Toronto’s Real Estate market may not be what it was one year ago, but there is still an ongoing battle for homebuyers, the proverbial Bidding War. Not only are they affecting Toronto, but Vancouver as well.
The Canada Mortgage and Housing Corporation (CMHC) designed and conducted a survey of 30,000 recent buyers in Toronto, Vancouver, and Montreal and determined that approximately 55% Of Toronto and Vancouver Real Estate Buyers had entered into bidding wars. In contrast, only 17% of Montreal Buyers experienced competition in multiple offers.
The CMHC found that a root cause for this was the Buyer’s fear of missing out (FOMO). Trends illustrated that Buyers felt they needed to borrow in excess of their pre-established budgets to maintain competitiveness in a land-scarce market or one that was filled with numerous foreign buyers.
Toronto witnessed 47.79% of buyers pay more than budgeted. In Vancouver, 47.91% of buyers paid more than planned, whereas only 23.67% Montreal buyers paid more than expected.
While FOMO appears to be the main force behind breaching budgets, other market factors did contribute to higher prices, but Buyers inadvertently added emotional premiums that ballooned their budgets. CMHC analysts believe that those who bought properties earlier possibly lacked market information. Conversely, those who bought later did miss out and couldn’t find anything they wanted within their budget.
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Source: Better Dwelling
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