When real estate agent Angela Hogben launched a three-bedroom house onto the Hamilton real estate market with an asking price of $499,900, she braced for an onslaught.
“I had a ton of showings – I didn’t get a single offer,” says the agent with Re/Max Escarpment Realty Inc. Ms. Hogben listed the house in April with an attention-grabbing asking price and set an offer date for one week later because that’s the strategy that has successfully sold many properties for huge premiums in the city west of Toronto.
In Hamilton, Barrie, Guelph and other Southern Ontario cities, agents who were seeing upwards of 25 offers on some properties and price gains of more than 30 per cent over the past year, are shifting strategies as they adjust to a cooler market.
Stephen Brown, senior Canada economist at Capital Economics, sees signs that bidding wars have calmed and prices appear to be levelling off in the hottest parts of the market. Meanwhile, listings and sales dipped in April from March – likely because sellers are holding off while pandemic stay-at-home orders are in place, he speculates.
Ms. Hogben calls the market in and around Hamilton “spotty” these days. As each week goes by, more sellers are watching offer night come and go with a couple of lowball bids – or none at all.
“Agents say, ‘My clients don’t want to compete,’” she explains.
Paradoxically, buyers who took a pass on 11 Hayes Ave., on offer night did compete for the house – but only after Ms. Hogben bumped up the asking price to $550,000 the following day.
Three submitted offers, and the house sold for $595,000.
“My clients were surprised it went that high after hearing crickets on presentation day.”
Ms. Hogben says many house hunters are wrung out out by the endless rounds of bidding and the ferocity of the competition. After the crushing disappointment of losing out on a few properties, they take a break.
While she understands the fatigue, people who are ready to pounce often find an opportunity, she says.
“I think it’s really important for people to know what’s going on,” she says. “They could have snagged a good deal for Hayes and they didn’t.”
Ms. Hogben pushes her own buyers to show up on offer night because she believes the best time to strike a bargain emerges when no one else comes to the table.
“I always tell my clients – even though they’re burnt out – ‘You’re going to go and look at this house. Because you never know. You might be that one offer.’”
She’s also pressing sellers to list as soon as they can. The owners of a five-bedroom house with a pool in the smaller community of Binbrook, Ont. were planning to list in July but Ms. Hogben urged them to sell in April when she sensed the shift in the market.
Ms. Hogben listed the house at 94 Kaufman Dr. with an asking price of $999,000 and received five offers.
“I had two legitimate offers – the rest of them were just junk.”
The house did sell for $1.25-million, but Ms. Hogben believes the bidding would have been much more intense in February.
She says lowball bids often seem to arrive from buyers from Toronto who are represented by an agent who doesn’t know the territory.
“These agents are coming in saying, ‘I’m going to put in a lowball offer and I’m going to get it’. Well they’re not.”
Ms. Hogben believes the stay-at-home orders and school openings and closings during the pandemic are also weighing on the market as Ontario struggles to contain cases.
Some potential sellers are holding back because of lockdown and fear of variants while buyers are turned off from even looking at houses.
Agents run into complications too: Ms. Hogben knows of one area agent who was showing a house to a couple while the home inspector worked in another part of the house. A neighbour called law enforcement and the agent was penalized for having people from three different households under one roof.
“They got pegged for a hefty fine,” Ms. Hogben says.
In Guelph, Ont., real estate agent Aimee Puthon of Coldwell Banker Neumann Real Estate, notes that the average sale price in April was $750,858, which is 36.8-per-cent higher than in April, 2020.
“It’s a challenging market in all price ranges,” she says, noting that many of the buyers are migrants from Toronto. “They’re able to arrive here and pay prices we just haven’t seen before.”
Ms. Puthon was working with local first-time buyers who recently lost out on a house listed with an asking price of $699,000 when an out-of-town agent brought an offer of $805,000.
One week later, Ms. Puthon found a detached house in Guelph’s south end with an asking price of $699,000. Within a few hours, a bully placed an offer so Ms. Puthon helped her clients jump in quickly.
There were four bids in total and, after the dust settled, her clients were successful with an offer of $790,000.
Ms. Puthon says bidding wars were a sure thing for a time but now the market is more unpredictable.
“Will there be two offers, or no offers, or 15?” listing agents wonder.
Still, lofty prices have her wondering how buyers are able to manage financially. She is recommending that people who are currently looking to buy make sure they are comfortable staying in a property for the next several years. That way, they face less risk if prices level off or dip.
“Markets change,” she says. “You want to be sure that you’re staying in the home because that’s your five to 10-year plan.”
At Capital Economics, Mr. Brown believes home prices in Canada look increasingly vulnerable to future rises in interest rates.
For now, however, he believes the bigger risk is the potential negative effect that further falls in sales could have on gross domestic product because the country’s economy has become more dependent on the costs associated with moving house.
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