The Ontario Housing Market and Blind-Bidding: What You Should Know
Monday Oct 04th, 2021
THE ONTARIO HOUSING MARKET AND BLIND-BIDDING: WHAT YOU SHOULD KNOW
SEPTEMBER 24TH, 2021
Now that Prime Minister Justin Trudeau and the Liberals have secured a minority government after the 44th general election, will the Grits move ahead with their plan to ban blind bidding? With the state of the House of Commons essentially unchanged from before the election, the public policy pursuit might prove to be a challenging feat for the Trudeau government. Since the Prime Minister proposed this policy solution to the housing affordability crisis unfolding in the Canadian real estate market, the idea has been dissected by industry observers across the country, including experts in the red-hot Ontario housing market. Suffice it to say, the response is mixed.
But what is blind bidding exactly? This is the process of placing a bid on a property without knowing what the other homebuyers are offering. The controversial practice in the middle of a soaring housing industry has come under fire in recent months, with even small towns and rural communities experiencing tactics that were typically reserved for major urban centers.
What You Need To Know About The Blind-bidding In The Ontario Housing Market
Before the coronavirus pandemic, housing affordability was a critical issue, but it was situated in large cities. However, over the last 20 months, the affordability concern plaguing the Ontario housing market has seeped into the rest of the Canadian real estate market. This has sparked a myriad of proposals to ease prices and ensure more households can achieve the Canadian Dream, which includes reining in blind bidding.
Critics of the blind-bidding process contend that the practice only helps sellers and hurts buyers, because it leads to bids that are thousands of dollars over asking price. They say this accelerates price inflation in the housing market, and puts home ownership out of reach of more Canadians.
Meanwhile, others assert that banning blind bidding would infringe on sellers’ rights. In addition, industry leaders argue that installing a ban on blind bidding would not achieve lowering the price tag of houses.
Others have questioned if blind bidding is even legal. The answer to that depends on the jurisdiction. Indeed, blind bidding and other housing legislation falls on the responsibility of provincial and territorial governments, not the federal government. For example, in the province of Ontario, blind bidding is an acceptable practice for residential properties. Many experts agree that this should be a local issue rather than a “heavy-handed option” designed by Ottawa.
said Saskatchewan Realtors Association (SRA) CEO Chris Guérette in an interview with Moose Jaw Today.
Taking it a step further, some real estate trade groups believe prohibiting blind bidding would “criminalize” homeowners.
Indeed, there is not a uniform opinion because there is not enough data on this method, although the numbers do show that 75% of the freehold real estate transactions in the Toronto area were sold over the asking price, which does offer a glimpse into the ubiquity of blind bidding.
What Are The Alternatives?
If banning blind bidding and introducing other regulatory measures are not the answers to Canada’s housing woes, what would be reasonable suggestions? For months, real estate experts have uttered the same panacea to sky-high prices: more supply.
During the election campaign, many suggested streamlining the application process, approving more development proposals, and perhaps even incentivize developers to construct more affordable and family-sized residential properties close to transportation hubs.
The State Of Canada Real Estate Market
It is clear that housing will be entrenched in public policymaking at all three levels of government for years to come. Until home ownership rates rebound and affordability becomes prevalent in all types of housing segments, Canadians will exert pressure upon their officials to tackle this critical topic that affects the entire country. Nobody knows if the Canadian real estate market will return to pre-pandemic levels when the nation flips the calendar to 2022, but industry analysts will be monitoring interest rates, the mortgage stress test, and the reopening of the economy as potential factors in supporting or impacting prices.
Sources: Financial Post, OREA, Moose Jaw Today, CBC