Canada housing bubble 202112/27/2023 ![]() ![]() One of the reasons there are so few homes in Ontario right now, Otto said, is because strict provincial and municipal environmental laws are making it more difficult for developers to get shovels in the ground. Les Otto, veteran real estate appraiser It also collects money on development fees. Realtors aren't the only people raking in big profits from real estate, Otto said.įederal and provincial governments not only charged HST and the sale of a home, they also tax the real estate agent's commission, while city hall collects money on land transfer taxes whenever a home changes hands. "There's not a lot of negotiation between buyers and sellers and there can't afford to be. People are being, I wouldn't say coerced, but it's been suggested to them that they bid high if they dearly want this house." "There's no transparency about what the other realtors are bringing to the table. ![]() Not only are potential buyers compelled to offer above asking, Otto said, they're going in blind. Otto said part of what's driving up real estate prices are bidding wars, where buyers are encouraged to bid high and don't get to see the other offers. "The realtor comes and says, 'if you really want this house, you better put $25,000 higher than the list price or $50,000, or some other ridiculous number and people feel compelled to follow the realtor's lead." "In a bidding war all bets are off," he said. Real estate agents know there are a lot of potential buyers with relatively few homes for sale, so they deliberately price homes under market value to get more realtors to bring their clients in and hopefully, trigger a bidding war. Otto said it's why we're seeing bidding wars become the norm. Thomas Association of Realtors said based on the current rate of sales, it would take less than two weeks to liquidate the region's current housing inventory. ![]() The supply situation is being closely monitored by local realtors. Last month, the London St. I've seen houses now that are exceeding a million dollars that a few years ago they were barely pushing $750,000." Last month the London St Thomas Association of Realtors said homes are selling so quickly there is less than two weeks worth of inventory left on the market. Otto said the exodus from the GTA, combined with large numbers of immigrants coming to Canada a few years ago has meant the supply can't keep up with the demand – in other words, too many people looking for not enough homes. "You get the lifestyle, you get larger lots, you get more bang for your buck in housing." Too many people looking for too few homes They can now go to Woodstock, Cambridge they can come to London, some of them have even gone to Windsor. "They no longer have to be in Mississauga, or Guelph or Brantford. "A lot of this is being generated by people escaping or moving out of the GTA and its sphere of influence," he said. Otto said the current state of the housing market is seeing unprecedented prices based on unprecedented demand, which has been fuelled by an influx of people looking for homes, tight housing supplies and strict government rules on new residential development. So what does a guy with 40 years of experience assessing the value of homes see in today's unprecedented housing prices? Does he see what some believe is simply a bubble that will inevitably burst? His staff assess homes as far afield as Windsor, Guelph, Owen Sound and everywhere in between. In the four decades, he's been in the business, he and his team have managed to build their firm, Otto & Company Real Estate Appraisals, into the largest business of its kind west of Toronto. Les Otto, of Otto & Company, has been in the real estate appraisal business since 1978.
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