Canadian real estate has been showing surging price growth, and it appears to be a direct reflection of buyer sentiment. A recent real estate survey was conducted by Ipsos, and commissioned by TD Bank. The survey found a large number of Canadians are willing to pay over ask, and engage in bidding wars. A separate data point shows this may be a result of feeling like they’ll be priced out of the market if they wait to pull the trigger at a later date.
The Majority of Millennials Are Ready To Pay Over Asking Price
The majority of Millennials are willing to pay more than the asking price, shows the responses. Just over 51% of young adults under the age of 35, said they were ready to offer more than the asking price. About a third (31%) of people between 35 and 54 said they would. Fewer than one in five (18%) above the age of 55, said they would be willing to pay more than asking price.
The readiness to pay over asking price also comes with the willingness to engage in bidding wars. A third (32%) of Canadians were willing to take part in a bidding war to buy a home. Which makes a lot more sense, once you already know they’re willing to pay significantly more than the asking price.
Almost 1 in 5 Home Buyers Would Offer $50,000 or More
Those who are willing to pay more, would be willing to drop a lot of cash to put an end to their home search. Nearly one in five (19%) of home buyers said they would be willing to offer $50,000 above the asking price. The survey also found 13% of people would be willing to offer between $50,000 to $100,000 over. A small segment of buyers in that demographic said they would be willing to pay even more than $100,000. Well, at least debt is cheap.
The Pandemic Made Things Worse, Says Majority of Homebuyers
Pandemic policies have made buying a home more difficult, says the majority of homebuyers. The survey found 52% of buyers said the market is less attainable now, due to the surge in home prices. This is contrary to the narrative that cheap money should have made things more affordable. Instead, it helped fuel even less affordably
Half of Home Buyers Struggle To Find A Place They Can Afford
The majority of buyers currently in the market don’t believe they can now find a home in their budget over the next year. Nationally, the number was 57% of people, but it was higher in Ontario (63%) and BC (62%). Quebec is getting there with 48% of people saying it was difficult to buy a home in their budget. The Prairies still show a lot of struggle with affordability, with 43% of people not able to find a home in their budget. However, since the rest of the country is so deeply unaffordable, it almost seems like they’re doing alright.
The survey gives a lot of sentiment context to the current (or recent) buying behavior the market has seen. Homebuyers, especially young adults, are worried housing affordability will get worse in the future. As weird as it is, that may explain why so many have been willing to pay way over ask. If they believe home prices will continue to rise, they think it will be more difficult to buy later. Also, if they think home prices will rise — it’s easy for them to write off stretching their budget.
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This is so messed up. Of course people now realize that the asking prive is artificially below its fair market value and so are ready to pay more. But this is interpreted as if people are willing to pay more than market value which is a pure manipulation.
That’s not true. The reason home prices are rising so quickly is because people are willing to pay more. The average purchase price in Toronto is 106% of asking price. The price gain was nearly 5%.
If the asking price was the “true” price, then prices would never increase. It’s manipulation when you don’t like it, but it’s the truth when it works in your favor.
The real reasons are due to cheap credit and mass supply manipulation led by rampant foreign and domestic investment. Various individuals/ entities continue to gobble up inventory and corner the market to their advantage. People are forced to pay more, not because they are willing.
At this point, buyers are getting what they deserve. Voted for a guy who needed cheap debt, and revenue to fund his handouts to donors, and that’s what happened. You didn’t realize it would also inflate my home value, and price yourselves out of one.
Lesson learned hopefully.
The 55 and older crowd are old enough to remember buying a home in the early 90 s and selling for less than purchase price in the late 90s. The mills are naive and listen to the TREB BS, and will most certainly be the greater fools in the end, unless they plan to hold on for a decade. Sad, that people will suffer. Then again; they deserve it. Buy beware.
People who want a place to live deserve to suffer because you’re angry you can’t afford to buy the place you want? The entitlement in your posts is so unreal lol
Overleveraging oneself to buy into a heavily inflated market is a risky play, regardless of what your intention for buying is.
Its the same precipice for utilizing multiple sources of margin to boost your portfolio returns and then market volatility ensues, ending up with your equity being completely eroded.
Preaching for people to practice proper risk management is not entitlement.
The only entitled ones are the plebs and the elites who think increasing systematic risk in the system via CMHC and other insidious endeavors like “First Time Home Buyers programs” are a good idea. It’s just adding fuel to a dumpster fire.
The good idea is to reindustrialize the nation and increase productivity. Not to play games with the money supply and debt. This NEVER ends well.
The canadians are just fools who fell for the Financialization meme because the only way they could sustain a growing economy was through cheap debt.
“b-but 60+% of canadians own their own home!!” and what? We’re just supposed to let a cancerous sector suck out productive capital from high-value added activities and shift them to housing? Ok. lol.
Thankfully I’m well off so I don’t have to indulge in the rat race.
James:
Not what Smug Canadians are saying. Rather it’s this: liberal party policies may be feel-good, but they are thoroughly destructive when it comes to making sure you can build a life in your own country. You get what you ask for; sometimes it’s better to hold your nose and vote differently.
Your options are as follows:
1. Vote Trudy, play musical chairs and hope you’re not left holding the bag.
2. Vote someone (anyone) else and cross your fingers they will do something (anything different).
3. Leave.
If you pick #1 then yeah you kind of do deserve to suffer if you’re left holding the bag….
If you pick #1 and you get priced out, well to be honest it was clear before they won the last election that they wouldn’t be taking any serious measures to cool the market, and in fact that they would be taking quite the opposite approach. Should people have sympathy when you choose to shoot yourself in the foot?
I picked #1 too, foolishly thinking that they would actually care about what’s best for the country. But I’ve learned my lesson, and #3 looks much more appealing these days given how bad it’s gotten/is getting.