By Lynda Cox
Many problematic situations have arisen in the real-estate market due to the COVID 19 pandemic. Let’s take a closer look at some of the major issues.
There have been fewer homes for sale, mainly because of the many stay-at-home orders. Most sellers, if not pressed, are staying put, leading to an unbalanced market, with , with plentiful buyers because of continued low interest rates, the need for more home office/family space There has been an escalation of house prices due to bidding wars, for example houses that in 2019 would have sold in the $600K range are now selling in the $800K range, resulting in buyer fatigue due to failed attempts to secure a house in bidding wars.
In addition, buyers need to be extremely secure financiallly because they have to bid high with no conditions in their offers, with no financing or building-inspection conditions, and never a condition regarding the sale of the buyer’s home. Also a large deposit is necessary for a strong offer.
Finally, risk-averse buyers are under a great deal of stress and often decide to continue renting or stay put in their small homes until conditions soften and a more stable market returns.
Here are two true stories to illustrate the situation.
Out-of-town buyers moving to Ottawa for work sold their four- bedroom/three-bathroom home in a western Canadian city with a main-floor family room, finished basement and two-car garage for just over $400K . They came on a house-hunting trip to find only four houses they might be interested in. Pre-pandemic, they might have had the chance to view 10 to 20 homes before making a decision. So far, in just three days, they bid on their top three homes and lost out on every one. They are stuck. They are discouraged. They are living in a hotel. They are a one-income family and cannot push their upper spending limit too high. They have been outbid every time.
Sellers, on the other hand, often make a killing, as long as they don’t have to buy. If they do, the profit they make from selling is just rolled into their next home purchase. The gain is cancelled out. They have benefited from the result of a bidding war when selling, but are now experiencing the frustration of having to participate in that same bidding-war process as a buyer, which is a very different story. Our most recent sellers in Lowertown sold for roughly $150,000 over their asking price, and luckily are moving to an area of the world where housing prices are much lower.
I hope this gives you a snapshot of the housing market that we have been going through. It is not easy to navigate. If you need to buy or sell, get expert advice.
Lynda and Jim Cox are a mother– and– son team with Royal Lepage Performance Realty. COXHOMETEAM.CA
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