published

3 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

Published

4 weeks ago

October 17, 2024

Anne Joseph

Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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