Real Estate Talk:
Competing in today’s market

Tips and strategies for buyers in this extraordinary seller’s market

By Joseph Marovitch

September 9, 2021

Last week, I visited several condominiums in the Eastern part of the city with clients, as their selling broker. The clients found a property to their taste and decided to write an offer. There were no other offers on the property at the time. Within 12 hours, there were four offers in the hand of the listing broker. Within 18 hours, there were seven offers for the condo.

Each time an offer arrived, the broker followed proper protocol by contacting all the buyers to say the listing broker received an offer, and asking if the buyer wished to alter their offer, meaning to enhance it by either increasing the offer amount or reducing the conditions, or both.

In this market, as has been the situation for the past 12 months, there are many more buyers than listings for sale. This is the strongest seller’s market in years. A seller simply has to list their property at market price and, in the natural course of events when there is more demand than supply, the price rises.

This is not a normal market, this is a market that is driving the price of homes up in triple digits. Where a duplex in NDG would have sold for $750,000 two years ago, now will sell for $1.2 million and a condominium in Hochelaga-Maisonneuve would have sold for $325,000, now will sell for $550,000.

In this market, as has been the situation for the past 12 months, there are many more buyers than listings for sale. This is the strongest seller’s market in years.

The pandemic has moved the real estate market forward by six years in pricing. I say this because these prices will not recede. These are prices that would normally be in effect five years from now, if there were no pandemic and prices rose between 3% in the further away suburbs or 8% closer to downtown, annually.

Over the coming year, we should hopefully see more property enter the market as the majority, if not all people, get the vaccine. Should we overcome this fourth wave of the Delta virus, we will see more homes for sale and less heated competition for the few properties. However, for now, it is a seller’s market, and buyers are at its mercy.

For a buyer to purchase an in-demand property, there is little choice but to make the best offer in terms of price and conditions. There are buyers out there who are putting between 50% or all cash down, removing the inspection condition at their risk, or simply throwing lots of cash without conditions at the sellers. This is not a good or normal market. The low-interest rates do not help either.

This situation can prove extremely faulty and risky in the future. Buyers who do not have enough capital and are scrounging for the down payment from friends, family, their life savings, and whatever credit they have, to take advantage of low-interest rates may be in dire trouble in the future when interest rates rise but their income does not.

If a buyer can purchase a property today within their means, they should do so because prices will probably not drop. If anything, prices will continue to rise, just slower post-pandemic, if there is a post-pandemic.

‘As time passes, with vaccines there should be more property available in the next few months, less competition, and the buyer will not have to pay 10 to 15 plus percent more above the market asking price of the listing.’

If a buyer is on a more limited budget, lock in a low-interest rate pre-approval for up to three months, which is the maximum, and take time to find the right property. As time passes, with vaccines there should be more property available in the next few months, less competition, and the buyer will not have to pay 10 to 15 plus percent more above the market asking price of the listing.

Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.

Next article: The real estate market and passports

State of the market

According to the Quebec Professional Association of Real Estate Brokers (QPAREB), sales in Quebec have reduced significantly in August, compared to last year. The QPAREB states the cause for the drop in sales to be a lack of inventory. Sales across Quebec from August 2020 to August 2021 are down by 30%. Montreal sales dropped by 27%. Once again, low inventory means high prices. Check the preceding article in Real Estate Talk to know why inventory is low, what the effects are, and where we are going.

Have a great week!

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Other articles by Joseph Marovitch