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Red-hot property market: “It feels like the toilet-paper panic, but with real estate"

The Canadian Press logoThe Canadian Press 2021-05-21

John Gates owned his 16-acre property just south of Silverton for 40 years. Six days after he put it up for sale on Property Guys, it was gone.

“It got 48 calls in that time, from Edmonton, Calgary, and down the valley,” he says. “And I sold it for $10,000 above the asking price.”

That’s not all. He told the buyer his step-daughter was still interested in camping on the property even after it was sold. Her right to do that got written into the sale agreement.

“I told him if they’re not building right away, would you mind if she did, and they said no, not at all,” he told the Valley Voice. “I was surprised!”

Gates is just one of hundreds of Kootenay residents taking advantage of one of the hottest markets – if not the hottest market – in memory.

“It's a combination of factors driving the market,” says Kul Nijjar, an agent with Fair Realty in Kaslo. “I think remote working, COVID concerns, real estate being sold in larger urban areas and then allowing those folks to buy in more "affordable" areas…

“Sometimes it feels like the toilet paper panic is happening but with real estate instead.”

“I’ve seen so many offers that are cash offers – some are not even subject to a building inspection,” agrees Bill Lander, a sales rep with Coldwell Banker Canada based in Nelson active in the Slocan Valley. “It’s a flat-out seller’s market. Buyers are at their mercy.”

He said he’s heard of other side deals buyers are using to sweeten the pot.

“I’ve heard of one case where the person selling the home needed somewhere to go, and the buyer said, ‘I’ll buy your home for this and you can live rent-free in the home for a year.’ It sweetens the deal for the buyer – now they have a year to find something else.”

Meteoric rise

The numbers show the wild extent of the rush. In Kaslo, sales have gone up 475% year-to-year from 2020. The sales value in dollars is up a staggering 730%. Even a 44% rise in the average asking price hasn’t slowed sales, with houses sitting on the market for half the time they were a year ago.

And Kaslo is hardly alone. Across the Kootenay, sales are up 250%, and the dollar sales 350%, with sales prices rising 20% over the year. And that rate is increasing. In April alone, housing prices rose 34%.

That’s the number that has Nijjar spooked.

“The increase in prices in just a few months is somewhat unsettling,” she says. “It's one thing when prices are going up incrementally over a period of time, but when they are increasing sharply in just a few months, then it feels a bit more risky for some type of buyers. Especially the first-time buyers.”

It makes it hard for agents to advise prospective clients too, says Lander.

“You can’t sleep at night if you tell them to go crazy, go $50-60,000 over asking, that’s the worst feeling: to tell somebody to go all in,” he told the Valley Voice. “But they have to go all-in fairly aggressively if they want to have a chance.”

Think longer-term

While it’s ambrosia for people selling property, it’s an awfully sobering situation for people – especially first-time buyers – to get into the market. Nijjar cautions people to do their research before wading into the fray.

“Places are being sold while some buyers are just in the discovery/research phase,” she says. “Researching where you want to be in the Kootenays, really learning about the area, finding out what services are important to you and which area has them, what type of real estate you're looking for, and getting your financing in place are the biggest things you can do to help yourself.”

And when you do take the plunge, she recommends buyers go in with a clear idea of their financial abilities to negotiate and manage the debt they’re taking on.

“If you get caught up in the multiple-offer situation and start bidding and you go over what you can afford, that's going to be a hardship,” she says. “When buying in a high market I think it's good to do some risk assessment – what happens if the values drop and you're still paying top dollar? Can you afford that?”

Nijjar says what people need to have if markets crash is going to be holding power. 

“Can you hold on to your property until market stabilizes itself? If you can't, then you probably want to just wait it out or buy in your budget range,” she says.

While some are suggesting buyer’s fatigue will kick in and slow the market somewhat, others see the boom just starting as urban dwellers seek more countrified living. 

When and how it all ends, of course, is another matter entirely.

“This is a pretty long run,” says Lander, noting prices have been steadily climbing since 2016. “And when I see it going global I get a little nervous about it. I’m not telling buyers to get scared, or sellers to hurry up and sell, but it’s been a long run, and we’ve had booming cycles [before].

“And if anyone has a real estate memory of the last 70 or 80 years, they might say this is one of the wildest runs that we’ve seen.”

John Boivin, Local Journalism Initiative Reporter, Valley Voice

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