Canada's Housing Market: Five things to know from a possible slowdown to bidding wars on campers

·4 min read

If you listen very carefully, you can almost hear the conversation that nobody in real estate wants to have. You can hear agents mumbling to each other about cautious buyers and markets that set the world on fire earlier this year, suddenly getting a bit frostier.

Nobody is suggesting the market is heading to a bad place. But houses scooped up in a feeding frenzy are sitting on the market a bit longer as buyers realize they have more options than they suspected going into the spring market.

Here are five things to know about the real estate market as we head into April.

1 - The GTA real estate canary is awfully quiet

There isn't one single "real estate market" in Canada because communities across the country are each unique. The Greater Toronto Area is a vital sign of health because so many of the houses that sell are in that large swath of sprawl.

In Durham Region, hundreds of people were booking appointments to see houses in February. Bidding wars were so ordinary people stopped reporting on them.

"For some time now, the strategy to sell a home has been to list it lower than market value, hold back offers, have a virtual offer presentation, and sell it over asking to the highest bidder, biggest deposit, least contingencies and meets the seller's closing date," one of the region's top agents said in a note to clients and elaborated on in a video.

"Over the past 10 or so days, I have noticed several failed offer presentations, which means no offers were received on offer day or fewer offers were received. As of now, I have not seen the price decrease, but I am seeing less competition on each of the properties for sale."

2 - Brokers would welcome a pause

The people who sell houses could do with a break. While bidding wars can drive up their sizable commissions when they are selling, they also take a lot of extra work if they have clients looking to buy.

Representing clients who get caught up in bidding wars is expensive in a commission-based business, Royal LePage CEO told Yahoo Finance Canada.

""If you're representing a buyer in today's market, again and again, you can be thwarted in multiple offer situations," Phil Soper said. "You can go through the work of understanding the region and property, advising your clients, visiting the home multiple times, and then putting together a formal offer, submitting it and losing. If you have to do that a dozen times, your costs soar."

3 - Other real estate options look good

When one door closes, another is said to open. That's undoubtedly true for secondary residences, an option for those sitting on some cash and who don't necessarily want to buy a new house.

One Ottawa woman was shocked to be flooded with dozens of interested buyers when she put her camper trailer on the market for $7,000. She had so many inquiries, she vetted applicants and then held an open house rather than deal with multiple showings.

The people that bought it said they were interested in another trailer, and there were 14 interested, and there was a bidding war," said Anik Savage-Boucher.

Royal LePage updated its annual forecast this week to say the average price of a house in Canada's "recreational property regions" will rise 15 per cent in 2021 to $502,730.

4 - February was confusing for real estate

The organization representing Realtors, the Canadian Real Estate Association, said February was a good month. They wonder what in the world is happening and what is to come in the months ahead.

"We are right at the start of the first undisturbed (by policy or lockdown) spring housing market in years, and we also have the most extreme demand-supply imbalance ever by a large margin. So, the question is, what is going on?" the organization's senior economist Shaun Cathcart wondered in a note. "Maybe the biggest factor here is the emergence of existing owners with major equity, prompted by the great shake up that is COVID-19 to pull up stakes and move. First-time buyers, which we have a lot of, are now having to compete with that."

5 - Still lots of time to sell your homes for wheelbarrows of cash

The Canadian Real Estate Association issued an interesting look ahead this month, saying that it was likely 2021 would set a record for the number of homes sold. And it certainly isn't worried about an abundance of "for sale" signs cutting prices by any significant amount.

It says the average price will increase by 16.5 per cent across the country to $665,000 (the median household income in Canada is around $88,000). However, it doesn't see the trend continuing into 2022, expecting a more modest increase of 2.1 percent.

"Conditions are now favouring sellers to some extent in virtually all local markets," it said. "The vast majority of Ontario markets are now into weeks of inventory. As with the annual sales figures, CREA believes this average price forecast to be well on the conservative side, in relation to current monthly data."