BMO report says Canadians willing to pay more to get what they want
CALGARY - Prospective Canadian homebuyers are more willing to enter into a bidding war this year for properties they want to purchase, says a new report released Wednesday by BMO.
And Calgary’s hot housing market is proving to be a good example of that as nearly 20 per cent of MLS residential sales in the city in February were for above list price.
The BMO Home Buying Report said 34 per cent of Canadians are willing to enter a bidding war when it’s time to buy a home, an increase of six points, or 21 per cent, from a year ago.
The report, conducted by Pollara, said that in major city centres, the appetite for competitive bids is the highest in Toronto and Vancouver (44 per cent and 41 per cent respectively). In Calgary, it is 38 per cent and in Alberta, it is 30 per cent.
“While many suspect bidding wars are triggered by sellers who deliberately price their homes below market, the report shows that just 15 per cent of owners have that motivation, with those on the Prairies and in Toronto the most likely to pursue this strategy - but even then the numbers are modest at 24 per cent and 22 per cent respectively,” said BMO, which says average home prices across Canada continue to rise, gaining momentum in the past year, with the average transaction price up nearly 10 per cent year-over-year in January. The average home sale price in Canada is currently just over $400,000.
“Calgary’s market continues to see the strongest fundamentals; Vancouver has rebounded from a soft patch; while Toronto’s market remains relatively balanced overall, though the condo market is more amply supplied,” said Robert Kavcic, senior economist with BMO Capital Markets, in a statement. “Overall, sales are expected to hold relatively steady in the year ahead, with price growth in the low single-digit range, below the rate of income growth.”
Laura Parsons, mortgage expert with BMO Bank of Montreal, said the competition for real estate in Canada, particularly in hotter markets, can be fierce.
“However, it’s important that buyers avoid getting caught up in the moment and respect the budget parameters they’ve established,” she said in a news release. “For those willing to negotiate on the price of a home, the most important part of preparing is ensuring they get pre-approved by their bank so they know exactly what their limits are and can stick within them.”
Data released Monday by the Calgary Real Estate Board indicates all-time records, for any month, were set in February in the average city sale price ($482,530) and the median city price ($424,900) as well as in the single-family sale price ($550,312) and the single-family median price ($480,000).
Mike Fotiou, associate broker with First Place Realty, said Calgarians were so determined to buy a home in February that nearly one in five paid above the asking price.
“Of the 1,854 properties that sold during the month, 364 or 19.6 per cent of buyers paid higher than list price. Compare that to the 10.4 per cent of buyers from a year ago or the 6.1 per cent from February 2012 that paid above asking,” Fotiou wrote on his blog.
“As sales rise and inventory continues to decrease year-over-year, it’s to be expected that buyers will find themselves in more situations where multiple offers are involved.”
mtoneguzzi@calgaryherald.com
Twitter.com/MTone123
And Calgary’s hot housing market is proving to be a good example of that as nearly 20 per cent of MLS residential sales in the city in February were for above list price.
The BMO Home Buying Report said 34 per cent of Canadians are willing to enter a bidding war when it’s time to buy a home, an increase of six points, or 21 per cent, from a year ago.
The report, conducted by Pollara, said that in major city centres, the appetite for competitive bids is the highest in Toronto and Vancouver (44 per cent and 41 per cent respectively). In Calgary, it is 38 per cent and in Alberta, it is 30 per cent.
“While many suspect bidding wars are triggered by sellers who deliberately price their homes below market, the report shows that just 15 per cent of owners have that motivation, with those on the Prairies and in Toronto the most likely to pursue this strategy - but even then the numbers are modest at 24 per cent and 22 per cent respectively,” said BMO, which says average home prices across Canada continue to rise, gaining momentum in the past year, with the average transaction price up nearly 10 per cent year-over-year in January. The average home sale price in Canada is currently just over $400,000.
“Calgary’s market continues to see the strongest fundamentals; Vancouver has rebounded from a soft patch; while Toronto’s market remains relatively balanced overall, though the condo market is more amply supplied,” said Robert Kavcic, senior economist with BMO Capital Markets, in a statement. “Overall, sales are expected to hold relatively steady in the year ahead, with price growth in the low single-digit range, below the rate of income growth.”
Laura Parsons, mortgage expert with BMO Bank of Montreal, said the competition for real estate in Canada, particularly in hotter markets, can be fierce.
“However, it’s important that buyers avoid getting caught up in the moment and respect the budget parameters they’ve established,” she said in a news release. “For those willing to negotiate on the price of a home, the most important part of preparing is ensuring they get pre-approved by their bank so they know exactly what their limits are and can stick within them.”
Data released Monday by the Calgary Real Estate Board indicates all-time records, for any month, were set in February in the average city sale price ($482,530) and the median city price ($424,900) as well as in the single-family sale price ($550,312) and the single-family median price ($480,000).
Mike Fotiou, associate broker with First Place Realty, said Calgarians were so determined to buy a home in February that nearly one in five paid above the asking price.
“Of the 1,854 properties that sold during the month, 364 or 19.6 per cent of buyers paid higher than list price. Compare that to the 10.4 per cent of buyers from a year ago or the 6.1 per cent from February 2012 that paid above asking,” Fotiou wrote on his blog.
“As sales rise and inventory continues to decrease year-over-year, it’s to be expected that buyers will find themselves in more situations where multiple offers are involved.”
mtoneguzzi@calgaryherald.com
Twitter.com/MTone123
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