Life in a hot housing market can be such a grind.
Baby boomers are afraid to sell their valuable homes because they're worried about how much it will cost to buy another place. Millennials are shut out of the market in some cases or they suffer from buyer's regret because of their debt load. And when you do find an ideal home, there's a good chance you'll find yourself in a financial cage match of overbidding.
So let's celebrate the many cities in this country with a more or less normal real estate market – the Winnipegs, the Ottawas, the Montreals, and the Halifaxes. Here are six reasons to be grateful for cities like these rather than hot markets like Toronto and the satellites cities to the east, west and north.
Less stress for downsizing boomers
A recent poll from Canadian Imperial Bank of Commerce found that up to 67 per cent of baby boomers planned to sell their house, most often to downsize to a smaller house, condo or retirement/nursing home. But the poll also found a high level of concern about the high cost of buying that next home.
Imagine you bought a house 20 or 30 years ago in normal market conditions and made a bundle. Now, you've got to step into a raging hot market where bidding wars are spreading from houses into condos. You figured you'd bank a certain amount of money after downsizing, but a hot market says otherwise. So much for supplementing your retirement savings with money left over from selling the family house.
In a normal market, you have the stability to map out how much your house will be worth and how much you'll need to pay for your next home. There's no need to worry about navigating between the promise of further price surges and the risk of a bursting bubble.
No FOMO for young buyers
Fear of missing out is a huge driver in a hot market. With prices rising by 33 per cent, as they did in Toronto on a year-over-year basis in March, people naturally feel affordability is slipping away. Wait for a pullback to make prices more reasonable? That requires patience and the ability to rent indefinitely.
In a normal market, young people can buy when they're at the right place in their lives to take on home ownership and ready in terms of both down payment and household income. There is no sense that if you don't buy a house today, you'll never own one.
Degrading bidding wars aren't the norm
Success in a hot housing market may require a willingness to blow away competing bids on a house with an offer that has no conditions. Prudent, cautious types get stuck on the sidelines.
In a normal market, buyers and sellers have roughly equal leverage. There is no pressure to overbid, and it's still customary to make a deal contingent on a home inspection and having your financing approved in full. These conditions aren't just for uptight worriers. They're there to give you confidence that you're financially set to make the biggest purchase of your life.
More balance for young buyers
Because prices and incomes are in better alignment in a normal market, first-time buyers are more likely to be able to carry their mortgages, pay for daycare, make car payments and save for retirement. Hot housing markets are grabby – they demand money you should be using to meet all life's many financial obligations.
This balance will be especially important if and when interest rates rise. Having a bit of slack in your household budget makes it easier to absorb higher mortgage costs.
Everyone's less judgmental about housing
Your buying and selling decisions in a hot housing market will be scrutinized by everyone you know. You don't want to be the person who hasn't bought in yet, who bought at the peak, or who left money on the table by either selling too soon or waiting until a pullback happens. Houses are just a place to live in a normal market, which means people are less competitive.
Less real estate blah-blah at gatherings of family and friends
It's spring. Five Canadian hockey teams are in the NHL playoffs. Global political tensions are rising. And how about that guy carried kicking and screaming off the United Airlines flight? In a normal real estate market, people talk about stuff like this rather than swapping stories about how much houses in their neighbourhood are going for.
Rob Carrick