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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