You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*You will be leaving MoneySense. Just close the tab to return.
“I was actually hoping the market would be depressed because of the pandemic,” says Fleming, 46, a technology director at a design agency. With many Canadians unable to work because of the mass lockdowns enacted to control the spread of COVID-19, he figured cash-strapped homeowners might be motivated to sell at favourable prices, providing a great buying opportunity.
But that’s not how it played out. Buoyed by historically low interest rates, buyers came out in droves to purchase single-family homes—especially those with backyards—in search of housing that would minimize their exposure to others and give them outdoor space to socialize more safely. At the same time, the number of houses on the market dwindled, as owners became cautious about strangers (and any pathogens they might be harbouring) parading through their homes.
Similar scenarios took place in housing markets across the country and, according to the Canadian Real Estate Association (CREA), only intensified by the start of 2021. “On New Year’s Day there were fewer than 100,000 residential listings on all Canadian MLS Systems, the lowest ever based on records going back three decades,” CREA senior economist Shaun Cathcart noted in a January news release. “So, we have record-high demand and record-low supply.”
What do you get when a surge in demand is met with a lack of supply? As any intro to microeconomics student will tell you, the answer is: skyrocketing prices. Indeed, the actual (not seasonally adjusted) national average price of a single-family home increased by 17% in the past year, hitting a record $740,900 in January 2021. Similarly, average single-family home prices in the Greater Toronto Area shot up to $1,074,600, from $921,600 in January of last year.
Buying in a seller’s market
Needless to say, all this posed a challenge to house hunters Fleming and Power, who had unwittingly entered an extreme seller’s market rife with bidding wars. Few properties in their price range met their criteria, and those that did garnered multiple offers.
“We found our dream home [in Toronto’s west-end Corso Italia neighbourhood], put in a bid, and didn’t get it,” says Power, 40, a senior operations manager at a tech company. So, they reviewed their finances and upped their budget to more than $1.3 million, but still had no luck even after looking at dozens of properties. “We always got outbid,” she says.
Finally, after months of searching, in November 2020 they landed a sweet three-bedroom with a fair-sized backyard and basement just south of Corso Italia. They offered and paid the asking price: $1,299,999—despite a similar property down the street selling for more than $1.5 million the day before.
How did they pull off this feat and, more importantly, what strategies can you use to be a more competitive buyer? We asked homeowners and industry pros to share their best tips for buying in a seller’s market.