Twenty five percent Canadians willing to battle
When it comes down to it, many British Columbia home buyers just aren’t willing to battle for their dream home, according to a BMO Home Buying Report released Thursday.
The BMO Buying Report said Canadian respondents in the Prairies, Ontario and Alberta are more willing to enter into a bidding war than those in B.C., Quebec and Atlantic Canada.
In the survey, 22 per cent of Canadians said they were willing to enter into a bidding war when making an offer on a home.
"Of those prepared to fight, half would pay up to 110 per cent of the asking price, while a quarter would be willing to bid up to 120 per cent," the report said.
Those surveyed in Manitoba/Saskatchewan ranked first in eagerness to enter into a mortgage bidding war (32 per cent). They were followed by respondents in: Ontario (28 per cent), Alberta (25 per cent), B.C. (23 per cent), Atlantic Canada (13 per cent) and Quebec (10 per cent).
The study also noted that 52 per cent of Canadians surveyed said they're willing to pay between 100 and 110 per cent of the asking price, with Quebec ranking first at 62 per cent. It was followed by: Alberta and B.C. (53 per cent), Ontario (51 per cent), Manitoba/Saskatchewan (48 per cent) and Atlantic Canada (44 per cent).
Meanwhile, 27 per cent of Canadians said they would pay between 100 to 120 per cent, with the highest in Atlantic Canada (33 per cent), then Ontario and B.C. (30 per cent), Quebec (25 per cent), Manitoba/Saskatchewan (22 per cent) and Alberta (17 per cent).
John Pasalis, broker owner of Realosophy Realty Inc., a Toronto-area real estate brokerage, cautioned that the bidding wars may not be as lucrative as they seem.
"One thing to keep in mind is the houses that are getting pretty crazy bidding wars are underpriced anywhere from five to 10 per cent," he said. "The list prices aren't always an indication of what they're actually worth."
Pasalis said his company has seen "multiple offers almost non-stop for years now," including as much as 10 or more buyers bidding on a house.
"You just get these spikes and valleys in the market where things get a little bit more heated and demand starts outstripping supply as things get faster," he explained.
However, the mortgage wars may backfire on owners if the bank's appraisal of the home is lower than what a buyer pays for the home, he said.
To avoid this, Pasalis cautioned that homeowners need to know the actual market value of the property they want to buy as opposed to its listing price.
Nationally, the average home sale price is $369,677, the report said. The average home prices across Canada are "rising modestly," it said, except in Toronto ($504,117) and Vancouver ($761,742).
"Toronto prices have risen 11 per cent over the past year, while Vancouver's have fallen 3 per cent," said Doug Porter, deputy chief economist for BMO Capital Markets.
The survey was completed online by Leger Marketing from March 19-22 with a sample of 1,000 Canadian home or condo owners. The margin of error is plus or minus 3.1 per cent, 19 times out of 20.