The first time that I posted this article was in 2017. Even 3 years before this initial posting, you could use the same narrative virtually word for word to describe what was going on in Metro Vancouver’s housing market.
This is what I wrote originally in 2017: For quite some time now there has been a very limited supply of properties on the market and most Realtors that I speak with on a regular basis are starting to have buyers lined up and waiting. There are so few properties to show these buyers, often times several groups working with the same agent are interested in the same property. We are beginning to see similar trends that we saw a year ago, which was 2016, where we saw multiple offers and properties going for several thousand over the asking price.
For years people have predicted a housing bubble and one of the biggest reasons has been affordability. The average household income is highly out of line with the average cost of a home in the lower mainland. This trend continued from the time of this writing originally in 2017 all the way up until the start of 2022.
There have been numerous articles explaining, how despite people screaming bubble at the top of their lungs for years, why ‘there is no bubble’, This article by a colleague is a good one.
I wrote a piece last year for 604now.com about the price of a tear down in Vancouver which has since been taken down it seems. The gist of the article is about the restrictions and the lack of supply of livable land in our city and province. It turns out the Pacific Ocean, US border, North Shore mountains, and the Agricultural Land Reservce (ALR) all remain intact.
Simply put, there is no expanded land supply in the Lower Mainland. Which means naturally, no expanded supply of properties to market. Migration and immigration numbers remain strong, largely due to stable employment numbers and – the recent sub-zero temperatures not withstanding – a pretty awesome climate overall.
So, we have
Strong employment numbers
What will this lead to in the ensuing months of 2017?
Well I can tell you already from experience over the last week and a bit that it will most likely lead to several buyers feeling immense pressure to write subject-free offers. Perhaps the single worst idea in real estate.
I’ve said this before and I’ll say it again- if the BC government truly wanted to do something to cool the market they would implement the same policy for used property transactions as we have on sales (and pre-sales) of brand new properties –a mandatory 7-day rescission period – a forced time of cooling-off during which one can get their finances in order, perform a property inspection, etc.
Think about this: In BC one cannot write a subject-free offer on a new build, period. And so there are no competitive bidding wars (lineups for three days in advance, yes, but risky binding contracts, no).
In other words, the one type of property that presents the least risk – a brand new build subject to current building standards, fully inspected by the city, and covered under warranty… this is the one you cannot write ‘subject-free’ on.
Yet our policymakers think it is A-OK to walk across the street and write a blind-bid offer, perhaps paying 10% more than the next-closest offer, on a 100+ year-old house containing asbestos tiles, poly B piping, vermiculite insulation, knob-and-tube wiring, unauthorized renovations, work not done to code, etc.
Yeah, No Problem. Go right ahead.
If you are thinking that the industry loves this subject-free, rush closing date environment, you would be incorrect. Realtors, appraisers, lawyers, notaries, bankers and Brokers alike would all be quite happy to see some form of legislation implemented to slow buyers, and perhaps slow the market down in general.
Removing the mechanism that creates this market madness would be applauded by all corners of the real estate industry.
Many people are still under the impression that a pre-approval means something. I have posted this before, a pre-approval is not worth the paper it is printed on, and once again this coming spring several buyers will succumb to the pressure to write subject-free offers based on a misunderstanding of how little validity a ‘pre-approval’ has. Hard lessons will be learned.
There is only one time that a buyer should even consider writing a subject-free offer, and that is when they have the capacity to close the purchase with cash. Otherwise, always insert into an offer a ‘subject to the buyer obtaining satisfactory financing’ conditions. Cover yourself.
Get ready for another rocking and raging spring market. Brace Yourselves.
Be wary of banks that offer you an extremely low initial rate with a significant increase a year later. For a first time home buyer in Canada, the complexities of mortgages can be very overwhelming, and it can be easy to get locked into a mortgage without getting the best rate possible.
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If you would like more information or a free consultation contact Aleem below, and as a Certified Mortgage Specialist let me help you get the home of your dreams. Great Mortgages, Made Simple