Bidding wars slow down amid cautious buyers
Measures seem to be working
Bidding wars have slowed and traffic at open houses appears to be down across the GTA and Hamilton after the province introduced new measures to cool the red-hot real estate market.
Tim Hudak, president of the Ontario Real Estate Association — which represents realtors across the province — said he’s heard from hundreds of agents since the Liberal government introduced measures to cool the market on April 20.
He added while it’s too early to say what the long-term consequences of the government plan will be, buyers have become more cautious.
“The realtors I’ve heard from are telling me that there are fewer people in bidding wars,” he said. “That’s not just in Toronto, but also other parts of the Golden Horseshoe, and there are fewer people coming to open houses.
Hudak said buyers appear to be taking a “breather,” but cautioned all evidence to date is anecdotal.
“There is a significant psychological effect on housing decisions,” he said. “This is the biggest purchase almost any of us make in our lives. So, people tend to be very thoughtful. I suspect a number of people, as a result of the government announcement, are waiting to see what the impacts are in the marketplace. Those who can be a little more patient, are being more patient.”
On April 20, Premier Kathleen Wynne announced a 16-point plan to address problems in the housing and rental markets. The measures included the imposition of a 15 per cent foreign speculators tax.
At the time, Wynne stressed the changes are being made to calm the frenetic market and establish fairness for those trying buy a home. In the GTA, sale prices skyrocketed by 33 per cent in one year.
Hudak said the changes don’t appear to have had an impact on sellers, who continue to list their homes at about the same pace as before the government’s announcement. But regardless of what the market looks like in six months, the underlying demand remains, he said.
“Record low mortgage rates, millennials are trying to get out of mom and dad’s house, the Toronto area (is) very attractive internationally and across Canada,” he said. “None of that is going to change. The ultimate answer to increasing housing prices in the (GTHA) is increasing housing supply.”
Scott Blodgett, spokesman for Ontario’s finance ministry, said it’s too soon to tell what impact the new measures have had on the market.
I suspect a number of people, as a result of the government announcement, are waiting to see what the impacts are in the marketplace.