April is now behind us, and the one thing that was surprising was the less than anticipated number of new listings to hit the market (the stricter pandemic lockdown measures may have been a factor). With the combination of low inventory, continuing low interest rates, and high buyer activity, overall pricing was driven even higher in the Centre Wellington & area real estate market. Homes in Fergus subdivisions and country properties, especially, had some eyebrow raising results during the month.

 IS IT TIME FOR THE GOVERNMENT TO INTERVENE IN THE HOUSING MARKET?

There has definitely been more chatter from government types and bankers with regard to taking steps to cool the housing market. Making it more difficult for buyers to qualify for financing, raising interest rates, a speculation tax to discourage house ‘flipping,’ and even making primary homes subject to capital gains taxes, have all been floated as ideas. (I suspect any government who introduces a capital gains tax will find themselves on the opposition side of government for a very long time, thus I believe this will not happen). I’m not a big fan of any of the ideas above – simply because they are not long term fixes – and may create more overall negative impacts than positive solutions. In our area, insufficient supply to meet demand is the current problem, plain and simple. The solution to this problem is not easy – and certainly not short term.

IS IT TIME TO CHANGE THE PROCESS OF SELLING A HOME USING A MORE OPEN AUCTION-STYLE PROCESS?

With the increased use of the holding offers strategy when selling homes, there has been much discussion on changing the process from blind closed bidding (where multiple bidders do not know what other offers are in the current holding offers scenario) to an auction-style process where everyone knows what others are bidding. While I am all for improving the process, I frankly do not believe the open process will end up being much of an improvement. As someone of a certain age who has been at several auction sales over the years, I know people tend to get caught up emotionally in the bidding. So in the end, I’m not so sure the final results will end up much differently. And changing the bidding process is not going to solve the supply-demand imbalance in our area.

THE MARKET MOVING FORWARD

As I stated in my last column, the rate of price increases we are currently seeing is not sustainable, thus if you are thinking of selling, it is still my position that now is a good time to do so (if you have somewhere to move to that is). We are reaching a tipping point where first-time buyers will be priced out of our market based on the current trajectory of price increases – and that is not good news for anyone. On the flip side, as noted last month, there seems to be an increasing appetite for higher priced properties well over $1 million in our area, and I continue to monitor that part of the market closely. Based on preliminary data, listing activity in May will increase over April levels, but buyer demand will continue to outpace supply for most housing types. In other words, it is going to be a very busy month in the local real estate market.