The Globe and Mail, Thursday, October 8, 2009
What happened to the buyer's market?
Many readers are finding the current housing market melee vexing: People are losing out to bully offers, contemplating entering the competition or just wondering when the fracas is going to end.
Conflagrations are breaking out across the country: A shortage in the number of houses listed for sale is leading to bidding wars in several cities, including Toronto, Montreal, St. John's, Saint John, Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria.
One e-mail comes from a couple with four kids and a compelling story about their frustrating experience switching towns north of Toronto.
In the spring, they sold their house in Brampton, Ont. in order to move a short distance to the smaller town of Georgetown, Ont. It was a buyer's market at the time and it took three months for the Brampton house to sell.
In Georgetown they found a split-level house that needed much tender loving care and decided to buy it from the bank that had recently repossessed it, writes the dad of the family.
“Despite the realtor's assurance that we were sure to be the successful bidder, given the price we'd offered, we lost the home - and the first salvo in what we thought was a buyer's market in Georgetown - when we were outbid. We discovered that the buyer's market that ear-marked the spring quickly turned into a seller's market in the summer and, at present, appears to be continuing.”
The couple soon learned that, although Georgetown is only a 15-minute drive from Brampton, the market dynamics are considerably different. A limited supply of groundwater, combined with a tendency among homeowners to stay put, means the supply of houses coming on the market is tight.
City planners have reined in new housing growth partly because of the water issue.
When the Brampton house deal closed, the family squeezed into a tiny two-bedroom rented apartment.
They grow increasingly astonished, the dad says, at the way houses are selling a few hours after being listed.
Recently they again found a property they considered ideal.
“We were at the house with our realtor within hours, only to be told that there were already two offers already on the house.”
They put in their own bid for $350,000. A few hours later, another surfaced for a total of four.
They were told the offers would be presented to the owner the following day.
The next day they were called by their realtor, who informed them that they would have to increase their bid to $355,000 to be successful. The dad gave the agent the go-ahead over the phone, on the spot. But the agent phoned back an hour later to say that, regrettably, the property was sold for $356,500.
“I was again taken aback. I didn't have the opportunity to further increase my offer.”
Some sellers will go back to all of the parties involved and give them the chance to dig a little deeper. But some buyers resent what they see as manipulation and refuse to participate, so sellers and their agents don't always offer that option.
Now this couple waits for the next one to come along - with their four kids in cramped living quarters.
“Very frustrating situation,” says the dad.
Opinions are welcome - plenty of people are trying to figure out where this rally is heading.