SHORT-SIGHTED SOLUTIONS

The blind bidding process has been forefront in the news this year, painted as the leading cause of unaffordable housing in Canada. So much so that the Liberals have promised to tackle this issue if they are rewarded in the federal election on September 20th. Given that it is the provincial governments that have the mandate to regulate the housing and real estate industry, this promise by the Liberals seems to be a classic example of overreach and trying to plan policy while on political campaign.

Up until 2017, multiple offers and bidding wars were not an issue – if a concept that most people had heard of at all. In the Guelph market, you could perhaps anticipate multiple offers and bidding wars on unique properties, like some of the stately stone homes and cottages, or in neighbourhoods with very low turnover and high demand, such as Exhibition Park or St. Georges Park. Classic supply and demand: plenty of people want those prestigious neighbourhoods and historic homes, and they rarely come on the market. At the peak of this year’s chaos, we were seeing intense competition and overbidding on just about any type of property, regardless of location, home type and condition.

I’m not a fan of the blind bidding process, and while much of the buzz around this topic focuses on the buying side of the deal, it’s not exactly a walk in the park for sellers either. From the listing perspective, it’s a very difficult process to manage and control. If there isn’t a strong process in place, the flurry of activity on the offer date (many of which are still set for evening hours, an arguably unnecessary habit from the past) can often to chaos, and the likely outcome can leave very few people happy. I’ve seen situations where even the winning buyer and their agent aren’t happy, because the process was so poorly managed.

Most brokerages won’t offer training or protocols to their agents on how to properly handle multiple offers or the blind bidding process, and like most everything else, leave the responsibility to the agents to figure it out. While certainly not ideal, these processes are being blamed for the housing crisis – and yet there doesn’t seem to be much concern around making them better, only scrapping them entirely.

Currently, many politicians are pointing the finger at an outcome and saying it needs to be changed, while ignoring the root cause of the problem – the lack of supply matching demand.

For years, the Canadian housing market has consistently not kept pace with the growth in the home buying and renting market. Canada is a popular destination for skilled immigrants who very quickly want to put down roots and own real estate. Couple that with internal growth from the baby boomer generation and the millennial demographic, and you can see why real estate is in such strong demand in this country.

Governments of every level have encouraged homeownership and made it a priority, while at the same time have made creating housing inventory more difficult and expensive. The situation that our real estate market is currently in should not be a huge surprise. The pandemic has merely brought the problem into clear focus, because we’ve now realized how important having a safe home environment is.

The call for the end of blind bidding is convenient for short-sighted politics. What the real estate market really needs is a comprehensive inventory growth plan in coordination with federal, provincial and municipal governments. Zoning rules, land use, and the development process all need to be addressed with each of the stakeholders. As a country, we’ve done this before with the advent of the Canada Housing and Mortgage Company shortly after the Second World War. All of those cute 1½ storey homes you see throughout Guelph are a result of all levels of government working together to create long term solutions to house the thousands of veterans returning from war.

It’s no secret we’re in a housing crisis that will only continue to mount if there is no plan for long-term intervention and investment. Buzzwords and short-term promises are nothing new during election season, and they certainly won’t be our ticket out of this nationwide housing shortage.

THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET

After a drop to just 17 sales several weeks ago, market activity has stabilized into a summer lull, albeit slightly quieter than usual. While anecdotally, competition has eased over the past month, pricing remains stable as we begin our ascent into the fall market.

Take a look at the full key week comparison below:

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