Realtors say homebuyers are forgoing inspections and subject clauses in order to make offers more attractive.
A low inventory of single-family detached homes for sale in Metro Vancouver has buyers engaging in multiple bidding wars or camping out to get a shot at the few homes when they come on the market.
The demand is so high that many buyers are paying more than the original asking price and, in some cases, aren’t bothering with inspections or subjects on the property before signing on the dotted line, said Cory Raven, managing partner at ReMax Select Realty.
This is because they’re afraid someone else will beat them to the punch if they wait or take their time, he said.
“It’s very typical for someone to enter the market once, twice or three times expecting to buy a house and going into the bidding war and losing.” Raven said.
“It really has changed the dynamic of the good old days when you see a place, put in an offer and wait a couple of weeks … people are going into a 40-year-old house with no inspections.”
Such tactics are not surprising in the most expensive region in Canada for residential real estate in 2014. The average residential sale price for a single-family home in Metro Vancouver this year was about $838,400, up from $781,517 a year earlier, according to the ReMax 2015 housing market outlook.
And the situation isn’t expected to improve much for buyers looking for deals in 2015, with home prices forecast to rise by at least three per cent across Metro Vancouver — similar to what was experienced this year. Healthy gains are also anticipated in Kelowna, which is expected to see a seven-per-cent increase, and Victoria, slated for a four-per-cent rise in house prices.
The market is so hot that sales of single-family houses are still being listed across Metro Vancouver into mid-December, when they would have usually stopped by now before resuming in the new year, said Brian Lamb, of Royal LePage Realty Coquitlam.
“It’s bizarre,” Lamb said. “It can only go up in the first quarter of 2015. I think we’re going to have an incredible first half.”
The ReMax report suggests young families and older homeowners wishing to downsize are expected to drive demand, while interest from Mainland China also continues to influence the Greater Vancouver market.
“The supply side has definitely been affected,” Raven said. “A lot of people who are housing rich don’t know what to do with the equity except to keep it.”
David Lamb, of Sutton Group West Coast Realty, agreed many older people are hanging on to their homes, which is having an impact on inventory. He recently had eight offers on a home in Windsor Park on the North Shore, while a property east of Seymour raked in $40,000 more than the asking price, which was round the mid-$800,000s.
“Earlier this year we had a guy who lost out four times and finally found a house,” David Lamb said. “It’s emotional, it’s tough. When there’s a lot of competition, there’s always somebody who will pay more.”
It’s not just older homes that are facing the crunch. Lamb said foreign investors are willing to pay more for a home in Metro Vancouver, particularly in the Tri-Cities and Burnaby, where they tend to knock down existing homes to build their own.
He cited the Rivers Run development as an example of foreign investment interests: in the first two phases 24 homes sold within hours, while the remaining 14 homes were snagged within an hour by buyers who camped overnight to get them.
ReMax expects there will be upward pressure on detached house prices in Vancouver’s west side due to high demand and low inventory, but said the condo and townhouse markets will likely sustain a more balanced market.
However, even those markets aren’t immune from buyers’ frenzy. ReMax realtor Mary Cleaver said a four-bedroom townhouse listed on Vancouver’s Carolina Street had seven offers and was sold within the week, with no subjects and at $50,000 more than the asking price. “It is unique for that to happen,” she said.
Condos in East Vancouver were in high demand near the end of 2014, according to the report, which suggested well-priced homes often sold within one to two weeks, whereas the average market time for condos was 45 days. “The condo market has been healthy but nowhere near the bidding wars and housing (price) gains,” Raven said.
But both Lamb and Raven said some people are starting to get buyers’ fatigue and bowing out of the bidding wars. Two Sundays ago, Lamb said, 28 people had come through an open house, but several parties decided not to bother in the bidding. “We had people who won’t get tied up in this flurry,” he said.
However, ReMax noted as those potential buyers move to the sidelines and wait for the market to stabilize, the demand in the region will continue to grow.
BY KELLY SINOSKI, VANCOUVER SUN DECEMBER 10, 2014