I feel for this guy pictured here as I do for all home buyers right now.
To say that the housing market in the Fraser Valley is hot would be a gross understatement. Google tells me that the hottest pepper in the world is the Carolina Reaper. Not sure if that’s accurate – never had one and don’t intend to. However, I imagine that if it is the hottest pepper in the world, it would be more than uncomfortably hot – so hot that you may find yourself frantically pacing back and forth, unable to breath, dripping with sweat, and seriously regretting your decision to taste it, and if all that’s true, then that’s likely getting closer to describing how this market feels for most buyers especially while they wait through the presentation of offers.
I don’t use the word Uber very often, but in this current market, especially most detached housing, it is uber-competitive. Multiple offers in the double-digit range is common – and not just 10-15 offers, but 20-30+ offers. Unconditional offers (aka – subject free) are common. Challenges to get showing times are common. Pre-offer inspections are common. Presentation dates are common. Above list price offers are common – and in some cases, not just thousands above, but hundreds of thousands. It is not a market for the faint of heart or the faint of wallet.
Despite the many potential challenges, risks, and stresses that come with this type of market, there are ways in which it can be successfully navigated. Here are a few…
1. Choose a strong agent
There’s lots to consider in selecting an agent, but having one familiar with the market in which you are searching, who has a strong rapport with other agents, up-to-date market knowledge to properly guide you on pricing, experience with multi-offer situations, well organized, and an agent who is available for you and great at communicating with you will certainly help.
2. Be aware
Have a system in-place for monitoring new listings and recent sales and recognize that many new listings will have confined showing windows and dates for presentation of offers. You will want to give yourself and your agent as much lead time to do the necessary due diligence as possible.
3. Be flexible
Like it or not it is a seller’s market and as such, buyers need to be prepared to view homes at inconvenient times, sign waivers, wear PPE, arrange for last-minute child care, etc.. in order to be ready quickly for opportunities as they present themselves.
4. Be organized
Make sure all your ducks are in a row. Amongst other things, this will definitely include having your financing in order, an inspector to do a pre-offer inspection if permitted and other pre-offer due diligence. The pace at which you will be expected to move to remain competitive likely will not allow for any delays resulting from disorganization. Have an adaptable game plan and understand the steps involved in the purchase process through consultation with your agent.
5. Be decisive
Time is a luxury that current buyers do not have when it comes to making decisions regarding a potential offer and even quicker decisions may be needed during a multi-offer situation. There should be ongoing questions, answers, and strategizing with your agent to best position you for success.
Should one be fortunate enough to get the call that their offer has been accepted, the initial response can vary: it may be excitement, it may be relief, it may be disbelief, it may be shock, it may be panic, it may be to have an involuntary nap, it could be tears, it really depends on the buyer. However, as the initial emotions wear off, in a market such as this, what undoubtedly will creep into the mind of many is the question “did I overpay?”
Almost assuredly, my simple response to this question would be, “yes, you did!”
However, this simple statement requires more clarification – so, here goes… To have one’s offer accepted most likely means that one buyer was willing to pay “over” and above what anyone else was willing to pay – hence overpay. This, I believe, is true of all purchases of unique items – real estate related or not. This does not, however, mean that the buyer who paid the most at that time should regret that decision to purchase, or that it was a bad purchase. In fact, in real estate, it is likely the contrary. Values of property, historically speaking, go up, so what may seem like an “overpay today” may be an “underpay tomorrow” especially in a rising market such as we are experiencing currently.
The bigger danger for buyers is likely being out of the market because that last sale price which you may have considered to be an overpay, now becomes the new sale price standard by which future comparable properties are measured. But when you’re in the market, you’re in. And when you’re in, you simply ride any market fluctuations up and down, as many home owners do, without paying much care or attention to it until it’s time to make another move. But when you’re out of the market, it can be quite frightening to see prices rise at a rate that sees one’s purchasing power diminish rapidly, and in some cases, daily. It’s next to impossible to save to meet those rising costs. For example, according to Fraser Valley Real Estate Board, the Housing Price Index (HPI) increased 15.2% in one year from January 2020 to January 2021. From a dollar perspective, what was $960,800 in January 2020 is now $1,106,500 – an increase of over $145,000 dollars. Now, not to get too technical, but that’s a lot.
Now, are these healthy market conditions? In my opinion, “no.” I think that market conditions such as this are potentially very risky for buyers and sellers because, to be competitive, many buyers are not doing enough due diligence to fully understand what they are purchasing, and sellers, while they may fetch quite the price for their property, may then find themselves in the buyer’s role and the fear of that, prevents some would-be sellers from even listing their property which in turn leads to less supply and less supply with steady demand likely leads to higher prices – a bit of a vicious circle. Such, however, is the harsh reality of things. We, in the Fraser Valley, live in a desirable location, land is finite, and it comes at a cost – a very high cost.
This high cost is, however, glorious for sellers who are exiting this market and moving elsewhere. Those sellers will likely have realized considerable equity gains which will give them a tremendous amount of options for purchasing a new home in a new, albeit, in a more distant location.
As a parent it is certainly frightening to see the direction housing prices are continuing to trend and I cringe at the thought of what this may mean for future buyers – including my children.
For the concerned parents out there who worry about their children raiding their fridge forever too, please click this link to schedule a chat regarding “Legacy Investing” which is designed to help parents plan for their children’s future housing needs: https://caseyduncan.ca/legacy-investing-leveraging-your-equity-for-future-generations/.
At the end of the day though, while prices may be high and conditions may not be ideal – they rarely ever are, and if we waited for them to be so, we would likely be waiting indefinitely. There’s always some reason to stall or question a move forward. My advice, for what it’s worth, and I’m fully aware it sounds self-serving, is to reach out to an agent such as myself. Have a conversation with that individual. A conversation where information is shared, options are explored, and one where you get the information you need to make the most informed and best decision possible for you and those making the move with you.
Should you have any interest in having that conversation or finding out more about the current market, feel free to reach out any time… except Superbowl Sunday. It should be a good one!