More Canadians are ready to fight it out to secure a property, with 34% willing to enter a bidding war when it’s time to buy a home, according to the BMO Home Buying Report.
That’s an increase of 6 points, or 21%, from a year ago.
Key highlights of the report include:
- In major city centres, appetite for competitive bids is the highest in Toronto and Vancouver (44% and 41% respectively)
- Provincially, prospective buyers in the Prairies and British Columbia are the most willing to compete on the price of a home (38% respectively)
- Current homeowners say they visited an average of 9.5 homes before buying. While half (49%) were successful on their first bid, this figure drops to 42% among those who bought in the past 5 years — including 32% in Vancouver and 24% in Toronto
While many suspect bidding wars are triggered by sellers who deliberately price their homes below market, the report shows that just 15% of owners have that motivation, with those on the Prairies and in Toronto the most likely to pursue this strategy. But even then the numbers are modest, at 24% and 22% respectively.
Average home prices across Canada continue to rise, according to BMO Economics. Across the country, prices have gained momentum in the past year, with the average transaction price up nearly 10% year-over-year in January. The average home sale price is currently just over $400,000.
“Calgary’s market continues to see the strongest fundamentals; Vancouver has rebounded from a soft patch; while Toronto’s market remains relatively balanced overall, though the condo market is more amply supplied,” said Robert Kavcic, senior economist, BMO Capital Markets. “Overall, sales are expected to hold relatively steady in the year ahead, with price growth in the low single-digit range, below the rate of income growth.”
“The competition for real estate in Canada, particularly in hotter markets, can be fierce, however it’s important that buyers avoid getting caught up in the moment and respect the budget parameters they’ve established,” said Laura Parsons, mortgage expert, BMO Bank of Montreal.
“For those willing to negotiate on the price of a home, the most important part of preparing is ensuring they get pre-approved by their bank so they know exactly what their limits are and can stick within them.”