In February 2021, Mr. Veilleux, a rental property owner, posted an ad on social media for the semi-detached apartment he had for rent. Within a minute, his message board is flooded: nearly a hundred people are interested in visiting or even renting without visiting. Local people, yes, but mostly city dwellers looking to settle in the region and quickly. A scam? No... only the effects of the generalized real estate boom.
After a few select visits among the many requests, he ended up renting to a young couple, ready to pay more than the asking price. Overbidding. Fighting for the property. Abandonment of the inspection stage for the owners. The real estate frenzy is everywhere. Why is this happening?
Is the Pandemic the Only Culprit?
The explosion in home prices is not new. In fact, you first have to go back to the 2000s to see that real house prices in Canada rose by almost 160%, according to data from the Organisation for Economic Co-operation and Development (OECD). This is far more than what has happened in other countries. Another factor is that Canada did not experience a major housing crash in 2008, unlike the United States. It should also be noted that our country has received a large number of immigrants, which has added pressure on our housing stock.
More recently, for several months now, abnormally low mortgage rates, combined with a huge demand for real estate and an insufficient supply, have been responsible for the rise in property prices. There was some momentum prior to COVID, but since COVID, the situation has only gotten more pronounced.
In Quebec, the phenomenon of overbidding used to be concentrated in the Montreal area, but now it is spreading throughout the province. Suburbs and regions located near large cities are becoming more popular. Some are looking for peace and quiet and nature to live out their confinement, others are forced to move to larger homes with their new telecommuting and homeschooling lifestyles. While this global pandemic may be coming to an end, households are thinking long term and looking for a better quality of life away from the “work, play, sleep” world. But not at any cost…
Buying a House, a Mission
There was a time when buying a home meant spending time with your family shopping for the home of your dreams, one that met your expectations and budget. Today, it’s a different story with supply and demand out of balance. Offers to buy are exaggeratedly higher than the posted price. Asking price much too high for the quality of the house. Hurried visits not exceeding 15 minutes. You will have to be patient, because for the moment, the real estate market shows no signs of letting up.
Once you’ve found it, we will be there to advise you on the best coverage for your home insurance.