In Ontario's housing market, where demand continues to outstrip supply, homebuyers are snapping up what's available, often following highly competitive bidding contests.
Multiple offers on properties continue to be the norm, driving up already high prices for homes throughout the province, with the average price of resale residential homes sold across Ontario in April reaching $869,788, a year-over-year increase of 46%.
At the same time, while homes are selling in auction processes -- a move that is said to be a way to reverse rising home prices.
However, the Ontario Real Estate Association (OREA) says homebuyers are rightly concerned about rising prices and a shortage of new listings and homes, but an auction process won't help.
OREA argues in jurisdictions where auctions are common, prices have risen as "auction fever" leads to higher bids.
"Unfortunately, for too many, the current real estate market is a frustrating game of musical chairs, with more and more people circling a fewer amount of chairs," said OREA CEO Tim Hudak.
"The experience can be discouraging: a hopeful buyer competing with dozens of bidders for homes they can barely afford, and repeatedly losing out. They’ve lost sleep wondering whether their own bid is uncompetitive or more than they really need to pay. It’s not surprising some may wonder whether there’s a different way," said Hudak.
Hudak says Ontario realtors believe that Ontarians deserve a choice when it comes to something so important as their home.
"A home is our most valuable and precious asset, the place of our fondest memories and where we feel safe. For many, their home is their nest egg for retirement," explained Hudak.
The association says auctions could also mean buyers would have to share private information during the process, such as a need to sell their own home to finance the purchase of another or how much they can afford for a down payment with a collection of strangers around the table.
OREA successfully lobbied the Ontario Government to allow buyers and sellers to choose if they want to use the traditional offer process or an auction, provided all parties consent -- as part of the Trust in Real Estate Services Act (TRESA).
However, the Ontario government must consult on the corresponding regulatory change needed to ensure this option becomes a reality.
While this is a step in the right direction, the current landscape of bidding wars in Ontario’s housing market is emblematic of a much larger issue: there is simply not enough supply to meet demand, leading to multiple offer situations and higher home prices.
Hudak says fixing Canada’s housing affordability crisis starts with meaningful action to boost housing supply.
More homes and more affordable choices will help frustrated buyers finally get the keys to a new home, while innovative and prudent financing options will help first-time buyers with the initial down payment.
"The provincial regulator should be given greater authority to suspend or revoke licenses of realtors who abuse the rules or take advantage of hard-working Canadian families," said Hudak.
To achieve this, Hudak says all levels of government need to work together and make it easier for first-time buyers to own a home.
Solutions to this include increasing housing supply, eliminating unnecessary government red tape, addressing affordability, and giving both buyers and sellers a choice in how they engage in the offer process.