Home bidding wars opposed by majority: poll
TORONTO - The national real estate market may seem to resemble a battleground, but a new survey suggests most Canadians would prefer not to go to war.
Three quarters of respondents from an online survey done by the Bank of Montreal suggested they would walk away from a promising property purchase rather than get roped into a bidding war that could raise the ante well beyond what they're prepared to pay.
Even among the 25 per cent willing to lock horns with other buyers, most would prefer to keep the grappling to a minimum. Half of respondents willing to engage in a bidding war said they'd draw the line at paying more than 10 per cent above the asking price. A further 25 per cent set their upper limit at 20 per cent over asking.
Prospective homebuyers and realtors agree, however, that all bets are off in the country's most competitive markets.
Ariel Brewster, 28, has spent the past nine months with her fiance combing Toronto for a modest fixer-upper that can be partially converted into rental space.
Twice they've submitted an offer based on an agent's appraisal of its value, but they've been outbid by as high as $100,000.
The notion of securing a home without a bruising bidding war sometimes seems utterly alien in a market widely recognized as one of the hottest in the country.
"You're not paying for what you bought, you're paying to win," Brewster said.
Canada's housing market is enjoying a particularly robust period, according to the Canadian Real Estate Association. Sales activity in March reached a new high not registered since April 2010, with Toronto, Calgary and Edmonton leading the surge.
Prices in Toronto have kept pace with its booming sales, rising 11 per cent in the past year to an average of $504,000, well above the national average of $369,000.
Vancouver, another market that has enjoyed brisk sales activity despite a recent cooloff, currently boasts an average home price of nearly $762,000, according to BMO.
Chris Simmons, a Vancouver-based broker with Royal LePage Real Estate, said bidding wars are commonplace in the heart of the city. A colleague recently fielded 32 offers on a single property, he said, and multiple bids are virtually inevitable in any market skewed in favour of a seller.
"No buyer wishes to be in a bidding war, that's the last place you wish to be, however in a seller's market, unfortunately . . . it would be surprising if you weren't."
Despite the constant temptations, Brewster is determined to stick to her strategy of measured, conservative bids.
Couples who try to enter the market without fixed goals in place, she said, will face a rude awakening when they witness the cutthroat conditions among their fellow buyers.
"I see a lot of couples who are newer to the search who are just going through the house and . . . planning where the couch is going to go, basically, and I kind of shake my head a little bit because I don't think they have any idea how much they'll have to pay to get this house. It's kind of that attitude that creates the inflated prices."
The BMO survey found Respondents in Ontario, Manitoba and Saskatchewan were the most likely to agree to pay above asking price. Those surveyed in Quebec and Atlantic Canada were the least likely to participate in a home bidding war.
A survey of this type is considered accurate within 3.1 percentage points, 19 times out of 20 _ although regional breakdowns are less accurate.
The survey was conducted March 19 to March 22.
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